Ladies and gentlemen, thank you for standing by and welcome to the Uxin Limited Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to introduce your host for today's call, Mr. Jack Wang. Please go ahead, Jack.

All right. Thank you, Operator. Hello, everyone. Welcome to Uxin's Earnings Conference Call for the Fourth Quarter and Full Fiscal Year ended March 31st, 2024. On the call with me today, we have D.K., our Founder and CEO; as well as John Lin, our CFO. D.K. will review business operations and company highlights, followed by John, who will discuss financials and guidance. They will both be available to answer questions during the Q&A session that follows. Before we proceed, I would like to remind you that this call may contain forward-looking statements which are inherently subject to risks and uncertainties that may cause actual results to differ from our current expectations. For detailed discussions of the risks and uncertainties, please refer to our filings with the SEC. And now with that, I will turn the call over to our CEO, D.K. Please go ahead, sir.

[Foreign language] Hello, everyone. Thank you for your continued interest and support. It's a pleasure to welcome you to our earnings call today. And to better communicate with our domestic and international investors, I will be discussing our performance over the last fiscal year as well as providing insights into our prospects in both Chinese and English. The current economic landscape in China is entering a new phase of development, bringing numerous challenges to various industries, including the used car sector. Notably, the competitive pricing strategies initiated by car manufacturers early last year have severely disrupted the price structure of the used car market, leading to a substantial decline in profitability across the industry. However, we are pleased to see opportunities amidst these challenges. Over the past year, China's used car market has continued its rapid growth trajectory, with national used car transactions surpassing 18 million units in 2023, reflecting a near 15% year-over-year increase. The government's series of favorable policies to encourage the development of the used car industry, coupled with substantial incentives for trading in old cars for new ones, have spurred consumption growth in the sector. In an increasingly complex and dynamic operating environment, resources are beginning to concentrate towards leading used car dealers, providing long-term sustainable growth and profitability opportunities for companies that excel in scale, branding, and efficiency. Uxin's unique business model characterized by our flagship used car superstores has demonstrated strong competitive advantages across various dimensions, becoming increasingly prominent in the cities where our superstores are located. In the four quarters of fiscal year 2024, our retail sales continued to grow with a total of 10,179 units sold throughout the year. From January to March, 2024, even during the traditional slow season of the spring festival, we achieved retail sales of 3,124 units, a…

Thank you D.K. and hello, everyone. I will provide a closer look at our financial results from the fourth quarter and fiscal year 2024. To facilitate communication with both domestic and international investors on the call, I will make my remarks in both Chinese and English. As we review our performance in the fourth quarter of fiscal year 2024, which ended March 31, 2024, we faced the traditional off-season for used car sales due to the Chinese New Year. Nevertheless, the enhancement of our brand strength, as well as product and service quality, enabled us to deliver remarkable sales results with a total retail transaction volume of 3,124 units, a 38% increase compared to the same period last year. The total retail revenue for the fourth quarter was RMB 269 million, representing a 2% year-over-year increase. Despite certain challenges in the current domestic economic landscape and the ongoing intense price competition among domestic carmakers, we proactively adjusted our inventory structure to adapt to market changes. The average selling price, or ASPs, of our retail vehicles decreased from RMB 117,000 in the same period last year to RMB 86,000 this quarter. However, the significant change in sales volume offset the impact of the price reduction. Our wholesale transaction volume in the fourth quarter decreased by 31% year-over-year to 934 units, leading to a total wholesale revenue of RMB 39.7 million. With our offline superstore model not fully operational, we are focusing more on the retail vehicle business and the proportion of wholesale business will naturally decrease over time. As such, our total revenues in the fourth quarter were RMB 319 million and importantly, our turnover efficiency has reached a new height amidst increasing market fluctuations, with the overall inventory turnover decreasing from 45 days at the beginning of the fiscal year…

[Operator Instructions] And your first question will come from Fei Dai with TF Securities.

We noticed that the company recently entered a strategic cooperation with Zhengzhou worth RMB 170 million. Can you elaborate on this cooperation and how long it will take for the new superstore to achieve profitability? Additionally, what is the company's strategy for selecting new cities for expansion? And are there any other cities currently in progress?

This is D.K. I will address that question. You're correct. We have recently signed a contract with the Zhengzhou city government, and the local government plans to provide substantial support for our used car business in the area. And in addition to the joint investment of RMB 170 million for our Zhengzhou superstore operation, the government also plans to invest an additional RMB 500 million in constructing the superstore site. The government will also offer industry subsidies, facilities and other -- various other support to ensure that our project in Zhengzhou can commence as soon as possible. The construction of the store will take some time and is expected to be completed next year. Our offline superstore models in Xi'an and Hefei are running smoothly, and we anticipate that the new superstore will take approximately 12 months or less from commencement to achieving EBITDA profitability. So when choosing new areas for expansion, we prioritize cities with large vehicle ownership, high activities in used car transactions, and superior traffic conditions. For example, Zhengzhou is a transportation hub in Central China and one of the most active cities for used car transactions, with over 13 million residents and a vehicle ownership of 5 million, making it an ideal location for a new superstore. We also consider specific city conditions such as available land plots, and whether government support aligns with our needs for expanding new superstores. Given the backdrop of policies encouraging the development of the auto after-market, local governments are very supportive of our offline superstore model. We are currently in negotiations with multiple cities and expect to finalize cooperation with 1 to 2 cities within this year, so please do stay tuned for our further announcement on this front. And that's our answer to the first question.

And we actually do have another question from Water Tower Research, who couldn't be here in person. So I would just ask that question on behalf of them. The question is, how is our used car -- used new energy vehicle business developing and what percentage of Uxin's inventory do they make up? Compared to fuel-powered used cars, are there major differences in profitability and cost when selling used new energy vehicles?

The growth rate of NEV sales in China this year has indeed been very impressive with their market share in new car sales now approaching 50%. We're keeping a close eye on this trend, and since the NEV boom only started in the last 2 to 3 years, their total ownership is only about 25 million, which is less than 10% of the national vehicle ownership of 340 million. Most NEVs haven't yet entered the used car sales space yet, so currently the proportion of our NEV sales is between 10% to 15%, which is still above market level. From our experience, the profitability of used NEVs is slightly higher than that of fuel-powered used cars. Firstly, used NEVs offer excellent value for money and due to their shorter update cycle and some characteristics similar to electronic consumer goods, their sales turnover rate is higher than that of fueled cars, leading to higher price markups. Additionally, since NEVs generally have a shorter average age, their condition and battery status are relatively better and they do not involve issues with engines and transmissions, resulting in lower average reconditioning costs compared to fuel-powered cars. From our perspective as a professional used car retailer, there is no significant difference in the fundamental operations between used NEVs and fuel-powered cars. Our operational system fully supports the acquisition, reconditioning, sales and after-sales services for used NEVs. We've built a database of NEVs as well, including brands like Tesla, BYD, NIO, XPEV and Li Auto, et cetera, and have invested in price monitoring, value retention systems and battery assessment equipment. We're also working with the National Big Data Alliance for New-Energy Vehicles, core suppliers in the supply chain, and vehicle manufacturers to promote a series of technical and informational collaborations to prepare for the used NEV business. We believe that with the rapid development of NEVs in China, the proportion of NEVs in our retail business will continue to increase, and we're fully prepared to capture that opportunity. And that's our answer to the second question.

Operator, let’s see if we have any other questions.

[Operator Instructions] And this concludes our question and answer session for today. I would now like to hand the call over back to management for any closing remarks. Please go ahead.

All right. Thank you again for joining today’s call and for your continued support in Uxin. We look forward to speaking with you again in the future. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.