Autohome Inc.

Ladies and gentlemen, thank you for standing by for Auto Home's fourth quarter and full year 2024 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow management's preparing marks. As a reminder, this conference call is being recorded. If you have any objections, you may disconnect at this time. A live and archived webcast of this earnings conference call will also be available on Auto Home's IR website. It is now my pleasure to introduce your host, Mrs. Sterling Song, Auto Home's IR director. Mrs. Song, please go ahead.

Thank you, operator. Hello, everyone. I'm Sterling, and welcome to Auto Home's fourth quarter and full year 2024 earnings conference call. Earlier today, Auto Home distributed its earnings release, which can be found on the company's IR website, .com.DN. Joining on today's call are chief executive officer, Ms. Song Yang, and chief financial officer, Ms. Quig Yan Zeng. Management will go through their prepared remarks, which will be followed by a Q&A session where they will be available to answer all your questions. Before we continue, please know that the discussion today will contain further looking statements made under the Safe Harbor provision of the U.S. Private Securities Education Reform Act of 1995. Further looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but are not limited to those outlined in our public filing with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. Auto Home doesn't undertake any obligation to update any further looking statements except as required and applicable law. Please also know that Auto Home earnings press release and this conference call include discussions of certain audited non-GAP financial matters. A reconciliation of the non-GAP measures to the most directly comparable GAP measures can be found in our earnings release. I will now turn the call over to Auto Home CEO Ms. Yang for opening remarks. Please go ahead, Ms. Yang. Thank you, Sirling. Hello everyone. This is Song Yang, CEO of Auto Home, and thank you for joining our earnings conference call today.

Today

is my first time to join the earnings conference call as the CEO of the company. We suppose you have read the update filing by the company earlier today. Hire Group has become the new controlling shareholder of Auto Home. Auto Home, as China's leading online automotive consumer platform, is supported by the core foundation of data plus technology, both a broad user base, deep industry insights, professional content, a strong network of OEMs and dealers, and a strong financial system. Hire's strategic investments reflect recognition of Auto Home's business model and market potential and will inject new vitality into Auto Home's long-term development. In the future, Auto Home will serve as a key hub in Hire's automotive industry ecosystem, continuing to solidify and develop the existing businesses while leveraging advanced management experience of Hire and operational systems of car tech in deeper user experiences, smart hardware connectivity, and new automotive retail to continue to strengthen Auto Home's O2O intelligent exchange and comprehensive service capabilities, further driving innovation and growth for the company and better serving every user. At the same time, Hire Group will remain as a key shareholder of the company and will continue to strongly support Auto Home's long-term development.

Next, let us take an overview of the company's financials. In the whole year of 2024, we have fully completed the breakthrough development of innovative businesses. The total annual revenue of the company is 70.4 billion yuan. Among them, the growth of online sales and other business revenue is 8.1 percent, with a 33.8 percent increase in revenue. New energy businesses continue to maintain a strong growth trend. The annual revenue is 55.2 percent. In terms of profit, the annual revenue of Hire and Auto Home is 20.5 billion yuan. The annual revenue is 29.1 percent. In addition, the total annual revenue of Hire and Auto Home is 15 billion yuan. Last week, we also bought back about 8,850 million US dollars in total. In the future, we will continue to implement the company board's one-line pink repurchase plan to continue to strengthen the

shareholder's return. We concluded 2024 strongly with significant breakthroughs across each of our innovative businesses. Total revenues for the year reached RMB 7.04 billion, with revenues from online marketplaces and others increased by 8.1 percent -over-year and accounted for 33.8 percent of total revenue. Notably, our NEB business maintained strong growth momentum with revenues in 2024, increasing by 55.2 percent -over-year. Adjusted net income attributable to Auto Home in 2024 reached RMB 2.05 billion, yielding an adjusted net margin of 29.1 percent. Additionally, we announced a combination of RMB 1.5 billion in dividends for the year, and as of last week, had repurchased approximately 88.5 million US dollars worth of shares. Moving forward, we remain committed to executing the board's approved Dividends and Share Repurchase program in hounding our shareholder returns. Our strategic focus throughout 2024 was integrating our -to-offline ecosystem, highlighted by significant milestones in user growth, enhances our content matrix, and enhances our expansion of our new retail business and the deployment of AI applications, which were particularly successful for our innovative businesses. I'd like to take a moment to reveal these achievements in great detail.

