Good morning and good evening, everyone. Welcome to Cango Inc.'s Q1 2022 earnings conference call. Joining us today are Jiayuan Lin, Chief Executive Officer, and Yongyi Zhang, Chief Financial Officer of the company. Following management's prepared remarks, we will conduct the Q&A session. Before we begin, I refer you to the Safe Harbor statement in the company's earnings release, which also applies to the conference call today as management will make forward-looking statements. With that said, I am now turning the call over to Jiayuan Lin, CEO of Cango. Please go ahead, sir.
Hi, everyone. Welcome to Cango's Q1 2022 earnings call. The global situation brought about by the pandemic and very large economic and geopolitical uncertainties can be characterized as complex and evolving during Q1. Domestically in China, we are also facing a challenging macro environment.
Although many OEMs have accelerated the resumption of operation and manufacturing since April, the overall decline in auto production is still difficult to reverse. A greater challenge comes from the demand side. Consumer confidence has been severely impacted, and their enthusiasm for purchasing cars has dropped sharply. Since the beginning of the year, the overall market environment has been tougher than we had anticipated.
At the same time, we have established a new strategic goal, which is to focus on building a tech-enabled car trading platform with car trading transactions business at its core and monetizing through multiple channels, including financing and insurance.
As of March 31, 2022, the M1+ and M3+ overdue ratios for all financing transactions that remain outstanding and were facilitated by the company were 1.7676% and 0.8% respectively. The slight sequential increase of M1+ was consistent with the overall trend of economy and the market.
下面我将分平台业务和传统非平台业务与各位分享，一季度主要的业务进展。
Next, I would like to share some information on the progress of our platform business and traditional non-platform business.
平台业务方面，经过过去几个季度的铺垫，车交易服务平台已雏形初现，平台效能和运营能力在本季度继续提升。作为平台线上主流量入口的灿谷好车B端车商服务小程序，高效整合自营车源、第三方车源、交易撮合、仓储物流等服务，上线不到一年时间，已在车商中积累了良好口碑，累计浏览量突破276万。截止一季度末，灿谷好车合作车商数达到7,435家，覆盖31省、360...
三百零六个城市。小程序上自营车辆三十三款，覆盖九个品牌，十三个车系。
Our initiatives and efforts in the past few quarters are bearing fruits. We are very pleased that our automotive transaction services platform has been taking shape in Q1. The platform efficiency and operating capacity continue to improve.
There are 33 proprietary vehicle models on Cango Haoche, including nine car brands and 13 car series.
一季度我们主要动作就是继续扩大车商覆盖面，提升车商活跃度。本季度平台上线车商数环比增长超过50%，其中主要增长来自于4S经销商的上线，占季度新上线经销商三分之二。同时得益于线上运营和线下出活相结合，第一季度平台用户日活跃率呈逐月上升趋势，季度车商活跃度环比提高了九个百分点。
In Q1, we continued to expand the dealer coverage and enhance their activity. This quarter, the new registered dealers on our platform grew by more than 50% quarter-over-quarter, mainly driven by the increase of 4S dealers, which accounted for more than two-thirds of the newly registered dealers within the quarter.
伴随着车商覆盖面的扩大，平台的线下仓储物流网络也在持续拓展。截至一季度末，我们累计建全仓103个，覆盖全国33个省、98个城市。同时，我们的物流运营能力也得到提升。一季度，灿谷好车平台上物流订单需求和成交台数分别环比增长120%和227%。
With the expansion of our dealer coverage, we have also expanded our offline warehousing and logistics network further. As of the end of Q1, a total of 103 warehouses had been established, covering 33 provinces and 98 cities across the country.
为更精准了解车商需求，有针对性地提供服务，一季度我们对网络中的车商进行了画像，依据其地域、规模、主营品牌、历史交易偏好等，对车商进行了分类分级。据此指导我们的品牌合作、车源入库、仓储物流分配等活动，为经销商提供更定制化服务。接下来，基于大数据分析，提升平台运营效率将是我们持续打造的平台基础能力。
In order to better understand the needs of the dealers and customize our services, in Q1, we conducted in-depth profile analysis of our dealers in the network. We classified and graded them based on their locations, sizes, historical transaction preferences, etc.
