Been connecting with the investors. Dear investors, good afternoon, everyone. My name is Li Guohui. I come from Zhongsheng Group Holdings Limited 2021 interim result. Because of COVID-19 pandemic, we still adopted the online release form. First of all, please allow me to introduce the management team, our Chairman and the CEO, Mr. Huang Yi, and Mr. Li Guoqiang, our Executive Chairman, and Mr. Xu Xiaolong, who is the IR Director. There are two parts for this press release. First of all, Mr. Huang and I will brief you about the performance result of 2021 first half. After that, we will have a Q&A session with the investors. First of all, we would like to give the floor to Mr. Huang Yi.
Good afternoon, everyone. Welcome, everyone, to take time from your very tight schedule to participate in 2021 interim result.
First of all, I would like to thank you for your long-term support. Here, please allow me to introduce the main performance result as well as the operating indicators for the first half of 2021. In the first half of 2021, with the prevalence of the vaccination as well as the economic recovery, we see that in the whole world, there are a lot of recovery of the economy. In particular, you can see that in China, macroeconomy has been constantly on a rise. As a result, there is a very strong momentum for the auto market. In the first half of this year, Chinese auto market is very promising. According to the auto industry statistics from January to June, production and sales has been 129 million, as well as 12.1 million, year-on-year growth of 24.2% and 25.6%.
For the first six months of this year, we have the terminal sales of 13.32 million. Comparing with 2020, there is a growth of 31.6%. There is also very strong demand potential. Different brands and different products that has been further released. At present, the cumulative sales of the luxury car. There is a growth of one percentage point, which reached 19.4%, and the sales also increased by 39.9%, which is seven percentage points higher than the average growth of the passenger vehicle. BMW, Audi, and Mercedes-Benz ranks top three. In niche market, Mercedes-Benz grew by 27.6%, BMW 44.1%, and Audi 38.6%. For the medium and high range brand, Toyota also performs pretty well.
In the first half of 2021, even though there are sporadic outbreak of the COVID-19, with very forward-looking strategic deployment and highly efficient operation capabilities, we give full play to the economy of scale. You can see that in different segments, all of the business have been maintaining a very strong growth. In the first half of 2021, new car sales was 275 ,000 a growth of 90.6%. Luxury brands, 111.3 thousand, growth of 45%. In terms of the new car sales, we are also performing much better than the industrial average. New car sales gross margin also increased significantly. For after-sales services, in the first half, our total revenue was CNY 1.1 million, a growth by 34.4%.
Car insurance, car finance, as well as used vehicle added value services profit also grew very well. Net profit was CNY 1.57 billion , year-on-year growth of 20.3%. You can see month-on-month growth of 39.3%. Since the second half of 2020, the used car business for some brands has transformed. Our business also grew at the same time. If you look at the comparable statistics, our growth was 39.3%. At the same time, for the used car business segment in our group in the future, the key in the current business stage development will also be taken as a priority. At our used car, trading was 7.35 million and a growth of 64.1%.
If you look at all kinds of different business in the first half of 2021, the net profit attributable to the parent company was CNY 3.7 billion , year-on-year growth of 61.3%. By the end of June 2021, the dealership stores was 386. Comparing with the end of 2020, there is a growth of 13 stores. For the luxury brands, they have 229 stores, medium and high-end , 197. Facing the emerging trend of EVs, while strengthening cooperation with your traditional automakers, we are also cooperating with those emergent premium EV car manufacturers. In the first half of this year, with XPeng and Weltmeister, we signed the strategic cooperation agreement. For Zhongsheng, New Energy, under the EV dealership model, we will cooperate with XPeng and the other leading EV players to have the comprehensive and all dimensions cooperation in different sectors.
We will actually build the new car sales center in the high-tier cities as well as the after-sales service center in the tier two and tier three cities, as well as the cooperation model in the lower-tier cities. In July, we also merged Zung Fu China with $1.3 billion. It is China's leading Mercedes-Benz dealers and ranks number one in South China and ranks number two in the western part of China. After this acquisition, I think that our market share for Mercedes-Benz will increase by six percentage points, which will actually come to 18% as a whole. As a result for Mercedes-Benz and the long-term development.
At the same time, you can see that in terms of the business development and the cost of control, this kind of merger will also help us to form synergy and to lay a solid foundation. In July, we successfully introduced the leading capital group as our long-term strategic. I think that with this Hillhouse introduction and engagement, it shows that for Zhongsheng Group as the main luxury brand dealer, we got a very strong potential in the future. With consumption upgrading trend in China, I think that auto sector as well as the other consumer brands will embrace the high-speed growth potential. At the same time, in the new energy sector, Hillhouse also have a very comprehensive deployment. As a result, in the future, we are also hopefully to form synergy with Hillhouse in terms of new energy.
At the same time, to have a close loop in terms of the new energy as well as EV segment. Our development has got wide attention as well as recognition all over the world. In 2021, for Zhongsheng Group, we have been consecutively ranked on the top, in the top 100 auto dealers. I hope that next year we are going to become number one in this ranking. On July, for Moody's and Fitch Ratings, we actually have been upgraded as a positive prospect. This shows that international rate agencies have been highly recognizing our performance as well as operating capabilities. All those honors shows the recognition from the market to Zhongsheng Group and will also incentivize us to make further efforts and to have better results in the future.
