Uxin Ltd. Q3 FY2024 earnings call

• Retail sales growth: Despite challenges from new car price reductions, retail sales increased. Super stores are operating smoothly with vehicle turnover less than 30 days and a high net promoter score. - Profitability progress: Achieved store-level EBITDA profitability in January 2024 and aims for company-level EBITDA profitability in 2024. - System evolution: Vehicle sales system has evolved, with enhanced pricing capabilities to respond to market shifts. - Value-added services: Leveraging super stores, launched value-added products, increasing penetration of financial, insurance, etc., services. - Cost reduction: Conducted organizational optimization, expecting quarterly cost savings over RMB15 million starting April 2024. - Inventory and expansion: Increased inventory levels, plans to open 1-2 new super stores in 2024, received invitations for new stores from local governments.

In the third quarter of Fiscal Year 2024 (October to December 2023), Uxin's retail business saw growth. Total retail sales reached 3,081 vehicles, a 34.7% quarter-over-quarter increase and a 5.2% year-over-year increase. Retail revenue for the quarter was RMB319.2 million, a 28% increase from the previous quarter. Wholesale transaction volume in Q3 was 1,273 units, a 20% quarter-over-quarter decrease, with wholesale revenue at RMB82.2 million. The gross margin for Q3 was 4.8%, 1.4 percentage points higher than the previous quarter. However, Uxin anticipates the gross margin will recover to above 6.5% in the upcoming quarter. The retail segment contributes significantly, and value-added services like financing, insurance, etc., are expected to boost gross margin further.

• Q3 2024 adjusted EBITDA loss was RMB43.8 million, a 43% narrowing from the same period last year. - Anticipate gross margin to recover to above 6.5% in the upcoming quarter. - Forecast for Q4 2024: Retail transaction volume ~3,100 units, wholesale ~900 units, total revenues between RMB300 million to 320 million, gross margin above 6.5%. - Aim to achieve monthly EBITDA breakeven by September 2024 and company-wide EBITDA profitability in the December 2024 quarter.

• Market volatility: Fluctuations in the new car market can impact the used-car industry, affecting inventory and pricing. - Competition: Intense competition in the auto industry could pressure margins and sales performance.

Q: What is the impact of the new car price wars on Uxin?

A: The new car price wars have had a twofold impact. Uxin's inventory structure is healthy with a balanced age range of vehicles. The sales efficiency is high with an in-house pricing system that quickly adjusts to market trends, keeping vehicle turnover under 30 days, mitigating inventory depression. Also, new car price reductions have a limit, and the market will stabilize, creating opportunities to improve profitability per vehicle.

Q: What is the impact of the Chinese government's vehicle trade-in policies on the used car industry and Uxin?

A: The trade-in policies encourage vehicle upgrades, bringing more well-valued models into the used-car market, boosting supply and transaction volumes. Uxin is partnering with local governments where its super stores operate to develop trade-in programs, broadening vehicle sourcing channels and increasing customer traffic at super stores, enhancing sales conversion opportunities.