We have achieved effective brand integration and extensive channel access. At the same time, we focus on the downtown market. We have held thousands of fish farms and hundreds of new cars all year round. We have covered more than 200 cities and have been actively promoting the new energy and new energy downtown policies. In terms of technical innovation, our AI has integrated all aspects of the business. First,

our online traffic reached new highs again, with average mobile DAU exceeding 77 million in December 2024, reflecting the effectiveness of our high-quality content-driven strategy in driving user growth. We also expanded partners with multiple internet platforms, leveraging open collaboration to engage with a broader demographic and extend our reach. Second, since the launch of our first Autohome Space Source in 2022 and the subsequent large-scale rollout at the end of 2023 and the accelerated expansion of satellite sources into low-tier cities in 2024, we've made substantial progress in building out our offline channels. The total number of franchise offline stores now exceeds 150, generating strong brand aggregation and extensive channel coverage. At the same time, we have more than 1,000 cities treating for new also shows near over 200 cities during the year, effectively promoting treatment for new and the NEB's inter-rural area policies. In terms of technological innovation, we've simply integrated AI across all aspects of our business. From content creation for consumers to operational management and decision-making analysis for clients, significantly enhancing productivity and operational efficiency for our customers. Automobiles play a crucial role in driving domestic demand and expanding consumption, making the industry vital to China's economic growth. In the automotive media sector, we'll continue to build differentiated competitive advantages by diversifying and expanding online traffic through our professional content matrix and ecosystem of partnerships. We also deepen our presence in offline regional markets with improved services for users and leverage of digital tools to connect online and offline operations. By utilizing our deep understanding of consumer needs and capitalizing our opportunities to transform the industry, we are building a virtual cycle between our online and offline businesses. Looking forward, we'll continue to target the substantial business opportunities we see in low-tier markets, deepen our presence in these regions, upgrade and refine our business models, and enhance operational quality to propel our development of new highs.

