Ladies and gentlemen, thank you for standing by for Autohome's First Quarter 2025 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference call is being recorded. If you have any objections, you may disconnect at this time. A live and archived webcast of this earnings conference call will also be available on Autohome's IR website. It is now my pleasure to introduce your host, Sterling Song, Autohome's IR Director. Mr. Song, please go ahead.

Thank you, operator. Hello, everyone, and welcome to Autohome's First Quarter 2025 Earnings Conference Call. Earlier today, Autohome distributed its earnings press release, which can be found on the company's IR website at ir.autohome.com.cn. Joining me on today's call are Chief Executive Officer, Mr. Song Yang, and Chief Financial Officer, Ms. Craig Yan Zeng. Management will go through their prepared remarks first, which will be followed by a Q&A session where they will be available to answer all your questions. Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. Autohome doesn't undertake any obligation to update any forward-looking statements, except as required under applicable laws. Please also note that Autohome's earnings press release and this conference call include discussions of certain non-GAAP financial measures. The reconciliation of the non-GAAP measures to the most directly comparable GAAP measures can be found in our earnings release. I will now turn the call over to Autohome's CEO, Mr. Yang, for opening remarks. Please go ahead, Mr. Yang.

Thank you, Sterling. Hello, everyone. This is Song Yang. Thank you for joining our earnings conference call today. In the first quarter, we concentrated on strengthening the fundamentals of our business and on enhancing our innovative initiatives. Leveraging on our solid foundation, we continued to drive breakthroughs in innovation, steadily advancing our online-to-offline integration strategy and achieving solid progress. In terms of building our foundation, we focused on expanding our product offerings and enhancing the user experience to deliver greater value and establish a solid base. On our content, we enriched our content portfolio by adding travel locks, camping, and other broader automotive-related content. We also introduced a robot section on our ATP homepage, expanding into the smart technology space to meet our users' diverse needs. On our user experience, we systematically promoted new card content through upgraded live streaming features to enhance the appeal of our professional content. We also launched the starting price tool, which consolidates government subsidies and OEM discounts, helping users make car buying decisions more easily and efficiently. Building on our solid fundamentals, we are actively driving technological innovation, continuously deepening the application of AI, and expanding our new retail business to establish engines for future growth. Currently, our AI technology has already been successfully implemented across our advertising, lease membership products in APP smart assistant, used car smart tools, and new media. Notably, at the end of March, again, we upgraded the Autohome APP with an AI smart assistant powered by DeepSeek and our own proprietary big data resources. This feature significantly enhances the user Q&A experience in the automotive vertical and efficiently improves efficiency in user decision-making. Meanwhile, our new retail business is steadily expanding.To date, we have nearly 200 Autohome space and satellite franchise stores in operation, providing local partners with cutting-edge technological capabilities, premium offline resources, and robust ecosystem support to drive mutual growth. In addition, through our participation in the auto show in Thailand, we are also actively exploring ways to support Chinese automakers in expanding overseas markets. Autohome began as automotive media and has evolved far beyond. In the two decades since our establishment, we've accumulated a massive amount of industry data, abundant industry expertise, a large and strong user base, and extensive brand recognition.Today, as the Chinese auto market undergoes profound structural changes, we've built a data-driven intelligent service platform across new retail, smart technologies, and a broader automotive ecosystem, driving a comprehensive upgrade to the automotive consumer experience. Looking ahead, we remain committed on user needs, continue to strengthen our foundations, actively explore new emerging sectors, and build a fully integrated online-to-offline ecosystem for services, providing consumers and clients a more comprehensive and convenient one-stop service. With that, I will now turn the call over to our Chief Financial Officer, Ms. Craig Yan Zeng, for a closer look at our first quarter 2025 operating and financial results.

