Uxin Limited (UXIN) Earnings

Management highlights

- Core Business Performance * Achieved 119% year-over-year growth in retail transaction volume, marking the eighth consecutive quarter of over 110% year-over-year retail growth, even with seasonal headwinds from the Chinese New Year holiday. * Maintained strong operational discipline: inventory turnover stayed at ~30 days, gross margin held stable at 7.7% for retail, and net promoter score improved to 68, remaining among the highest in the industry. - Industry Context * China's overall new vehicle market declined 20% year-over-year in the first five months of 2026, with internal combustion engine (ICE) new vehicle sales falling over 35% year-over-year in April and May. Starting in April 2026, mainstream used ICE vehicle prices declined 10%-15% in a 1-2 month period, putting industry-wide pressure on pricing, inventory turnover, capital efficiency and risk management. * Despite short-term price pressure, China's used car market still grew transaction volume 2% year-over-year in the first five months, outperforming the new car market significantly, with consumer acceptance of used vehicles continuing to rise. * Management draws a parallel to the 2007-2009 U.S. auto market downturn, where leading independent used car retailers emerged stronger with sustained long-term growth in sales, profitability and market share. Management expects current industry volatility to reshape the competitive landscape and drive long-term growth for consolidated market leaders. - Strategic Expansion Progress * Opened the Tianjin superstore in March 2026, the company's first location in North China, which can display and sell over 3,000 vehicles. This brings Uxin's total national superstore count to 6. * Announced new strategic partnerships with the municipal governments of Chongqing and Shijiazhuang to jointly develop and operate additional used car superstores, continuing the expansion of Uxin's nationwide network to improve service coverage, regional synergy and brand influence. - Scalability of the Superstore Model * The mature Xi'an superstore, Uxin's first location, now achieves peak monthly retail volume of ~2,700 units with ~25% local market share and is profitable at the store level. * Newer superstores have much shorter ramp-up periods due to refined operating systems: Wuhan hit 1,000 monthly units in 6 months post-opening, and Zhengzhou hit 1,000 monthly units in just 4 months, demonstrating improved replicability of the model across different markets.

Guidance

- For the second quarter of 2026, management expects retail transaction volume to reach 18,000 to 19,000 units, representing 73% to 83% year-over-year growth. Total revenue is projected to be between RMB 1.05 billion and RMB 1.1 billion. - Management reaffirms its full-year 2026 target of over 100% year-over-year growth in annual retail transaction volume. - The 2026 new superstore opening target of 4 to 6 new locations remains unchanged, even with current market volatility. As of the call, Tianjin is already operational, with projects at different stages of development in Chongqing, Shijiazhuang, Yinchuan, Wuxi and Guangzhou. - Management expects gross margin to face meaningful pressure in the second quarter of 2026, but projects gross margin will improve significantly in the third quarter and potentially return to normal levels if new car price stability continues.

Segment performance

Uxin operates two core business segments: retail vehicle sales and wholesale vehicle sales. For the quarter ended March 31, 2026: 1. Retail Vehicle Sales: Retail transaction volume reached 16,530 units, a 119% year-over-year increase. Retail vehicle sales revenue totaled RMB 1.01 billion, up 118% year-over-year and down 10% sequentially. This segment contributed 94% of Uxin's total revenue for the quarter. The average selling price of retail vehicles was RMB 61,000, which remained generally stable compared to prior periods. 2. Wholesale Vehicle Sales: Wholesale transaction volume was 1,681 units, representing a 134% year-over-year increase and a 32% sequential decline. Total wholesale revenue was RMB 27.9 million, contributing 6% of Uxin's total revenue for the quarter. Combined total revenue across both segments reached RMB 1.074 billion, up 113% year-over-year and down 10% sequentially. Overall gross margin for the quarter was 7%, stable year-over-year and up 0.2 percentage points sequentially. Adjusted EBITDA loss for the full company was RMB 34.3 million.

Risks & headwinds

- Continued significant declines in ICE vehicle new and used prices would keep gross margin under pressure, creating short-term profitability headwinds. - Ongoing industry-wide price volatility and market slowdown increases requirements for inventory management, pricing, capital efficiency and risk management for all used car retailers. - Newly opened superstores require upfront investment in facilities and staffing, leading to higher near-term losses before they ramp up to mature operating and profitability levels. - Sustained challenging market conditions could impact the pace of expansion ramp-up if management takes a more conservative approach to execution to preserve cash flow.

Analyst Q&A

• Q: Why did used car price declines and downward pressure start in Q2 rather than Q1, and what is the expected gross margin outlook for Q2? /

  A: Chinese vehicle sales from January to March matched Uxin's expectations. Sharp 35% year-over-year drops in new ICE vehicle sales and 10%-15% used ICE vehicle price adjustments only began in April, the first month of Q2. Faced with this volatility, Uxin prioritizes fast inventory turnover over short-term gross margin optimization, so gross margin will face clear pressure in Q2. If new car prices remain stable (which early June data suggests they are), Uxin's fast 30-day turnover will clear price-volatile inventory, and gross margin should improve meaningfully in Q3 and return to normal levels.

• Q: How does the operating ramp-up of newly opened superstores compare to the first Xi'an superstore when it launched, and what does this say about the scalability of the model? /

  A: When Xi'an launched in 2022, Uxin was still building and validating its full end-to-end operating model, but the mature Xi'an store is now profitable with 2,700 peak monthly units and 25% local market share. Newer stores like Wuhan and Zhengzhou have much shorter ramp-up times, hitting 1,000 monthly units in 6 and 4 months respectively, even in competitive markets. The improvement comes from more mature procurement and inventory systems, standardized operating processes, stronger brand recognition, and better site selection, proving the model is now highly replicable. New stores still require upfront investment, but will reach mature performance as sales scale.

• Q: What are Uxin's 2026 store opening plans, and will the company slow expansion if market conditions do not improve? /

  A: Uxin still plans to open 4 to 6 new superstores in 2026, with projects at various stages in multiple cities across China. While current market volatility creates short-term pressure, management views it as an opportunity to accelerate industry consolidation and gain market share for strong players, so the long-term nationwide expansion strategy will not change due to short-term volatility. Execution will remain flexible and disciplined: if conditions stay challenging, Uxin may slow the pace of openings and inventory ramp-up to prioritize cash efficiency, but the full-year expansion and growth targets remain unchanged.

• Q: Is there a similar divergence in performance between used ICE vehicles and used NEVs, as seen in the new car market this year? /

  A: While new NEV sales have outperformed new ICE sales significantly, with NEV penetration exceeding 60% in retail, there has not been a meaningful shift in the sales mix of the used car market. This is because used car supply depends on overall vehicle ownership, and NEVs still make up less than 15% of total vehicle ownership in China. The current 10-percentage point residual value reset for 3-year-old used ICE vehicles is a one-time adjustment that brings Chinese residual values in line with mature global markets, which will ultimately support healthy long-term used car market growth by reinforcing the value for money proposition of used vehicles.