For Zhongsheng Group, we bear in mind that brand as well as geographic coverage will be at the center. We will continue to optimize our brand portfolio and continue to strengthen our capabilities in existing geographies. Among the leading and strong brands, we are going to become an even stronger and solid leader. You can see that I think that this shows a very strong growth. For the luxury brands, it takes about 59.3% of the total. You can see 76.2%. Tier one and tier two cities, and 6.5% are in the Eastern China and the South part of China. Census conducted by the Chinese government. Population growth has been slowing down in China. However, we see that the population has been migrating to the core cities and economically developed cities.
In the meantime, there is the trend of consumption upgrade in higher-tiered cities. You look at those increasing percentage of consumers who are placing orders for upgraded products. In the future, the luxury segment is going to show a stronger and a persistent demands and a momentum for buying cars. Our group will continue to deepen our efforts in those higher-tiered cities and economically advanced regions. We are going to strengthen our network building and to further strengthen our leadership position. Our market share on the core brands we are dealing are continuously on the rise. We deal for brands like Lexus and Toyota. We are one of the largest dealer groups for these two brands in China and the rest of the world. Plus, we cover Mercedes-Benz, BMW, and Audi. We are one of the largest dealer groups for these three luxury brands in China.
This slide, it sums up our dealer network and how it is distributed in this country. As we can see, if you look at our dealerships, they are mainly located in the developed regions in China where the consumers have a strong purchasing power. Plus, there is heightened concentration that we enjoy in those key markets and territories. You look at the store count in Southern China and in Eastern China, reaches 218. The percentage of the stores there is around 56% of the total, among which 148 dealerships cover luxury brands. The total store count in Guangdong Province is 60, six, zero, among which 38 are for luxury brands. This is the province where we have the most stores. In Jiangsu, Zhejiang, and Shanghai, the total store count reaches 78, among which the stores covering luxury brands are 61.
In Sichuan Province, we have 16 stores in total, among which 12 stores cover luxury brands. Going forward, we will continue to ramp up efforts in these territories to improve continuously our leadership position in those regions, as I mentioned. H1 of 2021, if you look at the newly built network, we are going to continue focus on those main brands we cover and continuously increase the market share and optimize the structure of our stores. H1, we newly built 11 dealerships and acquired four dealerships. We closed down two dealerships that are not our core stores. You look at Mercedes and Lexus, BMW, Toyota. These are our key brands we cover. In 2021, three additional stores for Mercedes, four for Lexus, three for BMW, and four for Toyota. In total, 14 new stores have been added into our network.
In terms of our network building, we would adhere to the principles of combining self-building and external acquisition. We cover both brands. In addition to focus on same-store growth, we do external M&A to promote industry-wide consolidation. H1 2021, we acquired four core brand dealerships, including two for Mercedes, two for Toyota. They are located in Shenzhen, Yangzhou, Chongqing, and Ningbo, respectively. These are economically sufficient cities. By this acquisition, our regional network has been shored up further and our market stature, especially in segment of luxury, is bettered. Plus, we are upgrading our network for commercial Mercedes vehicles as well. We are integrating those newly acquired stores into our existing network. This is going to be a basis for our future continuous business growth. We are continuously enhancing our managerial capabilities for Zhongsheng dealerships.
For different brands we cover, we make sure we can manage our brands and operations at a very high level, which is approved of by the market. H1 2021, on the level of the dealership from our Mercedes, Lexus, BMW, Audi, and Toyota, which are the key OEMs that we deal for, we have received a lot of their awards, as a matter of fact. H1 2021, the efforts are underway continuously to improve the 5S managerial process and system and to promote the digital journey for our dealer network. We aim to improve the quality of the service we deliver to build a stronger brand image for our company. We launched those, for example, cars that we provide to our customers when their cars, for example, are being serviced at our store. We can make sure that we serve our customers.
By doing that, we can build a strong word of mouth. Plus, we also actually deliver some of the vehicles to the doorsteps of our customers if they are not available to come to the store once their vehicles are done with the service. By those services we offer, we are able to make our customers loyal. In order to facilitate the process of buying new vehicles or servicing their vehicles throughout the whole country, we have started the Xinya service, meaning we have managed to extend the service timing window. That is through WeMedia, the central cities, the car OEMs, and the third-party partners, those official website and public WeChat account. Through a host of means, we are doing branding for Zhongsheng Group.
As a luxury car service provider and a dealer group within our industry and clientele, we keep our brand equity and influence continuously at a high level, and we are continuously improving our brand value continuously. If you look at the new car business, despite the chip shortage globally and also some outbreak of pandemic cases in China, despite that, in H1 2021, there has been very strong demand and a potential for luxury cars. Consumers want to upgrade their products, so they place orders for luxury cars. This kind of demand has been unleashed. Given the situation of the chip shortage, we have strengthened our management of the gross margin of new car sales, as well as inventory of new cars. We bring to full play the advantages of core dealerships, and we work closely with the OEMs as well.
H1, our new car sales reached 270,000 units plus, registering a YOY growth of 39.7%. For luxury brands, the sales are 160,000 units roughly, registering a YOY growth of 35%. Despite the chip shortage, Mercedes registered a YOY growth of over 43%. For Lexus, it is over 44% YOY growth. As for BMW, the YOY growth exceeded 55%. These growth numbers are leading the whole auto industry persistently. The share of luxury brands is 58.8% of the total new car sales. The sales structure is continuously improving. Because of a stronger and better new car sales, we have managed to accrue more customers for the after-sales service business and to lay a solid basis for the development of a used car business as well. The new car sales revenue for H1 this year has reached CNY 72.5 billion, up by 35.7% YOY.