接下来请CFO曾炼先生详细介绍之家24年第四季度及

全年的业务及财务情况。 With that, I will now turn the call over to our Chief Financial Officer Craig Zeng for a closer look at our quarter and full year 2024 operating and financial results. 谢谢杨松总。 大家好,我是汽车之家的首席财务官曾炼。 Thank you, Ms. Yang. Hello, everyone. I'm Craig Zeng, the CEO of Auto Home. 二零二四年,我们在内容建设领域持续取得成绩。 凭借之家的专业评测能力以及对用户的真实使用场景 需求的洞察,我们聚焦新车智能和新能源两大 核心技术方向,打造了一系列对用户有用、对行业有益的专业IP矩阵。 In 2024, we continue to make progress in content development, leveraging our professional evaluation capabilities and a deep understanding of our user needs. We focus on two core technological areas, smart vehicles and EVs. With this in mind, we've developed a series of professional IP matrices that are both useful for users and beneficial for the industry. 全网曝光量超过6亿次,多家主机场主动转发栏目内容, 出现出我们在内容专业性上获得了业内的广泛认可。 For example, in December last year, we launched the first winter dual temperature test program focused on EVs. This initiative directly addressed three major industry pain points under low temperature conditions, short range, slow charging and high energy consumption. We conducted comprehensive tests on the reliability and comfort of vehicles in low temperature environments, covering more than 50 models across 30 brands, generating over 600 million views across various platforms. Multiple OEMs shared our content, underscoring the industry's broad recognition of our expertise in professional content creation. In addition, our content-based localization strategy also landed in many cities such as Chengdu, Xi'an, and other cities. In these cities, we used an open platform model to create localization content channels, and connected information such as service and promotion activities for local car manufacturers and car related businesses to connect regional user needs and regional resources, and thus created a complete barrier to customer cooperation from user needs to service supply. This measure not only helped us to revive the downtown market flow, but also laid the foundation for further expansion of our regional business. The Q1 Mobile data shows that the number of daily users of the car brand's mobile end in December reached 77.48 million, which is .6% in the same period in 2023, which proves our leading position in the car industry. Additionally, our content localization strategy was successfully implemented in several pilot cities such as Chengdu and Xi'an. In this location, we adopted an open platform model to create localized content channels that integrate services and promotional activities from local automotive partners. This approach connects regional user needs with local resources, forming a complete closed loop from user demand to serving and merchant cooperation. This initiative not only helped us acquire traffic from low-tier markets, but also laid the foundation for the further expansion of our regional businesses. According to Q1 Mobile data, the number of our average mobile daily users in December 2024 reached 77.48 million, an increase of .6% from the same period in 2023, reflecting our leading position in the automotive media vertical. In this location, we adopted an open platform model to create localized content channels that integrate services and promotional activities from local automotive partners. This approach not only helped us acquire traffic from low-tier markets, but also laid the foundation for the further expansion of our regional businesses. We have established 28 space station joint stores and over 130 satellite stores. We are also happy to see that the total revenue of new energy brands in this new home is continuing to rise. In 2024, the same increase in revenue reached 55.2%, showing a huge growth potential. Turning to NEVs, during the fourth quarter, our new retail business focused on strengthening operations in online live streaming and offline activities. Online, we utilized exhibition halls and holographic cabins at auto home space stores to boost local user acquisition capabilities through live streaming. Offline, we leveraged vehicles from several brands to create curated sales events that simplify the car selection process for users while making purchasing more cost-effective. We also observed rapid growth in new media matrix accounts and key influencer accounts related to new retail in the fourth quarter, driving significant growth in both these and transaction volumes on a sequential basis. To date, we have established 28 franchise auto home space stores and more than 130 satellite stores nationwide. We are also pleased to report that total revenues from NEVs during the year, including those from the new retail business, increased by .2% from last year, reflecting a huge growth potential. In addition, as China's largest car online platform, we actively respond to the country's emergency change policy. On the one hand, we implement a comprehensive policy through online platforms to subsidize and promote the sale of discounted information, providing user-friendly discounted information inquiries and full-time automatic matching, and to speed up the delivery of new cars. On the other hand, we are also working on a series of online online shopping malls to expand our product service to three or four-line cities, focus on the downtown market, create a trading scene, and help the new online shopping malls and new energy downtown policies to land. In addition, as China's largest automotive internet platform, we actively support national trade-in policies. We aggregate subsidy policies and promotional offers from manufacturers near real-time through our online platform, providing users with a one-stop service for discounted information and automatic matching of benefits that accelerate demand for vehicle upgrades and trade-ins. Moreover, we organize the 100 Cities Trade-in for New series of offline auto shows to bring our products and services into third and fourth-tier cities. By focusing on these low-tier markets, we create transaction scenarios and facilitate the implementation of Trade-in for New and the NEB policies in rural areas. In 2024, we hosted nearly 1,000 offline auto shows covering almost 250 cities nationwide, with over 80% of them in low-tier cities. In the digital field, we focus on the AI upgrade of our products, especially for car sales members. For example, our AIGC video processing tools have modular image and video production capabilities, which greatly enrich the content presentation, enable commercial content creation, and improve content production. We also support the distribution of content to multiple mainstream news platforms, which significantly improve the operating efficiency of our consumers. We also integrate core products into the digital operating process through AI smart systems. For example, AI smart follow-up for consumers provides a comprehensive chain-link follow-up plan and tools from the contract to the transaction, which allows the customer to handle the problem and increase the efficiency by more than 20%. In terms of management, AI takes over the store's management data and standardizes the complex management analysis process. Managers can quickly obtain the desired results through dialogue with AI, and guide management decisions. These upgrades not only indicate content creation and distribution efficiency, but also significantly improve the operating and management efficiency of our consumers. On the digital front, during the fourth quarter, we prioritize AI-driven upgrades