Uxin Ltd. Q1 FY2027 earnings call

• Market Context & Consolidation: The Chinese automotive industry is undergoing accelerated consolidation. New passenger vehicle sales dropped >20% YoY in Q2, with ICE sales down nearly 40%. Used car transactions remained resilient but faced pressure from falling new car prices. Approximately 30,000 brick-and-mortar dealerships exited in H1 2026, with 50,000-60,000 expected for the full year (>20% of industry).
• Operational Efficiency: Yuxin outperformed the industry with retail sales of 19,610 units (up 89% YoY, 19% QoQ). Inventory turnover improved from ~30 days to ~20 days, driven by AI-enabled pricing systems, integrated end-to-end operating systems (inspection, CRM, inventory management), and faster risk response.
• Strategic Expansion: Six new superstores are under construction in Yinchuan, Guangzhou, Wuxi, Chongqing, Shijiazhuang, and Shaoxing. The company continues to expand its warehouse-style superstore network nationwide while maintaining a prudent procurement strategy.
• Financial Discipline: Despite expansion, sales and marketing expenses remained stable. Adjusted EBITDA loss was 120 million RMB, primarily due to temporary gross margin compression. Net Promoter Score (NPS) remained high at 68.

The company reported Total Revenue of 1.151 billion RMB, up 75% year-over-year and 7% sequentially. Retail Vehicle Sales Revenue was 1.08 billion RMB (up 78% YoY, ~7% QoQ), contributing approximately 93.8% of total revenue. Wholesale Revenue was 37.4 million RMB (up 88% YoY, 36% QoQ), contributing approximately 3.2% of total revenue. Gross Margin declined significantly to negative 0.7% in Q2 due to rapid price adjustments in the new ICE car market impacting inventory values, compared to 5.2% in Q2 2025 and 7% in Q1 2026.

• Q3 2026 Volume: Expected retail transaction volume between 20,500 and 21,000 units, representing ~50% year-over-year growth.
• Q3 2026 Revenue: Total revenue guidance between 1.16 billion RMB and 1.19 billion RMB.
• Q3 2026 Margins: Expect overall gross margin to recover to above 6%, as per-unit profitability has already recovered since the start of Q3 following inventory reset.
• Strategy: Maintain cautious business strategy focusing on inventory turnover, per-unit profit, and capital efficiency amid elevated market risks.

• Price Volatility: Rapid declines in new ICE car prices in Q2 caused significant inventory impairment and compressed gross margins to negative 0.7%. Risks remain elevated if price fluctuations persist.
• Industry Consolidation: High exit rate of traditional dealers (50k-60k expected this year) indicates market instability, though it favors scaled operators like Yuxin.
• Market Demand Weakness: Broader auto consumption remains weak, with used car transactions declining 6-11% YoY in July/August 2026.

Q: Management discussed shortening inventory turnover from 30 to 20 days. Is this a defensive reaction to market volatility or a long-term operational target? How was it achieved?

A: This is a core long-term target, not just a defensive measure. It was achieved through AI deployment in pricing/risk alerts and integrating end-to-end systems (inspection, CRM, inventory). Faster turnover reduces price risk exposure and limits impairment losses during fluctuations. Over a full cycle, faster turnover supports higher per-unit profitability and unlocks operating leverage by allowing same capital/workforce to support larger volume.

Q: What are the current conditions in the used car market and competitive landscape for the remainder of 2026?

A: Market volatility is stabilizing after the sharp Q2 decline, though consumption remains weak. Industry consolidation is accelerating, with 50k-60k dealers exiting this year. This reshapes the market toward scale and digitalization, creating an opportunity for Yuxin to gain share. Yuxin maintains prudent procurement; if prices stabilize, they will accelerate buying; if volatility persists, they will drive growth via faster turnover and capital efficiency.

Q: Can you provide an update on the CEO's share purchase plan?

A: An entity controlled by the CEO established a Rule 10b5-1 trading plan on June 30 to purchase up to $5 million of ADSs at no more than $2.85 per ADS. Following the required 90-day cooling-off period, purchases will begin on September 28. The actual pace depends on trading volume rules, and the CEO aims to align personal interests with long-term shareholder value.