Thank you, Mr. Yang. Hello, everyone. I'm Craig Zeng, the CFO of Autohome. In the first quarter, we focused on key new car launches and upgraded the live streaming of our professional content. By live streaming new car debuts, initial showcasing, and initial test drives, we improved the timeliness and reach of professional content, creating an immersive consumer experience. For example, our new car express news program organized and customized live streaming of new car launches, attracting more than 200,000 interactions collectively. The related topic also sparked user-generated content and secondary distribution across multiple third-party platforms, extending the reach of our professional content beyond the traditional audience. Today, we have achieved full live streaming coverage for all S-class new car launches. In addition to our professional partners, we also introduced a variety of programs such as Motor Enthusiast and Grand Tour, creating interactive platforms for car owners to share and connect over their driving experiences, and marking an expansion of our content coverage from specialized automotive topics to broader car lifestyle and culture. This also integrates the future trends of smart technology into our content, forming a diversified and multidimensional content ecosystem. According to QuestMobile, our average mobile DAUs reached 76.92 million in March 2025, up 10.8% from the same period last year, reflecting our sustained growth in user scale and expanding platform influence. Turning to NEVs. Our new retail business introduced the Bui service model that integrates online and offline services. With a focus on the user, this model combines expert recommendations, real-time vehicle demonstrations via live streaming, instant communication through enterprise WeChat, transparent online pricing, and multi-vehicle test drives by real car owners. By connecting every stage of the buying process, we offer users a one-stop car purchase experience across multiple brands, making the progress easier and more…

[Operator Instructions] Our first question comes from the line of Thomas Chong from Jefferies.

My first question is about the auto industry. We see the sector is performing well in Q1. What's the implication to the sector and Autohome? What's management's expectation about the 2025 industry outlook? And my second question is about Retail. Can management comment about the progress so far and our plan going forward?

Thank you for your question. I am Song Yang. Let me answer your question. First, let me analyze the characteristics of the market for Q1. First, the overall new car sales grew, but with new energy vehicles, that is NEV, standing out, although their growth rate has slowed. According to official data, Q1's auto sales increased by 6% year-on-year. Among this, internal combustion engine vehicle sales, that is, ICE vehicle sales, continued to decline, down 12% year-on-year, while NEV sales grew by 36% year-on-year. However, this is slower than the growth rate of over 40% seen in the second half of last year. At the same time, we've observed a clear trend of growth in volume but decline in profits. In Q1, the average profit margin of China's auto industry was only 3.9%, significantly lower than the 5.6% average for downstream industrial enterprises, reflecting continued margin pressure in the auto sector. Second, 2 new policies have helped revise the market and stimulate car buying demand. In January, the National Development and Reform Commission and the Ministry of Finance released a notice on promoting consumption and the trade-in of consumer goods. Regarding the auto sector, it's proposed expanding support for scrapping and replacing old vehicles and improving subsidy standards for car trade-ins. According to the estimates from the China Automobile Dealers Association, after the scrappage standards were broadened, over 10 million additional National IV standard passenger vehicles became eligible, and the number of eligible NEVs increased by more than 1 million. Third, the price war has cooled while competition in intelligent vehicle technology has intensified. Automakers are now racing into the smart tech track, not only meeting consumer demand for intelligent experiences but also helping manufacturers overcome the challenges of technological homogenization amid fierce market competition. Looking ahead to the 2025…

Our next question comes from the line of Brian Gong from Citi.

I have two questions. First one is what's the latest status of Haier's acquisition, and once the deal can be completed. In the future, what new development strategies for Autohome to apply? And the second question is, when will OEMs' pricing to stabilize in management's view? And does the impact from [indiscernible] dealers to our lead generation business just emerge?