for our products, particularly for lead subscription package services. For example, our AIGC Video Generation 2 now features modular graphics and video production capabilities that greatly enhance the format of content while empowering dealers to create high-quality content efficiently. Additionally, it also supports one-click distribution of content across multiple mainstream media platforms, significantly improving operational efficiency for dealers. We also integrated AI into core products for dealership operations. For example, in lead management, AI-driven smart follow-ups provide dealers with comprehensive strategies and tools for managing leads from initial content contacts into the transaction, improving store staff's ECU resolution efficiency by over 20%. In business management, AI incorporates each store's operational data and standardizes complex operational data analysis process so that managers can quickly obtain insights to guide their decision-making. These upgrades not only enhance the efficiency of content creation and distribution, but also significantly improve the operational and management efficiency of dealership. In the second-hand business section, in 2024, we will enhance digital applications, providing users and customers with a series of digital search tools and other marketing tools, including car frames and car racks, to enhance customer experience and customer performance. On the other hand, we continue to increase the construction capacity of car frames, especially the built-in car frames, to promote car frame quality improvement and help the industry to develop. The number of built-in cars in Japan's home platform has increased by nearly 33% throughout the year. In the future, we will continue to strictly control costs, optimize operational efficiency, and ensure that business is steadily developing. For our used car business, in 2024, we will enhance digital applications, providing users and clients with a broad range of digital inquiry and other marketing tools, such as vehicle conditions and pricing, to enhance the user experience and improve client operational efficiency. We also continue to strengthen vehicle sourcing, particularly for certified high-quality vehicles, to ensure vehicle quality and promote the healthy development of the industry. Over the year, the number of average daily certified vehicles on our platform almost doubled compared to the previous year. Moving forward, we will continue to focus on strict cost control while optimizing operational efficiency to ensure the stable development of our business. Before discussing the specifics of our financials, I believe everyone has already noted that the decrease in our media services revenue during the fourth quarter narrowed significantly on the back of an improving auto sales market. Looking ahead to the new year, we hope to see our traditional businesses continue to stabilize and recover as we will continue to prudently invest in innovative growth initiatives in order to achieve our dual objectives of business expansion and financial stability. In the fourth quarter of 2024, and the main financial situation of the year, please note that I will only use RMB as the currency unit in today's discussion, unless there is another explanation. With that, let me briefly walk you through the key financials for the fourth quarter of the full year of 2024. Please note that I will reference RMB only in my discussion today, unless otherwise stated. The net revenues for the fourth quarter were RMB1.78 billion. Breaking it down, media services revenues were RMB437 million, lead generation services revenues were RMB758 million, and the online marketplace and others' revenues were RMB588 million, up .3% year over year. In terms of cost, in the fourth quarter, the sales cost was RMB4.29 billion, and the online marketplace and others' revenues were RMB3.68 billion. In the fourth quarter, the net profit was RMB76%, and the online marketplace and others' revenues were RMB80.8%. On cost, the cost of revenues in the fourth quarter was RMB429 million compared to RMB368 million in the fourth quarter of 2023. The gross margin in the fourth quarter was 76% compared to .8% during the same period of 2023. In terms of business costs, in the fourth quarter, sales and market costs were RMB7.18 billion, and the online marketplace and others' revenues were RMB7.3 billion. The research and development costs were RMB3.28 billion, and the online marketplace and others' revenues were RMB3.56 billion. The general management costs were RMB1.31 billion, and the online marketplace and others' revenues were RMB1.57 billion. Turning to operating expenses, sales and marketing expenses in the fourth quarter were RMB718 million compared to RMB730 million in the fourth quarter of 2023. Product and development expenses were RMB328 million compared to RMB356 million in the fourth quarter of last year. The general and administrative expenses were RMB131 million compared to RMB157 million during the same period of 2023. In summary, the fourth quarter of the Car Home business profit was RMB2.32 billion, and the third quarter was RMB3.67 billion. The adjustment of the Car Home's profit was RMB4.87 billion, and the third quarter was RMB5.03 billion. Overall, we delivered an operating profit of RMB232 million in the fourth quarter compared to RMB367 million for the same period of last year. The adjusted net income attributable to Auto Home was RMB487 million in the fourth quarter compared to RMB503 million in the corresponding period of 2023. The adjusted net income attributable to Auto Home was RMB1.23 million in the fourth quarter compared to RMB4.14 million in the corresponding period of last year. The adjusted net income attributable to Auto Home was RMB4.02 million in the fourth quarter compared to RMB3.99 million in the corresponding period of last year. The adjusted net income attributable to Auto Home was RMB4.15 million in the fourth quarter compared to RMB4.14 million in the corresponding period of last year. The adjusted net income attributable to Auto Home was RMB4.15 million in the fourth quarter compared to RMB4.14 million in the corresponding period of last year. Let me summarize the overall income of the entire year in 2024. The total income was RMB70.4 billion. The average service income was RMB15.2 billion. The service income of the county office was RMB31.4 billion. The online sales and other income were RMB23.8 billion. The same growth was 8.1%. The adjusted net income attributable to Auto Home was RMB20.5 billion. The adjusted net income attributable to Auto Home was .1% Let me summarize the overall income of the entire year in 2024. The total income was RMB7.04 billion. The average service income was RMB1.52 billion. The service income of the county office was RMB3.14 billion. The online sales and other income were RMB2.38 billion. The increase was .1% -over-year. In addition, we delivered an adjusted net income attributable to Auto Home of RMB2.05 billion with adjusted net margin of 29.1%. As of December 31, 2024, our balance sheet remains robust with cash, cash equivalents and short-term investments of 23.32 billion. We generated net operating cash flow of 1.37 billion in 2024. As of February 14, 2025, we have repurchased about 3.3 million shares. The total amount of the US stock is about $8,850 million. The above is our financial summary. With that, we are ready to open up the Q&A session. Operator?

