Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Uxin Ltd (UXIN, Financial) achieved a 38% increase in retail sales during the traditionally slow season of the spring festival, selling 3,124 units from January to March 2024.
- The company's gross profit margin rose from 1.2% in fiscal year 2023 to 5.9% in fiscal year 2024, indicating improved profitability.
- Uxin Ltd (UXIN) has significantly reduced its reconditioning costs per vehicle by 50% compared to the previous fiscal year through bulk procurement, SMART repairs, and 3D printing technology.
- The company has implemented a highly cost-effective customer acquisition strategy, reducing advertising and promotion expenses by more than 50% compared to last year.
- Uxin Ltd (UXIN) projects a year-over-year retail sales growth of 150% for fiscal year 2025 and aims to achieve company-wide adjusted EBITDA profitability starting from the third quarter of the fiscal year.
Negative Points
- The competitive pricing strategies initiated by car manufacturers have disrupted the price structure of the used car market, leading to a substantial decline in profitability across the industry.
- The average selling price (ASP) of retail vehicles decreased from RMB 117,000 in the same period last year to RMB 86,000 this quarter, impacting revenue.
- Wholesale transaction volume in the fourth quarter decreased by 31% year-over-year to 934 units, leading to a total wholesale revenue of RMB 39.7 million.
- Adjusted EBITDA for the fiscal year of 2024 was a loss of RMB 176 million, despite a nearly 40% reduction in losses compared to the fiscal year of 2023.
- The construction of the new superstore in Zhengzhou is expected to take some time and will not be completed until next year, delaying potential profitability.
Q & A Highlights
Q: We noticed that the company recently entered a strategic cooperation with Zhengzhou worth RMB 170 million. Can you elaborate on this cooperation and how long it will take for the new superstore to achieve profitability? Additionally, what is the company's strategy for selecting new cities for expansion? And are there any other cities currently in progress?
A: This is D.K. I will address that question. You're correct. We have recently signed a contract with the Zhengzhou city government, and the local government plans to provide substantial support for our used car business in the area. In addition to the joint investment of RMB 170 million for our Zhengzhou superstore operation, the government also plans to invest an additional RMB 500 million in constructing the superstore site. The government will also offer industry subsidies, facilities, and other support to ensure that our project in Zhengzhou can commence as soon as possible. The construction of the store will take some time and is expected to be completed next year. Our offline superstore models in Xi'an and Hefei are running smoothly, and we anticipate that the new superstore will take approximately 12 months or less from commencement to achieving EBITDA profitability. When choosing new areas for expansion, we prioritize cities with large vehicle ownership, high activities in used car transactions, and superior traffic conditions. We are currently in negotiations with multiple cities and expect to finalize cooperation with 1 to 2 cities within this year.
Q: How is your used new energy vehicle (NEV) business developing, and what percentage of Uxin's inventory do they make up? Compared to fuel-powered used cars, are there major differences in profitability and cost when selling used NEVs?
A: The growth rate of NEV sales in China this year has indeed been very impressive, with their market share in new car sales now approaching 50%. Since the NEV boom only started in the last 2 to 3 years, their total ownership is only about 25 million, which is less than 10% of the national vehicle ownership of 340 million. Most NEVs haven't yet entered the used car sales space yet, so currently the proportion of our NEV sales is between 10% to 15%, which is still above market level. From our experience, the profitability of used NEVs is slightly higher than that of fuel-powered used cars. Used NEVs offer excellent value for money, have a higher sales turnover rate, and lower average reconditioning costs. Our operational system fully supports the acquisition, reconditioning, sales, and after-sales services for used NEVs. We believe that with the rapid development of NEVs in China, the proportion of NEVs in our retail business will continue to increase, and we're fully prepared to capture that opportunity.
Q: Can you provide more details on the financial performance for the fourth quarter and fiscal year 2024?
A: This is John Lin. In the fourth quarter of fiscal year 2024, we faced the traditional off-season for used car sales due to the Chinese New Year. Nevertheless, we delivered remarkable sales results with a total retail transaction volume of 3,124 units, a 38% increase compared to the same period last year. The total retail revenue for the fourth quarter was RMB 269 million, representing a 2% year-over-year increase. Despite certain challenges, we proactively adjusted our inventory structure to adapt to market changes. Our total revenues in the fourth quarter were RMB 319 million, and our gross profit margin for the quarter was 6.6%, compared to 4.8% in the previous quarter and 2.3% in the same period last year. For the full fiscal year 2024, our total retail transaction volume totaled 10,179 units, achieving a retail revenue of RMB 1.02 billion and total revenues of RMB 1.38 billion. Our adjusted EBITDA loss was RMB 176 million, representing a nearly 40% reduction in losses compared to the fiscal year of 2023.
Q: What are your projections for the first quarter and full fiscal year 2025?
A: For the first quarter of fiscal year 2025, we expect our retail transaction volume to reach 4,000 units, representing a sequential increase of over 25%. Wholesale transaction volume is expected to be 1,500 units. Total revenues are projected to be between RMB 390 million and RMB 410 million. We also anticipate that our gross profit will remain stable compared to the fourth quarter of fiscal year 2024. For the full fiscal year of 2025, we project a retail transaction volume of around 25,000 units, representing a year-over-year increase of 150%. Our goal is to achieve company-wide adjusted EBITDA profitability starting from the third quarter of the fiscal year, which is from October to December in 2024.
Q: How has Uxin's branding and sales capabilities evolved over the past year?
A: This is D.K. Our branding and sales capabilities have generated a positive flywheel effect, further enhancing sales efficiency. By connecting with customers through superior products and services, we have built a stronger network effect in regional markets as customers' trust and reputation have grown, further boosting sales conversion rates. Our in-store customer conversion rate has reached approximately 40%. Despite intense industry competition, our retail vehicle inventory turnover rate has improved by over 60% compared to the previous fiscal year, allowing us to achieve higher retail sales with the same inventory size. Our AI pricing model dynamically monitors 600,000s of used car data points across the Internet, creating competitive models based on factors such as the car's model, age, condition, and mileage. This system, combined with customers' viewing records and offline test drives, can generate purchase and sale prices and adjust them promptly to ensure Uxin's vehicles remain highly competitive in the market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
