Uxin Limited (UXIN) Q2 2026 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to Uxin's Earnings Conference Call for the quarter ended June 30, 2026. [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 turn the call over to your host for today's conference call, Ms. Ali Wang. Please go ahead, Ali.

Thank you, operator. Hello, everyone. Welcome to Uxin's earnings conference call for the second quarter ended June 30, 2026. On the call with me today, we have D.K., our Founder and CEO; and 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 your 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. Now with that, I'll turn the call over to our CEO, D.K. Please go ahead, sir.

[Interpreted] Hello, everyone, and thank you for joining Uxin's earnings conference call today. It is a pleasure to reconnect with our investors through this call, and we appreciate your continued interest and support. I would like to begin with an overview of our operating performance this quarter and then discuss some of the adjustments we have made in response to changing market conditions. 2026 has become a year of accelerated consolidation for China's automotive industry. The new car market has remained under pressure since the beginning of the year. In the second quarter, new passenger vehicle sales in China declined by more than 20% year-over-year, with internal combustion engine or ICE car sales down nearly 40%, and by comparison, the mainstream and the used car market has shown greater resilience with nationwide used car transactions declining by only about 1.4% year-over-year in the second quarter. However, the rapid decline in new car prices, particularly for ICE cars, continue to flow through to the used car market, accelerating industry consolidation. Nearly 30,000 brick-and-mortar use car dealerships exited the market during the first half of the year, and we expect 50,000 to 60,000 dealerships to exit for the full year, representing more than 20% of the industry. Uxin significantly outperformed the broader market in the second quarter. Our retail transaction volume reached 19,610 units, up 89% year-over-year and 19% sequentially. Our Net Promoter Score, or NPS, remained at 68, continuing to rank among the highest in the industry. Price volatility during the second quarter had a temporary impact on our gross margin, and we proactively accelerated inventory adjustments and sell-through. Since the beginning of the third quarter, our per unit profitability has recovered rapidly, and we expect our overall gross margin to recover to above 6%. Since the beginning of this year, we have also continued to advance the digitalization of our business while systematically upgrading our operations. As we accumulate more transaction data, our pricing system has improved significantly in pricing accuracy, coverage and response time, enabling us to respond to market changes more quickly and accurately. These improvements in our pricing capabilities are also reflected in our operating efficiency. Our overall inventory turnover has now shortened from approximately 30 days to approximately 20 days. We believe 2026 could mark the beginning of a new phase in the evolution of China's used car industry. Traditional operating models are rapidly losing ground while the industry is gradually shifting from a fragmented and nonstandardized model towards a more scaled standardized and digitalized retail model. We believe the next 2 to 3 years will be a critical period for the reshaping of China's used car market. Throughout this transition, Uxin will continue to maintain its leading position. Over the past several years, we have validated our superstore model and continue to strengthen our core operating capabilities across vehicle pricing, inspection and reconditioning, inventory turnover and customer service. Today, we are able to maintain a rapid inventory turnover of approximately 20 days while achieving healthy per unit profitability. Sales volumes and operating efficiency at our existing superstores will continue to ramp up while 6 new superstores in Yinchuan, Guangzhou, Wuxi, Chongqing, Shijiazhuang, and Shaoxing are currently under development. At the same time, we're steadily advancing discussions with additional cities on new partnerships as we continue to expand our warehouse-style superstore network nationwide. Finally, I would like to share our outlook for the third quarter. Our inventory turnover and profitability have both returned to healthy levels. However, we believe risks in the automotive market remain elevated. We are, therefore, maintaining a prudent operating approach, placing greater emphasis on inventory turnover per unit profitability and capital efficiency. For the third quarter, we expect retail transaction volume to reach between 20,500 and 21,000 units, representing year-over-year growth of nearly 50%. With that, I will turn the call over to our CFO to walk you through the financial results. John, please.