Among which, the revenue coming from luxury sales is continuously on the rise. For luxury brands, as a share to the total new car sales is 77.4%. In terms of after-sale service and merchandise sales, this represents the core competitiveness of our group that make steady profit contribution. They become a very important driver for our business. For example, the Japanese brands, we have the lean and quality management for after-sale service. Our customer base has exceeded six million, and we have great service, so our service penetration is increasing. Thanks to the improved process for after-sale service. We have the Shengbao, the worry-free kind of a service we offer, and we do strong promotion for those service. As a result, we have managed to make our customers more loyal to us. In the meantime, we have a centralized CRM system which we utilize.
It is very helpful to continuously improve the level of service we deliver to our customers. Yet despite the outbreak of some cases, H1, the revenue of after-sale and merchandise sales reached CNY 11.3 billion or up 34.3% YOY. The share of the after-sale business is around 12.9%. The after-sale service overall gross margin is steady. As we continuously improve the operational efficiency and to enhance the scale of economy, we are confident that going forward, well into the future, we are able to maintain the steady growth of the after-sales gross margin. We are going to continuously optimize the after-sales process and management and launch those innovative products intended to make our customers more sticky with us and to guarantee the quality of the after-sale service to provide strong guarantee of the strong momentum of growth for the after-sale business.
If you look at the value-added service we offer, they have been growing continuously throughout the years. This is one of the key growth drivers for our group. In terms of the financial business, we leverage the scale of economy at advantage for new car sales. We strengthen our partnership for auto loan with those core commercial banks. H1 this year, our financial service penetration increased to 64.8%. Compared to the same period in 2020, it went up 9.5 percentage points. The scale of our financial lending up by 80.7%, reaching 31.8 billion CNY. In the meantime, we are actively looking at the comprehensive rate of insurance. The Xingbao insurance business and the insurance renewal business are growing steadily with a continuously rising scale of our insurance premium business.
As the heightened penetration of the financial service, and we are building larger scale for the financial service we deliver. There is a scale of economy benefit. The financial service revenue and a commission we charge the customers for a used car maintain a very strong momentum. H1, the net income of value-added service went up by 20.3% or CNY 1.57 billion . If you look at the used car commission, if you include that, then the YOY growth is 39.7%. If you adjust for that, sorry, then the percentage of insurance for value added is 13%. The share of financial service in the value-added business is 53%. The share of our used car business reached 27, sorry, 23.7%. The used car, following new car sales and after-sales business, has become the third main pillar of our business.
If because of the lowered VAT tax for used car business, as well as some of the restrictive policies being lifted gradually and the consumers after better service experience and a sales support, we bring to full play our advantages as a leading business. H1 2021, we optimized our used car platform, and we actually improve the measurement of performance system for our teams. Then from inside our group, we managed to optimize the resources nationwide. We managed to boost the business growth for used car. H1, the transactional volume of a used car is at 66,000 units, roughly, up 64.1%. From this perspective, the share of the brands we cover, the used car sales for the brands we cover up by 30%. The share of a used car luxury is 42%, up by 9.5% YOY.
The retail business for brands we deal, their used car is 13%, up by three percentage points. Those are some of the good numbers I emphasize in terms of the quality of the used car sales. This is a very important metric we track, the quality of the used car sales. Then the business revenue we realized from used car reached CNY 3.5 billion with a gross margin of 7.1%. Thanks to the quality we have, that we can achieve the used car sales growth margin of 7.1%. The net commission revenue of CNY 370 million are for used car. We have a continuously improving customer base. As a result of that, we lay a very solid basis for future continuous revenue growth. Then we also look at the trend of a new energy vehicle business.
The new energy vehicle sales has become a strategic direction of goal for Zhongsheng Group because those traditional OEMs like Mercedes and BMW are electrifying their powertrain. Lately, Mercedes has hosted a strategic release event announcing their new strategy from electrification first to all electrical. From 2022 through 2030, Mercedes has a plan to invest over €14 billion on battery EV and announce a whole host of plans comprehensively, including efforts to improve R&D of those vehicles and launch a whole host of battery EV products. BMW, from now through 2025, on average, the annual growth for the sales of the battery EVs is 50% or higher. By 2025, BMW aims to sell compared to the baseline of 2020, those battery EVs, that is 10 x more from the baseline in 2020. We have strengthened our partnership with those EV departments of traditional OEMs.
H1, the battery EV sales volume of the conventional OEMs registered a growth of over 181%. In the meantime, we are cooperating with the EV startups in China, and we have strategic partnerships with them. For example, we signed the agreements with XPeng and Weltmeister. Plus, we are negotiating the possibilities of a partnership with other EV startups as well. We stand a big chance to pull off some more strategic agreements going forward. Across the whole nation, we work with XPeng. Now, the areas of cooperation includes Shenzhen City, Beijing City, which are first-tier cities in terms of new car sales. In Foshan and Dongguan cities, which are tier two cities in China, we work with them on after-sales service center. The ROI for new energy vehicle business will be able to meet our expectations in a sustainable manner.