Thank you. We will now begin the question and answer session. To answer the question, please press star or the Q&A button. Press star 11 and wait for a name to be announced. If you would like to cancel your request, please press star 11 again. First question comes from Thomas Chong of Jeffreys. Please go ahead.

Thanks, manager, for answering my question. I have two questions. First is for the transaction with CarTag. What is the background and the purpose of the transaction? And how it will impact our business in the future and what areas plan to cooperate? And my second question is we saw the recovery in the fourth quarter in 2024. So how the positive policies will impact auto market and auto home? And what's the management outlook for the auto market in 2025? Thanks.

Thank you for your question. I am Yang Song. First, we cannot comment on the investment decisions of Haier. But we believe that the strategy of CarTag to invest in auto home is based on the decision-making of various aspects.

Thank you for the question. My name is Yang Song. Firstly, we cannot comment on Haier's investment decision-making. But we believe that the highest-cutting strategic shareholding in auto home is a decision based on multi-faceted considerations.

As Haier's announcement of the new As you know,

stated in the news release by Haier, as China's leading online service platform for auto automotive consumers, auto home takes data plus technology as its core support and it has a wide use base. In depth industry insights, professional content, as well as strong network of vehicle manufacturers, OEMs and dealers, and a stable financial system, Haier's strategic shareholding reflects its correct mission of auto home's business model and market potential. And we are also injecting vitality in the long-term development of auto home.

In the future, Haier will continue to develop its existing business as a key source of energy for the automotive industry. At the same time, it will use the advanced management experience and operating system of CarTag to further promote the company's innovation and growth, and serve each user

better. In the future, as a key hub in Haier's automotive industry ecosystem, auto home will continue to consolidate and develop its existing business, and at the same time draw on Haier's advanced management experiences on the CarTag operating system to further promote the company's innovation and growth, with aims to better serve every user and customer.