[Interpreted] Thank you, D.K. Hello, everyone. I will now walk you through our financial performance. In the second quarter, our retail transaction volume reached 19,610 units, up 89% year-over-year and 19% sequentially. Despite continued pressure across the broader automotive market, we maintained inventory turnover of approximately 30 days and delivered business growth well above industry levels. Retail vehicle sales revenue totaled RMB 1.08 billion, up 78% year-over-year and approximately 7% sequentially. The average selling price or ASP of our retail vehicles was RMB 55,000 compared with RMB 59,000 in the same period last year and RMB 61,000 last quarter. While lower market prices resulted in a decline in ASP, the rapid growth in sales volume offset this impact. Our current price range covers the car buying needs of the vast majority of mainstream consumers. As price volatility in the automotive market gradually eases, we do not expect ASP to decline significantly from current levels and expect it to remain relatively stable overall. Turning to our wholesale business. Our wholesale transaction volume was 2,289 units in the second quarter, up 88% year-over-year and 36% sequentially. The total wholesale revenue was RMB 37.4 million. Combining both retail and wholesale, total revenue for the quarter reached RMB 1.51 billion, up 75% year-over-year and 7% sequentially. During the second quarter, auto prices, particularly prices for new ICE cars, underwent a rapid adjustment over a relatively short period which had a direct impact on the gross margin of our existing inventory. We also proactively accelerated the sell-through of cars affected by these price fluctuations. As a result, our gross margin fluctuated significantly during the quarter, reaching negative 0.7% compared with 5.2% in the same period last year and 7% in the previous quarter. With the earlier inventory reset now largely complete and inventory turnover further accelerating we have achieved a more stable and efficient balance between procurement and sales. Since the beginning of the third quarter, our per unit profitability has recovered significantly, and we expect our overall gross margin to recover to above 6% in the third quarter. Turning to expenses. We continue to maintain strict cost discipline despite the continued expansion of our business and superstore network. Our sales and marketing expenses remained broadly stable during the quarter. Adjusted EBITDA loss was RMB 120 million, primarily reflecting the temporary impact of the lower gross margin. Moving to our outlook for the third quarter. We are accelerating inventory turnover while maintaining a prudent inventory procurement strategy. We expect retail transaction volume to be between 20,500 and 21,000 units with total revenue between RMB 1.16 billion and RMB 1.19 billion, and gross margin recovering to above 6%. As our gross margin recovers and operating efficiency improves, we expect our profitability to improve further. Finally, I would like to provide an update on our financing. We recently received $4 million in investment proceeds from NIO Capital and the closing of the remaining $4 million investment is proceeding as planned. NIO Capital has confirmed that it will proceed with the remaining investment at $2.86 per ADS. Meanwhile, NIO Capital is also actively advancing the overseas direct investment or ODI filing process for its investment in the company. That concludes our prepared remarks for today. Thank you, everyone. Operator, we're now ready to begin the Q&A session.

[Operator Instructions] [Interpreted] We received 3 questions from investors. The first question is Uxin has further shortened its inventory turnover from approximately 30 days to around 20 days. Could management discuss how you have been able to achieve such rapid turnover. Is this primarily the result of proactively to the current market environment? Or is this an operating level you expect to maintain over the long term?

[Interpreted] Thank you for the question. There are several factors behind our ability to shorten inventory turnover from approximately 30 days to around 20 days. First, we have been applying AI across our operations. A range of technology capabilities we have developed and upgraded are gradually being deployed across key areas such as pricing, price adjustments and risk controls. The accuracy, coverage and response speed of our pricing capabilities have continued to improve, and we're already seeing a meaningful improvement in inventory turnover efficiency. Second, we have further integrated our end-to-end operating system. We continue to upgrade our core systems across inspection and reconditioning, inventory management and CRM using technology to improve our assessment of car conditions, market demand and customer needs and to increase the efficiency of car matching and transactions. As these different parts of our operations become more closely connected, the overall efficiency from procurement through sales has also improved. The longer a used car remains in inventory, the greater the price risk we assume. Faster turnover significantly reduces our risk exposure and help limit inventory impairment losses when the market fluctuates. Therefore, when viewed across a full operating cycle, faster turnover does not come at the expense of per unit profitability. Instead, it helps us achieve more stable and healthier overall per unit profitability. At the same time, faster turnover allows the same amount of inventory capital and the same workforce to support a larger sales volume. As workforce and capital efficiency continue to improve, we also expect to unlock greater operating leverage. So for us, inventory turnover of around 20 days is not a short-term defensive strategy. It is a core operating target that we intend to maintain over the long term.