Right now, as I mentioned, we have over six million customers in our customer base. Every year, actually, our customer base is increasing by hundreds of thousands of new customers.
In particular, in the high-tier cities and the economically developed geographies, we do have a lot of strengths. In particular, in terms of the management of our business and operations, we are very confident that our services can be extended from the traditional auto business to the EV business. That is all for my introduction. I would like to give the floor to our Executive Director and our Co-CFO, Mr. Li Guohui, to brief you about our financial performance in the first half of 2021.
Thank you, Chairman Huang. I would like to briefly talk about the financial performance and financial results in the first half. If you look at our revenue structure, in the first half, our total revenue is CNY 81.3 billion. Our top line grew very strongly and new car grew by 45.7%.
For after-sale services, the total of profit was CNY 1.37 billion. You can see that for the used car, actually, it was about CNY 3.5 billion. We have been very much focused on the after-sale services as well. We have registered so far. For the new car by different brands, Mercedes-Benz ranks number one, takes about 31.7%. Lexus 16.5%, Toyota 15% over the past years. BMW percentage also increased. It already hit 12% and also contributed. You can see that for the top four luxury brands, they totally take about 74% of the total revenue. In terms of the gross margin and the value-added services, our total new car vehicle sales was about CNY 2.74 billion.
Because of the lack of the chips as well as our internal management, you can see that new car gross margin grew very significantly. New car gross margin was 3.8%, it grew by 0.8%. You can see that there are also big differences for different kinds of brands. In the first half of this year, our luxury brand gross margin was 4.7%, year-on-year growth of 0.9%. Mercedes-Benz and BMW continue to grow and Lexus as well as BMW also follow us up. Toyota's gross margin also remains very stable. If you look at entire sales, we have very active restructuring and in terms of the total sales, there is a very strong growth, and it also helps us to expand the gross margin. In the first half of this year, the market remains to be tight.
As a result, we optimized our inventory level. In the first half of this year, our overall inventory was 21.8 days, and luxury brands 21.6 days. Mercedes-Benz, BMW, the average inventory was 13 days. Lexus, Toyota, the average inventory was 12 days. In terms of the after-sales services, we have a total of CNY 5.44 billion and a year-on-year growth of 52%. After-sale services gross margin was about 18%, which is a quite normal gross margin range. Then cost analysis. In the first half of 2021, our SG&A expenses was 5.1. The expenses has been greatly cut and the economy of scale has been greatly reflected. In the first half of 2021, the total SG&A was CNY 3.44 billion. Our sales to this kind of.
I think our future businesses m anagement expense of CNY 1 billion and expense ratio down to 1.29%. From this perspective, in value terms, the first three items of expense, it is the payroll, CNY 3.1 billion, and promotion and advertising of CNY 600 million. As our business scale is improving continuously, the financial expense is actually down. For example, by 0.3% to the level of 0.6%. We have a very good and a stable financial management. As a result, we are fully approved of by those external stakeholders, including those investors in the banks. We have access to better cost of financial, and we bring to full play the advantages of our financial resources. For example, the overall effective income tax rate down, and so Fitch Ratings and Moody's Ratings upgraded our ratings.
Going forward, we're going to continue to improve the current rating of BBB- to a higher level by next year annual report time, for example, to BBB. Then going forward, we have odds of a further reduce the cost of capital. Based on our scale of economy advantages, we are doing a strong financial management and we strengthen the income tax management as the leading company, we leverage our advantages. I think that if you look at our business turnover, we're likely to become the top number one company in China. Then we enjoy those tax preferential policies from the government, and we also have great support from the headquarters. Going forward, there is room for more optimization for effective income tax rate. What about the financial status? Cash CNY 10.8 billion for the first half.
Inventory of CNY 8.6 billion, which is continuously on the decline. In the meantime, we have internal lean management, so the structure of the inventory is optimizing. The total assets increased to CNY 69 billion. The net assets of CNY 30.7 billion. Cash flow, we have a very strong operational cash flow H1, with inflow of CNY 6 billion and investment cash flow outflow is CNY 480 million, and there is outflow of the financing activity cash flow of CNY 2.1 billion because we paid back those loans to the banks. Going forward, operating cash flow is going to be a key KPI in our managerial process. The inventory turn, average inventory turn down by 8.9 days to the level of 20.8 days. We're very confident. We enjoy brand advantage and managerial advantage. We're confident we can keep a low level of inventory turn.
We have one of the metrics for after-sales fulfillment rate. So based on the lean management, the service fulfillment rate has been continuously on the rise. This is a very good thing. So H1, it is in a historic high level, 106%. For CapEx. For our CapEx, it is very steady, but based on the financial status and operational capabilities, it is CNY 15.6 billion for the first half because of increasing expenditure of M&A. If you look at the robustness of the CapEx by looking at EBITDA, which is CNY 6.7 billion H1, which went up big time. In terms of debt, we're trying to strike a balance between growth and financial risk control. We will continuously improve our international credit rating status. We are doing steady and robust financial management. This is very good not only for equity shareholders, but also debt owners.