除去以上分享的平台运营情况进展外，一季度我们也持续投入资源打造平台自营产品，主要含自营车源及与之配套的金融保险等供应链服务，及非自营产品，主要包含第三方车源发布、寻车、物流等撮合服务。在自营产品方面，一季度共销售车辆6,827台，其中新能源车辆5,193台。助力中小新能源品牌进入下沉市场，也是我们车交易业务未来的发展重点之一。在非自营产品方面，一季度平台活跃度提升显著，第三方车源发布和寻车调速环比分别增长了624%和22%。
In addition to the progress of the platform operations I've just mentioned, in Q1, we also continue to invest in building the platform's proprietary products and services, including proprietary vehicle sources, supporting financial and insurance supply chain services, as well as third-party products and services such as third-party vehicle source listing, car search, logistics, and other matching services.
In terms of third-party products and services, the platform's activity increased significantly in this quarter, with the number of third-party vehicle listings and car search entries increasing by 624% and 22% respectively on a quarter-over-quarter basis.
与此同时，在灿谷向平台转型的过程中，传统的车金融和保险业务的定位也发生了变化，从原有的单一的业务形态，向以交易为抓手、金融保险变现的复合形态转型，打造平台供应链服务能力。
At the same time, during the transition process to an auto transaction services platform, the positioning of our traditional automotive financing facilitation business and insurance facilitation business has also changed. We no longer develop these businesses as independent segments. Instead, we integrate them into a full package of supply chain capabilities pivoting around auto transactions.
具体来说，结合战略转型和当下的市场情况，我们对纯金融业务进行了主动收紧，这也反映到我们该板块的业务数据当中。2022年第一季度，车金融业务板块收入1.1亿元，环比继续收缩。与此同时，配合转型，我们在业务端对传统车金融业务进行了流程改造，使之更高效地与交易耦合。在车商端，推动车商通过平台自主地进行发布库存车、寻车报价等线上撮合操作，提升车商活跃度。在平台端，通过平台更好地匹配到资质正规的优质车商，主动去进行金融、保险等业务的复合，增加车商粘性。截至一季度末，灿谷车金融合作经销商总数为44,771家，其中4S经销商8,687家，我们也正逐步推动这部分车商向我们的灿谷好车平台迁徙。
Specifically, in combination with the strategic transformation and current market conditions, we have reduced our financing facilitation business size. Meanwhile, we are reengineering both business processes to make them more efficiently coupled with our car trading transactions business. The adjustments are also reflected in our numbers.
同样，我们在车后市场板块也做了业务流程梳理，以交易驱动，促成保险与交易金融更紧密地结合，来为车商提供更好的服务。一季度车险出单量环比持平，但实际上在车险费改之后，这一块的业务空间就被大大压缩了。我们目前看到的主要机会点在新能源车领域，所以过往几个季度都在主力探索与新能源品牌的保险落地合作机会。目前已经完成与理想、高合的系统对接，一季度和威马、哪吒、沙龙、极氪等新能源品牌的洽谈也在进展之中。与此同时，我们在包括贵州和陕西在内的若干省份开启了维修网点的维修加交易试点，并希望借此尝试拓宽后市场服务网络，同时以这些网点为依托，为新能源厂商提供下沉市场交付及售后服务。正如前面提到过的，今后不管是我们的金融还是保险业务，都会以交易为依托，在交易基础上去实现金融保险变现，这将是我们开展业务的指导思想。
Similarly, in the aftermarket services sector, we have also restructured the business process centering on car transactions. We are looking to promote a closer integration of car transaction financing insurance so as to provide more integrated supply chain solutions for dealers.
At the same time, we have launched a pilot program in several provinces, including Guizhou and Shanxi, to help auto maintenance stores and car garages explore opportunities in new car and used car selling. This initiative has expanded our offline presence in the aftermarket services sector and enhanced our capability in providing delivery and after-sales services for NEV brands in the lower-tier markets.