[Interpreted] The second question is the automotive market experienced a significant adjustment in the second quarter. Could management share what you have been seeing recently in terms of used car market conditions and the competitive landscape? How do you view the industry outlook for the remainder of 2026?

[Interpreted] Thank you for the question. Based on recent market performance, overall auto consumption remains relatively weak. Nationwide passenger vehicle retail sales declined by more than 20% year-over-year in both July and August, with ICE car retail sales down approximately 40%. This pressure has also carried over into the used car market. Nationwide used car transactions declined by 6% year-over-year in July and by 11% in August. On pricing, we believe the most severe adjustment occurred in the second quarter. New car prices, particularly prices for ICE cars declined rapidly over a relatively short period, which had a significant impact on used car prices. Since the beginning of the third quarter, the market has remained under some pressure, but we have not seen the kind of sharp monthly declines that occurred in the second quarter. Overall market conditions are gradually stabilizing. At the same time, industry consolidation is continuing. Nearly 30,000 brick-and-mortar used car dealerships exited the market in the first half of this year, and we expect 50,000 to 60,000 dealerships to exit the market for the full year, representing more than 20% of the industry. We believe this market adjustment will accelerate the reshaping of the industry with market share becoming increasingly concentrated among companies with scale, standardized operations and digital capabilities. For us, this also creates an opportunity to gain market share. We have maintained a relatively prudent approach to inventory procurement in the third quarter while shortening inventory turnover to around 20 days. At the same time, we expect our retail transaction volume to continue growing by nearly 50% year-over-year, significantly outperforming the broader industry. The fourth quarter is typically a peak season for the used car market. Our current view is that market volatility is unlikely to be as severe as it was in the second quarter. Although risks remain. We will, therefore, adjust our inventory levels prudently based on market conditions. As prices stabilize further, we will accelerate inventory procurement. As volatility persists, we will continue to maintain rapid inventory turnover and drive sales growth through faster inventory -- through fast turnover and greater capital efficiency to reduce the impact of price fluctuation. That's my answer.

[Interpreted] The third question is the company previously announced a plan by the CEO to purchase additional company shares. Could management provide an update on the execution of this plan?

[Interpreted] Thank you for the question. Over the past few years, we have validated our warehouse-style superstore model and began expanding our footprint nationwide. Our sales volume, operating efficiency and core capabilities have all continued to improve. I believe the company is moving in the right direction. Given the recent performance of our share price, I decided to use my own funds to purchase additional Uxin's shares in the open market as a tangible demonstration of my confidence in the company's long-term value. As previously announced, an entity controlled by me established a Rule 10b5-1 trading plan on June 30 and to purchase up to $5 million of the company's ADS at a price of no more than $2.85 per ADS. Following the required 90-day cooling-off period, purchases under the plan will be eligible to begin on September 28. The timing and pace of purchases will be determined in accordance with the preestablished trading plan and will strictly comply with Rule 10b5-1 and other applicable securities trading rules. The actual amount that can be purchased on any given date will also be subject to factors such as the recent trading volume of the company's ADS. As a result, the purchases will be carried out gradually over time. I remain highly confident in the company's long-term development. Through these purchases, I also hope to further align my personal interest with the long-term interest of the company and of our shareholders. That's my answer. Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Ali Wang for any closing remarks.

Thank you again for joining today's call and for your continued support in Uxin. We look forward to speaking to you again soon.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. [Portions of this transcript that are marked [interpreted] were spoken by an interpreter present on the live call.]