H1, we utilized the operating cash flow to pay back the loans to the banks. So in the first half, the total loans are CNY 18 billion, which went down compared to the level of 2020, and equity up because the equity is around CNY 30.7 billion, which is on the rise steadily. We actually manage the bank loans and the interest-bearing loans as well. The asset liability ratio going down, which is around 56.09% right now. The interest coverage rate of 11.29%, which went up distinctly from the level of 2020. So comprehensively, the capital structure is now more robust, and we have managed to increase the financial elasticity, so to speak, further. So this is a critical moment of growth for Zhongsheng Group. For the past years, we're continuously leveraging our scale of economy as well as efficiency enhancement, total volume, the total profits, and the margin.
We are growing our operating assets. As we do that, we manage efficient operations. Our business revenue exceeded, let's say, 87 billion for the first half of this year. This is a huge operating asset pool we have. The ROE manages to be kept at above 20% and kept that very steadily. Net profits of CNY 3.7 billion we already achieved H1, which exceeded the full year net profits for 2018 already. As we expand our dealership network, the single store growth margin is kept at a good level with ideal growth. The net profit margin is climbing steadily. These are strong track records, very great records we're creating. We're very confident about the future development path. Going forward, we will continue to strengthen our scale of economy and the leadership advantages.
As a result, we can translate those advantages into a very robust business driver and create a strong shareholder return. That's it for the presentation of the business performance H1. Thank you. Any questions are welcome. Thank you.
Thank you, Mr. Huang, Mr. Li, Mr. Xu Xiaolong, for your great presentations. A very great highlight of your performance. Now, in Zoom, please feel free to ask your questions. You can email your questions to Fei.Fong@gs.com or my colleague Olivia.Xu@gs.com. Mr. Huang and Mr. Li, just for starters, the first question goes to Mr. Huang. Second question goes to Mr. Li. First question, in the EV sector, we have seen your network and your strategic thinking about your business model going forward. Mr. Huang talked about the Mercedes all-electric strategy, the two brands, Mercedes and Lexus.
The question for you is, when do you think they're going to land their products, like battery EV products, big time in China? Will they borrow some new models from those adopted by EV startups or ID.4 of Volkswagen? Or are they going to leverage their existing model for their EV sales in China?
Thank you for your question. In terms of the progress of electrification, as I mentioned, Mercedes, for example, by 2030, their message is crystal clear. It wants to achieve all electrical by 2030. This is a very clear objective for Mercedes. By the way, in terms of electrification, be it Mercedes or Lexus, in addition to electrification of the powertrain, they're making huge investment on intelligence, especially those luxury brands. Apart from electrification, even for their existing ICE engine conventional vehicles, they're ramping up big time their investment on intelligent or intelligence.
I'm sure as they're electrifying their powertrain, along the way, our customers will have a strong taste of the benefits the traditional luxury brands can bring, because they offer good electric vehicles, which are very intelligent. They also have their luxury design elements. All these elements will be combined by those luxury OEMs. You mentioned about models. Currently, as we know that Tesla in China, all those traditional auto brands, there are three business models in China for cars. First, the fully direct sales represented by Tesla and NIO, right? According to my understanding, these two EV companies are operating their business through direct sales. Other brands, including XPeng, in a traditional OEMs, they adopt proprietary operations combined with distributorship, right?
As far as distributors or dealers are concerned, you look at those agency and distributorship by essence, there is not going to be a big difference in terms of our profitability. We have very great support for EV sales in terms of the new car sales growth margin. I would like to introduce to our investors some of the models. There is reports that go like, starting from Australia, Mercedes may decide to change the distribution model. For example, from the traditional distribution to the agency system, which is different from the direct sales, by the way. What is the distinction, if not difference, between distributorship and agency? If we look at the profitability model, the rebate we have from an OEM is sort of a commission we have, right? For now, under this new model, there is the agency fee you may have access to.
This is only a nomenclature change, so to speak. There is no big change in terms of the percentage of income you enjoy. If on the market out there, if the sales are slowing down for different reasons, if the distributors have heightened inventory, it may lead to the instability in the price points, that in order to destock the distributors have to sell and then cash out on those cars, right, as quickly as possible. Under this new agency model, the dealers do not have to build their own inventory, hence, there is no pressure on the back of the distributors, so the prices can be stabilized. Then the commission the dealers have access to is very steady. In terms of after-sales and the customer experience, nothing will change there. This is a very clear message from a Mercedes OEM.
The new model, the agency model, under which we do not have to keep our own inventory, this is not a bad thing for distributors. However, it is a bigger challenge for OEMs, especially for those branded OEMs which have huge size of operations. I told companies like Mercedes in Australia, it is okay, right? Every year, their sales volume is only tens of thousands of units. This new agency model, no big deal, right? When I was in Australia several months ago, I visited the general managers of those dealerships in Australia. I told them about the impact of the new model. They told us no big deal for them, but bigger responsibilities on the back of the OEMs.
In China, think about it is not annual sales volume of tens of thousands, but rather hundreds of thousands of units, and this is a big change and a challenge for OEMs. According to the current plan of Mercedes, by the way, this is only their plan, they will begin to make more exploratory efforts for this kind of a new sales model for their EV business starting from 2023. It is just a switch from a distributorship to the agency model. As I mentioned, we have less demand for cash because we do not have to keep our own inventory as the distributor. Hence, it is good for us. We enjoy a higher ROE because our after-sale business does not entail a lot of cash flow or cash, right? So we can have even stabler or more stable sales revenue.