We expect economy to face greater downward pressure in the coming quarters. For the automotive market, losses caused by the pandemic outbreak in key areas are huge, with the year-on-year decline in total vehicle sales as high as 46% to 47.6% in April.
We expect revenues to continue to decline sequentially in Q2, which is expected to be in line with the decline in the overall automotive market. We are also cautious about full year 2022. In the face of a more complex macro environment, we will continue to strengthen business risk management in all areas and continue to develop our platform capabilities.
Thanks, Jiayuan. Hello, everyone, and welcome to our Q1 2022 earnings call. Before I start to review our financials, please note that unless otherwise stated, all numbers are in CNY terms, and all percentage comparisons are on a year-over-year basis.
In addition, revenues from our automotive financing facilitation and aftermarket service facilitation business were CNY 105.9 million and CNY 25.8 million respectively. Now let's move on to our costs and expenses during the quarter.
The change was primarily due to an increase in car trading transactions sharing of total revenues. Car trading transaction normally presents a higher cost revenue ratio, thus pushing up the overall ratios.
General and administrative expenses in Q1 2022 were CNY 50.9 million, compared with CNY 61.4 million in the same period, 2021. As a percentage of total revenue, general and administrative expenses in Q1 2022 was 6.5%, compared with 5.5% in the same period, 2021.
Net loss on risk assurance liabilities in Q1 2022 was CNY 98.9 million, compared with CNY 21.7 million in the same period, 2021. Net loss on risk assurance liabilities was mainly due to a sequential increase in the default rate since 2021.
On a per-share basis, diluted net loss per ADS in Q1 2022 was $0.98. Diluted Non-GAAP adjusted net loss per ADS in the same period was $0.81.
Looking ahead to Q2 2022, the latest COVID surge has drawn China's car market into disarray with factory shutdown and sales plunging, and we, along with our dealers, are facing a much more difficult operating environment.
Thank you. We will now begin the Q&A session. Our first question comes from Shelley Wang with Morgan Stanley. Please go ahead.
第二个问题想问一下一季度的，因为看到车贷业务是有减少，想请教一下，就是这个减少是一个暂时性的现象，还是说是我们一个长期的、可能一个方向性的战略性调整。第三个问题的话也是关于战略的，就是如果我们看更长一点，比如说三年、五年这个长度来看的话，对于我们来讲，哪一块业务会是我们未来发展的重点？这三个问题，谢谢。
Hi, I'm Sherry from Morgan Stanley. I have three questions. The first question is about the impact on demand and supply from the government policy to halve the car sales tax. For example, on a demand side in H2 2022, do you think that there will be more demand for your car trading business and also car financing facilitation business, and what do you expect the extent of the impact to be?
好，谢谢Shelly。我来回答你的三个问题。就第一个问题啊，就目前形势来看，汽油车新车供应能够面临短缺，而且还存在一个问题，就是供需双方的错配问题，就那个有库存的车辆卖不掉，但是要滞销的车辆生产不出来，所以这个问题短期内是得不到缓解。所以针对现状，我们将致力于新能源车、长库龄库存车和二手车车源的拓展，以满足我们车商及客户的需求。
Thank you, Shelley, for your three questions. I will answer them one by one. First, about the supply of petrol cars. Right now, there is still supply shortage of traditional petrol cars, and we don't expect the problem to be mitigated in the shorter-term.
关于第二个和第三个问题，就助贷，传统汽车贷的助贷业务我们将进行收缩，这是战略性的调整，但我们并没有放弃车贷业务，所以我们公司新的那个战略是新车二手车交易搭台，金融保险变现，数据护航，不断修正我们的这方向。
On your second question, yes, the traditional car loan facilitation business is reducing, and it is part of our strategic transformation.
所以我们的车贷业务表现会经过快速下降，然后逐步恢复，然后再持续增长的这样一个状态。
We expect our car loan facilitation business to go through this process where, in the shorter-term, it will decline quite quickly. However, when it reaches a plateau, the growth will stabilize, and then after that, it will continue to grow steadily.