At the same time, Haier will use its technology innovation, car interaction, consumer service system, single-use management model, and other advantages. Combine CarTag's online and offline integrated operation, especially advanced -to-door management experience, and fully connect the home of cars and in-depth experience of user, smart hardware connection, and the field of car new animals, and co-development. At

the same time, Haier will utilize its leading advantages in technological innovation, user insights, consumer service system, and the human and auto combination management model, integrate the online-offline integrated operating of CarTag, especially its advanced door management, inventory management experience, and full-scale -to-car experience. In

conclusion, we firmly believe that through the combination of both resources and professional knowledge, we can create more innovative solutions for users.

So, overall speaking, we firmly believe that by combining the resources and professional knowledge of the two parties, more synergy can be created, providing users with more high-quality and innovative solutions. In addition, I have a supplementary notice. After the transaction is completed, Ping An Group will continue to be the major shareholder of Auto Home and a deepened collaboration with Auto Home in multiple aspects, such as after-sales vehicle services, online marketing, and support the long-term development of Auto Home together with the auto community. So, I hope that this will be a good opportunity for us to continue to work together with Haier.

Now,

it would be my great pleasure to answer your second question. Thank you for the question. I consider this to be a great question. In terms of official data, the auto market performed strongly in the fourth quarter of last year, with sales volume increased by .2% -over-year. We believe that this is mainly because approaching the end of the year, auto companies made efforts to achieve their annual growth. We coupled with the exploration of some two new policies at the end of September, it effectively boosted the auto market itself and helped the recent recovery of the industry confidence.

As you know,

as a professional vehicle media platform in the automotive industry, we started to meet users' needs for the two new policies, which is a large-scale equipment renewal and consumer group trading incentive. And we do see that Auto Home has created a localized content channel, integrated and updated local trading for new policies, and accurately connected user needs with local resources. According to the Quest Mobile data shows that in December of 2024, the average daily number of mobile users of automotive increased by .6% -over-year, further consolidating its industry influences. At the same time, with the recovery of the auto market, Auto Home's media business has also picked up, growing by 34% -over-quarter. We expect this trend to be continued in 2025. Next, I would like to share with you my outlook for 2025. According to the market detailed sales in 2025, it will increase by 2% -on-year. And also we can see that the cumulative retail sales in 2024 increased by .5% -over-year, among which the retail sales of new renewable energy passenger vehicles will increase by 20% -over-year, and the penetration rate will reach 57%. We believe that this overall pattern of auto market in 2025 will be stable and positive, and the following trends may be shown. I would like to provide you with three detailed analysis.

First, the policy continues to be good, and the market is steadily growing. Second, the new energy vehicles continue to grow, and the smart trend is showing.

And then secondly, we do see the continuous growth of the renewable energy vehicle, and also the emergence of the intelligent trends. And then thirdly, we do see the industry price competition will continue.

We believe that the test is still in the growth period of the Tang Dynasty, and we will continue to grow in the new energy business and develop health in the Chinese automotive industry.

That's all for my answer. Thank you very much.

Thank you for the questions. Next question comes from Brian Gong from Citi. Please go ahead.

Thank you for answering my questions. The first question is about the business of Li Zhen. What is the current situation of the car dealership? And what are the potentials of this block? The second question is about the second-hand car market in 2025. When do the second-hand car business in the entire industry and the company expect to be restored? Thank you, Guanli. I will translate myself. Thanks, management, for taking my question. I have two questions. First is regarding our lead generation business. How is the contract renewal situation so far? And any areas to further explore potentials for this segment? And the second question is about the outlook, 2025 outlook for youth car market. And when does the management expect the industry and our business to recover for youth car business? Thank you.

Thank you very much. I would like to take your question. Talking about the renewal of the Billy Connect, actually it started at the end of 2024 as usual. And it was basically completed after the Spring Festival in 2025. The renewal situation is very good. Actually it exceeds 85%, which is better than previous year.

The current situation is also dependent on two aspects. One is the upgrade of the product. We also use the optimization of the AI tools. And the platform to collect data, data, and workflow is combined to increase the efficiency of the car business. The second is to maintain the advantage of our brand, the influence, the flow of users and the resources of the customers.