This agency model is not like a bad thing. By the contrary, it is a good thing to a certain extent for distributors like us. If the production is huge for brands like Mercedes, if they try this new model, I think the pressure on their back is way heavier than that on our back.
All right. Thank you, Mr. Huang, for the great thoughts there. Another question is for Mr. Li. Could you share with us the situation on inventory and the supply lately? In June, the inventory days were 21 days versus 30 last year, right? You shortened the inventory days by nine days. How can we interpret it? Is it because the higher inventory turn rate or is it because of a challenge from a supply chain? You also spoke of effective reduction of your financial costs. What are the drivers behind? Does that constitute a competition barrier for other companies?
H1 inventory level, we are one of the core dealers. With tight supply, the OEM tends to support us more in terms of the new car resources. Our inventory of over 20 days, we strike a balance between an inventory level and the sales we deliver to our customers because we enjoy strong support from the OEMs. Now, you look at July, that momentum has been kept. There is a tight supply of new cars. The inventory for some of the core brands we deal for is 0.4 months. We achieved a very good equilibrium because gross margin for our new car sales is increasing Qo Q. Actually, this is reflection of our comprehensive financial management muscles. From this perspective, we managed to optimize the financial expense structure.
The financial expense has been reduced to a big extent. H1, the bank lending rate onshore and offshore down to 40 or 50 basis points. We managed to upgrade the international rating and outlook. With low level of effective rates in the first half, we can achieve more kind of a savings. The cost of our capital is reduced, and we have access to very favorable cost of capital. In China, as an auto dealer, Zhongsheng Group is unique in terms of the financial power. If we put aside the operational capabilities, we enjoy very strong financial power to help us through this M&A journey. After the acquisition, even before the Hillhouse additional capital investment, we already did a great job for our financial management going forward. We are going to actually strengthen our efforts in terms of industry consolidation.
We have higher level of ROE of 20% above. We have internal calculation. We signed a strategic agreement with XPeng. You look at their new car sales and ROI, or ROE can reach between 35%-40% for XPeng ownership. All right, cost of a capital, additional point because we spoke of inventory.
Actually, we already talked about inventory. Inventory has been remained low, and we have been optimizing our inventory. There are two sides of the efforts. A few years ago, a lot of investors are very concerned about a very high inventory because there are a lot of different problems and challenges. For example, the unstable prices, as well as all kinds of other challenges and issues. People are quite concerned about that. Many years ago, I've been always talking with the investors. I said that for the inventory, I think that for the automakers, they have been keep optimizing the supply. Over the past years, the automakers, in particular, the OEMs cooperating with us, they have been very careful about the inventory level of the dealers, and they have been adopting very scientific way to maintain a very reasonable inventory level for the dealers.
As a result, you can see that all the kinds of the capital required has been greatly reduced because inventory remains low, so the capital request has been remained low. As a result, for experienced dealers like us, internally, we also keep improving our inventory level. In particular, you can see that with the combination of the different stores, we continue to optimizing the inventory level. As a result from the two sides, the OEMs as well as the dealers, their efforts from both sides, as a result, you can see a very ideal inventory level so far.
Thank you so much, management. Thank you for your sharing. Our next question, Mr. Liang Yonghao from China Merchants Bank Securities. The question is that for the new car, used car, auto finance, as well as after-sales services, you have low frequency contact with the clients.
You can see that in terms of the whole life cycle management of the autos, a lot of dealers taking a high priority about that. Do you have any strategy to improve your interactions with the customers so as to have more touching point and have more business opportunities? Could you also brief us about the opportunities as well as cooperation with Toyota?
Okay, in terms of the contact with the client, which frequency of the interaction should be appropriate? I believe that the demand from the client is the number one priority because different customers, they have different habits. When they need you are there. This is most important thing. When the customers, they haven't think of something, you already thought it about him.
When they come to the 4S stores to do the maintenance of the car, we would tell them what will be needed in the next step. I think that this is the most appropriate frequency of contact with the clients. If we just contact the clients too often, that might be a bothering for the clients. I believe that frequency, I think that demand of the clients is the criteria of appropriateness. From our side, I think that we are very strong in retaining our clients. That is for sure. On the other hand, another very important KPI system from our side, we have one index called the referral rate. Mouth to mouth referral from our clients. I think that in Zhongsheng, this is about 25%. That is a very strong, important foundation for us to keep such a strong client base in Zhongsheng.
That is my answer to the question about high frequency or low frequency. In Hainan province, I think that we already made a trial. Because in Hainan, the size of the business is very small, but we also acquired very valuable resources. For example, in Hainan transportation system, the satisfaction rate of the customers is the highest among the customers. This is a very important indicator we refer to. At the same time, for Lexus, Toyota, as well as the other brands, we also analyze the impact of the brand. We have been discussing with them about this topic. Even though this is a very small project, I believe that from Toyota China, their chairman also attaches great importance to that.
From Zhongsheng, and for me myself, I also personally engaged with a lot of business, and I also made a lot of decisions in this project. I believe that for this project in Hainan, we will continue to disseminate it in more geography in China. I think that for this transportation project, the intention is to improve the satisfaction rate of the customers. Thank you.
I would like to add one point about our frequency. For Zhongsheng, our logo is lifetime partner, and we cover the entire life cycle for the customers. So I think that this is not low-frequency at all, because after-sales service, on average, each year, there will be two times of the car maintenance services offered to the client. At the same time, there is also insurance renew, and we also have the customer promotion activities.