好，我都回答完了。
Thank you. That's all for me.
Our next question will come from Sophia Zhu with Goldman Sachs. Please go ahead.
各位领导好，我是高盛 Sophia。我这儿可能有三个跟业务相关的问题，主要是覆盖在两大方面。第一个就是公司的车交易这一块，恭喜公司今年 Q1 的话，收入是超预期。但是我想问一下，就可能在这个车交易的这个业务模式方面，不知道，我们理解其实很多在做这一块业务的 player，其实有些人已经开始在做 B2B2C 的模式了，所以不知道公司未来的话是不是也计划拓展 B2B2C 这样的业务模式。如果会的话也想问一下，就是说那平台中具体的 To B 的这一块的话，包括哪些类型的，比如说车商或机构。 第二个问题和第三个问题呢，主要还是想问一下，就是公司助贷这块业务，因为过往的话，可能助贷在业务规模还是比较大的，但是呢，在上一次的那个财报披露的时候，公司应该是提到，就是接下来的话会缩减整个助贷的这个规模，以规避这样的一个风险。那其实这样的话想问一下，就是说在整个 Q1 的话，不知道公司新增的这个助贷贷款的表现方面，逾期是不是有所改善，以及就是整体来说，公司的这个助贷的逾期率的趋势现在是不是整体有一个下降的。 然后第三个问题，也是跟助贷这块相关的，就是如果公司持续地继续打算缩小助贷业务的规模的话，想问一下，就是从整个公司未来的收入和利润角度来看，这整体的一个影响会是一个怎么样的趋势。谢谢。
Thank you, I'm Sophia from Goldman Sachs. The three questions covering two areas regarding business development. The first question is on car trading transactions. First of all, congratulations on your Q1 revenue performance. Your Q1 actual revenue beat your expectations.
The second question is that since during last earnings call, you mentioned that the company will scale down the auto financing facilitation business to manage risks. What about the overdue ratio performance of the new loans in Q1?
好的，谢谢Sophia，我来回答您的问题。关于第一个问题，我们公司B2B2C的业务模式会是我们进行平台化转型的终局。从我们以前十几年的经营和运作来说，我们连接了银行、保险公司和车商的B2B模式，现在要转型成为一个可持续发展的平台化公司。我们期望把整个汽车价值链上的参与者都整合到平台上来，这会增加汽车的主机厂、车源方，再到购车者，再到仓储物流等服务，服务性公司，都成为我们的客群和平台合作伙伴。
Thank you, Sophia, for your questions. On your first question, actually, the B2B2C model will be our endpoint as we transform our platforms.
As a result, we are working very hard to integrate all those participants into our value chain. Specifically, the parties could include the auto OEMs, banks, insurance companies, mid- and small-size dealers, and of course, the car owners or the consumers.
关于第二个问题，第一季度我们新增的助贷的业务，因为我们已经提高了那个审批标准，所以理论上它的信贷质量会有所提升，但是由于表现期尚短，需要验证的话，一般要九个月以后才能看出它的那个具体的数据来得到验证。同时，我们加强了催收力度。就整体数据来看，逾期数据已经趋于平缓，M1的数据略有上升，这主要是那个疫情的影响，但M3的数据环比有所下降。
On your second question, on the new loans in Q1, we have stepped up our efforts on underwriting and also on the approval of the loans. In other words, we are more strict and stringent than before in approving those loans.
We have seen improvements in the M1+ and M3+ ratios, thanks to our collection efforts. However, the M1+ ratio has gone up slightly. It's largely because of the pandemic.
On your third question, it is part of the company's strategic transformation. If you look at the economic indicators, it definitely shows that our strategy is well-supported by the facts. Actually, there is strong evidence showing that our strategic transformation is very much in line with the development of the market.
We expect the negative impact on our profitability to be only near-term. On the other hand, we have to look at the strategic logic of our business. When we are continuing to expand our business—in particular, the car trading business and also related insurance and aftermarket services business—then we expect that to go up again.
We have no further questions at this time. I will hand the call back to management for closing remarks.
Thank you all for attention and for your participation.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.