Uxin Limited
Q2 2021 Earnings Call Transcript

Published: 17 Dec 2020

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to Uxin’s Earnings Conference Call for the Quarter Ended September 30, 2020. And at this time, all participants are in listen-only mode. And after management’s prepared remarks, there will be a Q&A session. Today’s conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the call over to Nancy Song, Investor Relations Director of Uxin. Please go ahead.

[Nancy Song:]

Thank you, operator. Hello, everyone. Welcome to Uxin’s earnings conference call for the quarter ended September 30, 2020. On the call today are D.K., our Founder and CEO; and Zhen Zeng, our CFO. D.K. will review business operations and the company highlights, followed by Zhen, who will discuss financials and guidance. They both will be available to answer your questions during the Q&A session that follows.

[Kun Dai:]

Thank you, Nancy. Hello, everyone. Thank you for joining our earnings conference call today. The September quarter marked our transition to an inventory-owning model. Now we are pleased to report that we have successfully made the transition, which gives us better control over all other fault -- our other flow and the supply chain management with our online projects and the service offering being continuously optimized. We are also very pleased with the progress we made better serving our customer as a national wide online car dealer. Not to only have we raised the bar in delivering enhanced the customer experience, but we also validated our efforts by receiving improved customer satisfaction feedback during the quarter. The completion of our shift to an inventory-owning model, coupled with our unique offering off and online used car buying experience father the strengths our ability to maximize customer value to our dedicating approach, offering quarterly value for money used cars alongside the best-in-class pricing services. In fine-tuning our products and services, we focused on three initiatives during the September quarter in order to deliver a better customer experience. First with used car quality by adopting stricter standards in selecting and inspecting cars and improve the car conditions by introducting standard and wheel rounding reconditioning services. In terms of car quality by leveraging the massive used car better category that from our historical car inspection and through our experience in progressing our car insurance clients over the past three years. We have developed an extensive and deep understanding of car performance from certain mix and models in relation to manufacturing data of knowledge. This data-driving know-how allow us to effectively exclude some new tap off cars with manufacturing defector of relatively high failure rates.

[Zhen Zeng:]

Okay. Thanks D.K. Hello everyone. Thanks for joining us today. As we made the transition to an inventory-owning model, we continue to enhance our operational efficiency across the board. Our focus on handpicking used cars now enables us to allocate our inspection resources to only specific qualified cars and helps to optimize inspection costs. In addition, we are also able to reduce sales and relevant administrative expenses as we streamlined our sales process by migrating every sales step online. With a fundamentally optimized cost and expense structure in place, we believe that we will achieve better operating leverage in the long-term as we achieve a scale, strengthen trust in the Uxin brand and benefit from positive word-of-mouth referrals among customers. Now, let me work you through our financial details for the quarter ending in the September. Please note that the result I will discuss related to the continuing operations only. All numbers are in RMB unless otherwise stated. Also, please note that some numbers I refer to are non-GAAP numbers. You can find a reconciliation of these numbers at the bottom of our earnings release. In the three months ended September 30, 2020, total revenues were RMB76 million compared with the RMB397 million in the same period last year. The decrease was primarily due to the decrease in the 2C transaction volume and GMV, as a result of our business model transformation.

[Nancy Song:]

Thank you, Mr. Zhen. Operator, we would like to open the call for questions now.

[Operator:]

Certainly. Ladies and gentlemen, we will now begin the question-and-answer session. We have our first question coming from the line of Eddy Wang from Morgan Stanley. Please go ahead.

[Unidentified Analyst:]

Hi, D.K., Michael. Thank you for taking my question. Thank you for taking my question. I have two questions. The first question is about the outlook of the used car industry in next year. And the second question is that you mentioned, you have been doing a lot of efforts to improve the overall NPS goal, and the user experience. So going forward, what kind of the efforts you will continue to do to further improve this -- the user experience in terms of NPS. Thank you.

[Kun Dai:]

Okay. Thank you, Eddy. All right. I will take these two questions. So, first of all, industry, just recently China auto Dealer Association has a promoted and implemented several used car policies this since year. In this industry environment, I think it will be a new start for the used car industry next year that is the whole sector should move forward in full compliance with relevant used car policies, further implemented and upgraded. This, will enhance the entire industry to develop from a used car brokerage model toward -- to a more organized the business model. We are participating as more regulated. Currently a used car VAT tax has already been cut from 2% of ourselves to 0.5%. And at the same time, there are also some -- the enhancements in policies relating to vehicle temporary -- preparatory, the registration and the title transfer. And, we can say Beijing introduced a new license planted allocation policies earlier this month. As a pilot city, I believe Beijing will launch and implement specific plans next a response to this policies mentioned above. So, there will be a favorable government policies in place and by the way the implementation carried out by pilot city as a reference for other cities and the regions to learn from. The developments in regulatory, the compliance and implementation of policies will bring positive change to the used car industry, including higher engagement to offer industry players and customers the high acceptance of buying used car. But this change will gradually to taking place. From what we have seen currently, all these three policies will benefit Uxin as we now operate as the online used car dealer. First, as a business entity, our adoption of inventory-owing model we will be fully supported by the policies. In addition, the use car tax cut can also help to lower our tax expenses. We will be operating under the inventory-owing model and for promoting as well called temporary property registration and digitalization of the title transfer process. It will significantly simplify the fulfillment process as customers purchase used car online from us, which will lead a much improved delivery, the efficiency. And at the same time relevant fulfillment to cost can also be optimized correspondingly. So I think follow all of these policies, I think next year, they used car -- the total transaction volume, could it be increased and from our forecast it's around the two digits around 10% to 15%. So that's the answer for the first question. And the second question about the NPS improvements. I think this year we really found out a very efficient way to improve the NPS. I think we are mainly focused on the two aspects, quality and the condition of used car, and the best-in-class purchasing services. This two things is the most sensitive to improve the NPS. So next year, we are keeping to enhance all our ability and the source invested into this to area, and we believe that we can keep to improve the customer satisfaction and also improve the NPS. Yes. And I want to say some more, for example, we were focused on strengthening our ability to reconditioning the car. So next year, we will do -- build our own the reconditioning center to enhance our refurbish ability from using ourselves and to bring the like new condition the used car to our customers. Yes, and that's the second question -- the answers. Thank you, Eddy.

[Unidentified Analyst:]

Thank you. Thank you, D.K. Thank you. Very clear. Thank you very much.

[Kun Dai:]

Thank you.

[Operator:]

Thank you. Thank you. I would now like to turn the call over to Nancy Song, for any closing remarks. Thank you.

[Nancy Song:]

Thank you again for joining our call today and for your continuous support in Uxin. We look forward to speaking to you soon in the future. Thank you.

[Operator:]

Thank you. That concludes the conference for today.

[Kun Dai:]

Thank you.

[Operator:]

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