On average, each year, we will have four to five contacting points with the customers. I think that for the used car business, the potential is also huge. Our retention rate is at more than 93% for the customers, and we already enhanced the stickiness and the loyalty of our customer base. We also optimized the value as well as the combination of our client base. So these are some of the points.
Another question, Wang Ping from Credit Suisse. Could you give us a breakdown from the used car sales? How many from the self-operation and how many from your partners? What is the commission for the used car?
In the first half of the year, we sold about 67,000 used car. The percentage of the self-sold car is about 40%.
For the used car, you can see that the unit sales price last year was about CNY 70,000, and this year it was CNY 90,000. We have very special accounting system for the used car. We have been making very solid improvements. In terms of the gross margin and net profit margin, I believe that the used car will contribute to more than 10% in our total profit. I think that the percentage will continue to rise in the future. Currently, we just lay a solid foundation for the used car, and in the future, we are going to adopt more business models. For example, CarMax, because we have a very strong strength in terms of the new car, and I think that in the used car business, we will continue to create value and to generate more profit.
Thank you, Mr. Li. Next question, Sherry Wong from Morgan Stanley. XPeng and Weltmeister dealers, their investment return ratio comparing with the traditional luxury 4S stores, whether it's higher or lower? Because of lack of the chips, whether the OEMs, they already downgraded that whole year sales target?
I will take the first question, and my colleague will take the second one. I think that to put it simply, the brands we cover, I believe that their original supply plan will have no change, but it's very difficult to ask them to have a rise of the total supply. I'd also like to take this opportunity to discuss with the customers about this topic. The shortage of chip supply is, of course, not a good news for the customers because the customers, they cannot get their cars. In some specific months, the sales will drop.
I'm not concerned about this drop because chips shortage will finally be resolved. My biggest concern is about demand. To my delightness, I see that demand remains very strong. This is the most important thing. If there is no demand, even though there are multiple chip supply, it's useless. I think that for the industry and the brands we covered, we are very confident about the future potential. People see that there's a lack of the supply for the chips as well as the cars. I think that from our side, luxury brands, including Toyota, the middle range of brands, as well as the B-level cars, Camry, as well as the cars priced at CNY 200,000. The order placement has been very strong and constantly on a rise. You can see that the demand for the middle range vehicles remains very strong.
Order placement is quite far reaching, and the customers are just patiently waiting for the delivery of the vehicles. This is a good news for the market. I believe that there's a very strong message sent to the market, which is the demand remains very solid.
For XPeng, I like to add one point. In Zhongsheng, we have a new energy team. I just give you a conclusion. We invest in the stores for XPeng. The investment return cycle is comparable with our luxury brands. According to our estimation, it's more than three. The ratio is more than three. In terms of the profitability model, previously, we have very few EVs, and now we have a bigger percentage. It's very good opportunity for us to share with you the EVs. For XPeng, actually, commission was about 7%.
Actually, if you deduct the labor cost as well as the other cost, actually, the profit is even higher than the luxury brands. If you look at our current statistics, we drew a very interesting conclusion. The EV after-sales services is comparable to the traditional auto after-sales services. At present, you can see that the revenue is even higher than the traditional vehicles, because you can see that the driving habits for the EVs is different from the traditional combustion engine vehicles. As a result, the accident rate might be higher. As a result, the maintenance frequency will also be higher. At the same time, you can see that for EVs, the quality control, as well as some of the other maintenance requirements, is fewer. However, for the EVs, you can see that after-sales services revenue is totally comparable to the traditional vehicle.
Secondly, gross margin is also comparable. Based on our big data analysis, we are even more confident about our EV business. I think that with the opening of the XPeng stores, we will have more operation data to share with the investors. Now for us, even for the traditional dealership stores, you can see that actually the after-sales is the biggest contributor of the profit, which is about 60%-70%. From these services, EVs and the traditional vehicles are the same. A new energy vehicle is a high-tech business, and the loss rate is even lower, because actually every vehicle has to go back to the appointed places by the automakers so as to do the maintenance.
Pretty clear. Next question, Lou Zhao from BOCI. The question is about value-added services. For example, insurance commission in the first half dropped a little. Is it because of the fee structure reform of last year? What is the potential for the value-added services in the future?
Let me take this question. According to our guidance, our added value services will be about 20% of the total. We're very confident about that. In our business model, with the changes of this industry, you can see that in the first half of this year, since Q3 of last year, there is a comprehensive insurance fee reform in this industry. At that time, we think that they just transformed some of the commission to the after-sales services. So if you look at the commission rate alone, it seems that there's a drop. However, our insurance scale has been increasing. You can see that insurance renewal has been increasing by almost 40% in the first half of this year.
As a result, you can see that all this has been reflected in our after-sales services revenue as well as gross margin. At the same time, you can see that for the new car gross margin, we think that it also relevant to the value-added services. In the value-added services, our Used car business as well as the new energy vehicles also grow significantly. We believe that this too will keep driving the value-added services to grow in the future.
Next question. Investor want management to have a breakdown of the brands Mercedes-Benz, BMW, and Lexus. What is the month-on-month growth? It seems that the gross margin month-on-month is also increasing. What are the reasons behind that?