Why we can achieve such success is because of the two factors. One is the product upgrade. Full scale AI implementation is creating on platform information, data, and workflow. Through AI operation reduction, AI follow-up, efficiently improvement, and AI decision making assistance, it reduces cost and increases revenue for dealers. And the second is the brand advantage. We have very strong brand influence, high user traffic, and also we have the optimized operating experience. And the comprehensive service guarantee continuously attracts a large number of customers to renew. And also I want to talk about the business potential in the following three aspects. The firstly is the Chinese auto market. Although maybe different sources may have different projections, but we believe the overall trend would be uprooted.

We believe that there is still a lot of room for improvement in digitalization and intelligentization. Especially after the introduction of new AI technologies, it can help us achieve more accurate customer vision, which will increase the efficiency of the leads, and help the dealers to have more targeted market strategies and more accurate customer services.

And also we can do more on digitalization and intelligentization. For example, we can further optimize the AI technology to achieve more accurate customer portraits and personalized recommendations, helping the dealers to reach targeted customers in a more effective way. We can also analyze the user's car and using big data and AI to better achieve more efficient targeted market strategies suggested for dealers.

And also we

do see more opportunities and more coverage. In the past, our market is more focused on the big cities, and in the future we can get into the down market, which is more focused on the big cities. We can do more at the lower tier cities and help us to achieve more customers. And secondly, in terms of the lead business, we focus a lot on new car sales. In the future, we can do more post-sales services, including the maintenance and etc. So in this way, we can further expand the business flow.

But from the perspective of the industry, we know that the whole profit is not ideal. Although the total number of second-hand cars is .5% higher than the total number of second-hand cars, there are 49 single-car cars in the market with a profit of only 4% to 6%. There are 29 cars, even less than 4%.

The annual use of car transaction volume increased by 6.5%. However, out of the top 100 used car dealers, 49 had a single vehicle gross profit margin, which is only between 4% to 6%. And 29 had a GP margin of less than 4%.

The reason for the increase in sales is of course the increase in the amount of oil. The policy of the country to continue to change cars and new cars also promotes the need for second-hand cars. In addition, there are some positive aspects of the policy, such as the approval of the government and the cancellation of the national insurance law. Now,

talking about the reason of sales growth, for example, there are problems with the policy support. For example, the trading for new policies in the new car market has driven the replacement demand for used cars to a certain extent. And also, cross-provincial business handling under the lifting of the national five emission limits has simplified the trading process, reduced the trading cost, and improved the trading efficiency.

Another interesting point is the second-hand car of new energy. In the past, the second-hand car of new energy was a market that was not very popular, and the volume was relatively low. In 2024, the first transaction volume exceeded 1 million units, and the profit margin increased by 48%. This is a very important point to pay attention to.

However, the transaction volume in 2024 exceeds 1 million vehicles, an increase of 48% year over year, which is an important driving force for the market growth.

But from another angle, there are also some disadvantages, such as the decline in profits. The main reason is that the price of the new car is a huge pressure on the second-hand car. Because the price of the new car is not very high, the second-hand car's stock period will be extended, and the funds will be difficult to raise. And because the price is relatively difficult to judge, the profit margin of the second-hand car will also decline.

While there are pros and cons, for example, the reason for the profit declining is mainly due to the price war in the renewable new car market, which has led to large fluctuations in the purchase and sales price of the used car and the extended inventory cycle and the difficult capital recovery. So this single vehicle growth profit margin of used car dealerships and enterprises had a generally declined.

In the second half of 2025, we think that the market's supply and exchange policy are still the two biggest driving factors. The second-hand car of new energy will continue to increase, so its supply and exchange volume will increase. So we think that the second-hand car industry in 2025 will continue to grow.

But we think that the market demand for new policy will continue to be released. Coupled with the promotion of the renewable energy used car, the sales volume of the used car industry in 2025 is expected to continue to grow.