Thank you, Brian, for your question. On February 20, Haier Group announced that its subsidiary, Cartech had acquired a 41.91% stake in Autohome. As of now, the equity transfer has not yet been completed, and the transaction is still under regulatory approval. We will share any updates with our shareholders first up to date. So as the transaction is yet to be completed, we could only disclose public information and opinions. So all in all, we believe that we will be committed to the online to offline new retail model and also the development trend in new energy vehicles and intelligent development strategy. So according to the press release by theHaierGroup, we will be committed to continue strengthening Autohome's O2O intelligent exchange capability and the Ping An Group will remain our important shareholder. We will also continue to strengthen our partnership with Ping An Propertyand Casualty Insurance. So as for your second question about when the auto price war is expected to stabilize and also the impacts of dealership closures, whether they are beginning to emerge, we believe that the price war is expected to continue in the short run. And just now, we've heard from CEO Yang that now we are seeing a trend of growth in volume while decline in profits. And also, we can see that from the financial reports of automakers that are listed, their profits has been affected. However, we believe that the room for further price decline is limited. And we believe that after the current inventory clearance and also the end of the subsidy policy transition, the competition will gradually cool and ease. Also, we are seeing a major impact on the dealers caused by the price war, especially in terms of their financial reports last year, we are seeing the decline in…

Our next question comes from the line of Xiaodan Zhang from CICC.

So could management update the strategy for the new retail model as well as its expansion pace for the subsequent quarters? And also, any update on the shareholder return plans?

So as CEO Yang mentioned earlier, our new retail business has been constantly evolving. So it started from version 1.0, which focused on launching space stores in major cities, and then we had version 2.0, where we introduced a satellite plant and we built a plus and marketing network, extending from core cities to surrounding regional markets. And now we are up to the stage of version 3.0, where we focus on enhancing the car buyers' experience and reducing transaction costs for both buyers and sellers through technology and service upgrades. So our new retail strategy has been consistently upgraded in line with market dynamics. Our first store in Shanghai underwent a comprehensive upgrade in Q1 this year. In addition to existing services, it now features an immersive VR camera experience and an on-demand AI smart purchase assistant, making the car buying journey even more intelligent. The AI smart purchase assistant can match vehicle models to a customer's budget, lifestyle demand, and preferences, cutting information search time by 90%, lowering decision-making costs, and improving purchase, overall purchase efficiency, delivering a time-saving car search and cost-saving car purchase. As mentioned by CEO Yang, by the end of this year, Autohome aims to operate 50 space stores and 500 satellite stores, offering car buying services to nearly all prefecture-level cities and counties in China. Over the next 3 years, we plan to open 1,000 satellite stores. With this rapid scale-up, our new retail business is expected to become a greater contributor to Autohome's overall revenue. So as for the shareholder return plan, about the dividends, our general plan is to maintain consistent and stable in terms of our shareholder return. We will continue to honor our previous commitments to the market that is this year's dividend payout will be no less than RMB 1.5 billion. And about our share repurchase, in September 2024, the Board approved a $200 million share repurchase program. And as mentioned by CEO Yang, as of now, we have already executed approximately $130 million repurchasing that is nearly 5 million ADS. So taking both the dividends and share repurchases into account, our annual shareholder return rate has exceeded 10%. Looking ahead, we will continue to reward shareholders through consistent and stable dividend and repurchase policies, aiming to increase long-term and stable returns for our investors.

Our next question comes from the line of Ritchie Sun from HSBC.

I would like to ask how would you think about the impact of trade tensions towards the car market and our business?

So, we believe the trade war will have some impact on China's auto market. There would be price fluctuations because with the U.S. imposing higher tariffs, American auto brands such as Tesla, Lincoln, Chevrolet and Hummer are expected to rise. However, we believe that currently, the domestic auto market is largely driven by the growth of new energy vehicles, and we are also seeing very high market share from brands of Europe and Japan, while the proportion -- while the share of U.S. brands is relatively limited. So, we believe the impact on the overall Chinese auto market will also be limited. So just to clarify, by U.S. brand, I mean imported U.S. auto. So, for Autohome, because our main businesses are focused on the domestic market, so there may be some impact on the macro level, but the direct impact is very limited on Autohome.

There are no further questions at this time. I will turn the conference back to management for closing comments.

Thank you, everyone. Thank you very much for joining us today. We appreciate your support, and we look forward to updating you on our next quarter's conference call in a few months' time. And in the meantime, please contact us if you have any further questions or comments. Thank you very much. Thank you.