I just take the question of the new car gross margin.
You can see that in the first half of this year, the luxury brands, Mercedes-Benz, BMW, Lexus, as well as Audi, they're all on a rise. You can see that for BMW, it's about 2%-3%, and Lexus more than 6%. For the new car gross margin, because of the shortage of the credit line, I think that the gross margin will continue to grow. I see that for the after-sales services, so far, because we have the double insurance system, and insurance business continued to expand in the first half of the year. You can see that for the 4S season car, revenue also grow a lot. I think that for the gross margin of the after-sales services, we are very confident to keep it at 48%-49%. From the big data perspective, it's very stable.
In terms of the economy of scale, I believe that in the future, we will continue to leverage the economy of scale.
Next question for the investor. Could you specifically discuss July and August? How about the supply of the chips? What about the demand? From the supply side, what is the sales? Whether the sales is not very good?
In terms of the demand remains very high. From the supply side, yes, on July there are some impact, and the impact was different for different brands. BMW was much smaller and Mercedes-Benz a little bit bigger impact. Generally speaking, for July, on average, I believe that it's 30% lower than the average month.
The automakers, they are very confident that by the end of this year, all of this will recover and go back to the normal range. I think that this is a very good opportunity for us at present, because the inventory level remains very low, and we're also very confident about the stability about the price. For July and August, our profit margin also remains solid and stable. I think that this is also in line with the general trend since June. For the dealers, yes, we are also benefiting from the new car sales. For the new car sales data, please contact our colleague in the future for the specific statistics because the numbers differ a lot for different brands.
Okay. Okay, Mr. Li, is it possible to take several questions because we still have many questions from the investors?
Okay. Please choose one or two questions. I would also like to thank investors for your interest in our company.
Please also talk about the acquisition of Zung Fu. We see that after the acquisition, when can we expect the release of the profit? After this acquisition, is it possible to have other opportunities of merger and acquisition in this industry in the future? What will be your next target?
As we know that this time we actually make this acquisition, it is just quite natural because Jardine Matheson is one of our shareholders. They already invested in Zhongsheng for more than seven years. They also see that the management expertise as well as management efficiency are quite on a match.
When we discuss about the merger and acquisition possibilities, I think that it's quite natural for this to happen, because we trust each other. I think that this is not just a very normal acquisition. I believe that this is actually a strategic cooperation with Jardine Matheson, not just a simple acquisition case. I also believe that, yes, of course, there will be very big impact on us after the merger and acquisition. First of all, in terms of the fee, we just have one layer management structure, so the cost will be much saved. You can see previously Zung Fu, they manage the mainland business from Hong Kong. They're not so localized like Zhongsheng. As a result, you can see that their management cost is much higher. I think that this will be a very big strength after the merger.
As for the other topic, which is about new targets for the merger, I believe that we are not doing the merger for the merger's sake. We do it strategically. For the past two years, basically speaking, we do not have very big acquisition initiatives. I think that on the market, you all know that we actually have other negotiations about the mergers and acquisition, but we did not finally make any acquisition. We do not just do the acquisition for increasing the size of the business. We want even more from that. In particular, strategically speaking, there is something in their negotiation, but we are in no hurry to do that.
As I mentioned, the financial robustness is a very important metric we have to keep in mind. For Zung Fu China acquisition, we actually looked into the possibilities of cost and business synergy. We are very confident. For example, the EPS growth of 15%. Because of the synergy we may expect financial-wise, we are very confident or even more confident about the full-year profits for the year 2022. We have locked in on a very strong profitability for the full year of 2022. Right now, based on those antitrust feedback, and we have got very positive feedback. Q3 and Q4 this year, I am sure we are able to complete the consolidation of the statements.
Yes. Just to add something from my perspective. We do not acquire targets for the sake of it or for the sake of a scale, because our scale is big enough.
There is a lot more we need to do to make more investment on new energy business as well as the showrooms, right? There is a lot more we can do. We do not make acquisition for the sake of a larger scale. We are very clear.
Mr. Li, can we take one last question?
All right.
We have an investor question asking for the management to pass their comments on the trending of the commission rate. For example, 7% commission for XPeng, which is a very big number compared to that for traditional brands. Companies like ID.4 EV car of Volkswagen. Of course, it may be to do with the sales volume, but the commission rate is only two to three percentage points for commission rate for ID.4 of Volkswagen. Different brands are trying to explore for the possible commission structure.
Dear management, if the EV business is mature and steady between the dealers and the OEMs based on the agency model, then what about the profit-sharing percentage?
Let us talk about the commission rate. We have to look at the comprehensive picture. The OEM gives you the commission, but you have to ask, what have you done for the OEM and the brand, right? What have you done in terms of the service you deliver? The EV startups like XPeng, they give us eight percentage points, or eight, or five, what have you. Behind that commission, we have to ask, what have we done for that brand, right? This is very important. You also spoke about ID.4. The lower commission rate, right? In the meantime, the ID.4 does not really have a strong sales performance on the market. The commission rates may be determined by the market force, right?
All right. Yeah, because of the lower commission, that's why the sales performance is not very good. I get it. All right. On that note, thank you again, Mr. Huang, Mr. Li, and Mr. Xu Xiaolong, for your time with investors. On behalf of Goldman Sachs, congratulations to your strong performance. With that, let's end this call. Thank you.