We also hope to change the pain points in the market through our efforts, mainly in terms of the transparency of the market's driving and car mines. So we want to increase the number of car dealerships and enterprises in the home market. So we think that the second-hand car industry is still a long-term one. We can't say that it needs to be restored, because it has been growing. But it may not be a short-term one, which may not give you the hope of a very big explosion. But it will continue to grow.

We do believe that that would help to improve the market. We are aiming to address the pain points in the market, for example, to enhance the transparency of the used car transaction in terms of the pricing and the condition of the car. So that's why in Auto Home, we want to promote the trustworthy used car source, which would increase significantly. So this certified and high-quality car source usually has a higher selling price, and we help the dealer to improve the profitability. And also, digital tools such as the vehicle condition and price query can effectively improve the business operation efficiency. So in this way, we believe that the overall momentum is that it will be a long-term growth of the market, but do not expect to see short-term outbursts of the rapid

growth of the market.

Operator? Thank you for the questions. One moment for the next question. Our next question comes from the line of Xiao Dan Zhang from CICC. Please go ahead.

Thank you for taking my questions. Could you please share your outlook on the 2025 revenue and margin outlook for the NEV's new retail model, and how should we think of its expansion pace going onwards? Thank you.

Thank you for the question. New retail is a key business in its home. The core logic of this business is the combination of online and offline. We believe that any business in the future must have an online and offline auto-output combination in order to have a greater development, especially in the field of car.

Well, thank you very much for the question. As you know, the renewable energy vehicle is one of the key development strategies for auto home. And we believe that the new retail business will focus more on auto, the online and offline collaboration. We believe that this will be the major driver for the future growth of the business.

In 2022, we will have only one home in Shanghai. By the end of 2023, we will have 28 homes. By May 2024, we will start testing the satellite. So far, the number of satellites and -to-home sites has exceeded 150. We are now at a large scale, as you just mentioned.

Actually, our past experience shows that this is a very good strategy. For example, in 2022, we only have one space store in Shanghai. By the end of 2023, we have 28 space station franchise stores. Since we started testing the satellite stores in May, the total number of the space station and satellite franchise stations has now exceeded 150. So it can be seen that the construction of our offline channels have taken initial shape, achieving the wide coverage of the high and low tier cities.

In terms of profit and speed, we will look at it according to our current situation. In general, the new retail business is not a small business. Our partners are basically trying to achieve a balance of income in a relatively short time. So our expectation is that in the 25 years of the entire income, the proportion of new retail will gradually increase.

Thank you. One moment for the next question. Our next question comes from the line of Richie Sun, from the United States. Thank

you, Gwenni Cheng. You answered my question. I would like to ask you what your thoughts are on the increase in the proportion of new retail. Thank you, management, for taking my question. I want to ask, what is your view on further lifting the payout ratio or show the return? Thank you.

Thank you. In the past five years, we have been constantly increasing the payout ratio. In 2022, the annual payout was 500 million. In 2023, the annual payout was 1.2 billion. In 2024, the annual payout was 1.5 billion. At that time, the board of directors also proposed that the next three years will not be less than 1.5 billion. We will also firmly implement this policy.

Well, thank you very much for the great question. Actually, if you look at the past three years, in 2022, we had already paid 500 million grand in the payout. In 2023, this number reached to 1 billion RMB. And in 2024, it further reached to 1.5 billion RMB. And also, our board of directors also made a promise that in the future, in the next three years, we would pay out no less than 1.5 billion RMB. In addition to the dividend payout, we also find other ways to think about the future. So, in the future, in addition to the dividend payout, we will continue to do more share-back policies and other share-back policies.

Thank you.

There are no further questions at this time. I will turn the conference back to management for closing.

Thank you

everyone. Thank you very much for joining us today. We appreciate your support to the company and we look forward to updating you on our next quarter's conference for a few months' time. In the meantime, if you have any questions, please feel free to contact us. And thank you for joining us today. Thank you everyone. Bye bye. Thank

you for your participation. You may now disconnect your lines.