By Alan Hao
Uxin, China’s only Nasdaq-listed used-car e-commerce platform, plans to focus efforts on its 2C business after reporting significant revenue growth in its unaudited financial results on March 14.
The used-car trading platform’s total revenue in the 2018 calendar year soared to RMB 3,315.4 million (USD483.1 million), reflecting a 69.9% growth from last year. 2C transaction revenue likewise surged by 180.3% from a year ago to RMB 645.3 million. Meanwhile, Uxin’s 2C business registered a sales volume of 494,826 units, up by 74.3% year-on-year whereas the company’s 2B volume dropped by 8.8% to 319,672 units in 2018.
“We see much greater growth potential in the 2C business, especially in terms of cross-regional transactions. We have identified a number of strategic initiatives to strengthen our capabilities on this front,” Founder, and CEO of Uxin, Dai Kun, cited in the company’s press release. “Looking to 2019, we will continue to increase our focus on the 2C business.”
“Going forward, we will continue to focus on driving the growth of our 2C business while increasing operating efficiency to build a sustainable business and generate long-term value for our shareholders,” said Uxin CFO Zeng Zhen.
Uxin held a conference call on March 14 that shed further light on the company’s key strategies in 2019 as well as the various factors that have contributed to the substantial growth of its 2C businesses. According to CEO Dai Kun, cross-regional transactions is where they see particularly great growth potential, specifically in four areas: First, Uxin will penetrate lower-tier cities where there is a rapidly growing demand for used cars. Second, the company will enhance and standardize its used-car inventory online display by leveraging its advanced inspection system. Third, Uxin will further develop big data capabilities and AI technology. And lastly, the company will improve its overall servicing process in order to ensure a seamless, one-stop purchasing experience for customers.
Uxin’s cross-regional transactions have helped bring about an influx of cars into Chinese lower-tier cities which have traditionally lacked choices for used-car buyers. Uxin seeks to provide customers in these cities with a wider selection as well as the opportunity to purchase the ideal car at a reasonable price. For example, if a customer in a small city such as Beihai in southern China’s Guangxi Province searches for a used red Mercedes-Benz C-Class on Uxin’s platform, he may find hundreds of listings of this particular model. Currently, the company’s cross-regional transaction service can assure customers delivery of their selected car within in five days.
Lower tier-cities are the next frontier of used-car trading in China. Uxin’s research institute conducted a report showing that used car e-commerce platforms became popular in third- and fourth-tier cities in 2018. Compared to the last 17 years, the proportion of used-car sales in these cities has increased significantly. Sales of used cars in third-tier cities showed the largest growth rate, increasing by 10.4%.
A policy initiated by China’s Ministry of Commerce in 2018 struck down pre-existing used-car restrictions, a move that will likely boost used-car trading across the country. As a result, other used-car trading platforms such as Guazi are also entering the field of cross-regional transactions.
Generally speaking, 2018 was a year of investment for Uxin, as its CFO Zeng explained in the conference call. The company, he said, has shifted focus to developing the resources and infrastructure to facilitate the rapid expansion of the company’s 2C business, particularly within cross-regional transactions. With these investments, Uxin has already began to benefit from improved operational efficiency across its business. This was particularly the case in the fourth quarter of 2018, during which Uxin achieved a significant reduction in sales and marketing expenses as a percentage of revenues. As evidenced by the earnings report, Uxin has managed to narrow its net losses by 65% to RMB 315 million, compared to last year.
For the first quarter of 2019, Uxin expects total revenues in the range of RMB 900 million to RMB 950 million.
( Photos from UXIN )