Ladies and gentlemen, thank you for standing by, and welcome to Uxin's first and second quarter fiscal year 2024 earnings conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a Q&A session. 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 conference call, Mr. Jack Wang. Please go ahead, Jack.
All right. Thank you, operator. Hello, everyone. Welcome to Uxin's earnings conference call for the first and second quarters of fiscal year 2024, ended June 30, 2023, and September 30, 2023, respectively. On the call with me today, we have DK, our founder and CEO, as well as John Lin, our CFO. DK will review business operations and company highlights, followed by John, who will discuss our 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 I will turn the call over to our CEO, DK. Please go ahead, sir.
Hello, everyone, and thank you for joining our earnings call. I'm pleased to reconnect with you all today on the call, and to facilitate communication with both domestic and international investors, I will share our company's latest progress in both Chinese and English. Hello, everyone. Thank you for joining our earnings call. I'm pleased to reconnect with you all today on the call, and to facilitate communication with both domestic and international investors, I will share our company's latest progress in both Chinese and English. Due to the financing transactions with the government of Hefei City in the past month, we postponed the release of our first quarter financial results. Today, we're presenting the performance of the first and second quarters of fiscal year 2024, covering April to September 2023.
I will first review the key highlights of the past two quarters, then share some of our achievements and future goals. In the first quarter of fiscal year 2024, from April to June 2023, we witnessed the end of a car-buying surge, initially fueled by pent-up demand during the pandemic. Subsequently, the aggressive pricing strategies of new cars beginning in March continued to reverberate through China's used car market. This shift led to a cautious approach by consumers, who adopted a wait-and-see stance on purchasing used cars. Aligned with these market dynamics, we opted for a prudent car acquisition strategy, maintaining lower inventory levels. Consequently, our retail transaction volume in the first quarter saw a 25% decrease from the previous quarter, totaling 1,687 units.
However, in the second quarter, between July and September, we strategically increased our inventory levels, resulting in a significant rebound in retail transaction volume to 2,287 units, a notable 36% sequential growth, and far surpassing the industry's average growth rate of 5% in transaction volume. Throughout this period, we effectively maintained the turnover base of our vehicles on sale below 45, while simultaneously enhancing our profitability as our gross margin has expanded to 6.2% from 1.3% in the same period last year. A notable achievement in September was our Xi'an superstore, reaching positive EBITDA, contributing to a nearly 50% year-over-year reduction in the company's overall adjusted EBITDA loss. Additionally, we consistently upheld the industry's highest net promoter score, or NPS, maintaining a score around 60 points for seven consecutive quarters.
This performance underlines the success of our superstore model and signifies that our business operations are progressing along a robust and healthy growth path.
值得一提的是，优信全力打造的合肥长丰二手车超级卖场，于2023年9月开始试营业。合肥长丰卖场总建筑面积达到450,000平方米，包含一个全球最先进的手车再制造工厂和一个全球最大的二手车仓储式卖场，最多可容纳10,000台车辆展售。随着库存规模的提升，将在未来几年持续驱动公司业务的增长。
It is also worth highlighting that our state-of-the-art Changfeng Superstore in Hefei City commenced its trial operations in September 2023. Encompassing a vast area of 450,000 square meters, the Changfeng Superstore features the world's most advanced used car reconditioning factory, and the largest warehouse-style used car retail superstore, with a capacity to showcase up to 10,000 vehicles. The expansion of our inventory at this facility is set to significantly bolster the company's business growth in the forthcoming years.
同时，在9月底，我们与合肥地方政府正式签署了股权投资协议。合肥建投北城产业投资将在未来10年内，通过分阶段注资向优信在合肥子公司投资最高15亿元人民币，用于支持推动合肥二手车超级卖场的经营与发展。合肥独特的位置优势，优质的营商环境，发达的汽车产业，成熟的上下游供应链，将在未来数年内为优信业务发展提供巨大的助力。
At the same time, we signed an equity investment agreement with the local government of Hefei City at the end of September. Under this agreement, Hefei Construction Investment North City Industrial Investment will commit up to CNY 1.5 billion over the next 10 years to using Hefei subsidiary to support the operation and development of our used car superstore in the City of Hefei. The city's advantages, strategic location, favorable business environment, well-established automotive industry and robust upstream and downstream supply chains offer substantial support, fostering Uxin's continued business growth.
The Xi'an superstore completed a comprehensive upgrade in December 2022. After operating for 10 months, it achieved positive EBITDA in September 2023. The Hefei superstore has already started trial operations in September 2023. Our goal is to achieve positive EBITDA for the Hefei superstore in March 2024 or before. Based on the realization of scaled profitability for the superstores, the continuous control and optimization of costs and expenses, we also have a clear roadmap for the company's overall profitability, with the goal to achieve overall EBITDA profitability for the company in September 2024 or before.
Reflecting on our experience, since the relocation and upgrade of our Xi'an superstore in December 2022, it has successfully reached the EBITDA profitability by September 2023, just 10 months into its operation. Our Hefei superstore, which began its trial operations in September 2023, is on a similar path, with an objective to reach adjusted EBITDA profitability by March 2024 or even earlier. Leveraging the scalable profitability of our superstores, combined with our ongoing efforts in cost control and optimization, we have established a clear strategy towards the company's overall profitability, and our goal is to reach overall EBITDA profitability by September 2024 or sooner.
过去两年多以来，不断打磨形成的远超行业水平的管理能力和效率优势，使我们朝着盈利的目标更加靠近。我们挑选四个方面在电话会中与大家做一下分享。
Over the last two years, we have significantly enhanced our management capabilities and operational efficiency, surpassing industry norms and edging us closer to our profitability targets. During the call today, I would like to highlight four key areas of development.
首先，我们基于AI内核的车辆定价系统训练完成。我们的系统已经可以根据不同车辆、车况、车龄、颜色、里程等参数进行自主智能定价，并结合客户关注度、线下试驾反馈、市场行情等动态修正报价。精准的定价使我们的收车和售车两端都具备足够的竞争力，并保障在售量，在售车辆的周转效率稳定在30-45天的健康状态。
Firstly, we have successfully completed the training of our AI-powered vehicle pricing system. This advanced system autonomously and intelligently sets prices for vehicles, considering factors such as condition, age, color, and mileage. It also dynamically adjusts quotes in response to customer interest, feedback from offline test drives, and market conditions. This precision in pricing strengthens our competitive position in both purchasing and selling, ensuring an optimal vehicle turnover efficiency of 30-45 days.
其次，依托于行业领先二手车再制造工厂的高效运转，我们可以在提供超大规模二手车供给的基础上，提升车辆流转的速度，降低整备的成本。先进的再制造技术和设备的引入，保障了车辆品质的输出。通过打造全行业最先进的透明工厂管理体系，我们实现了检修一体化数据透传，人、车、料实时监控，工序设置全局最优，车间任务智能分配并进行并行处理。车辆进行整备到上架销售的时间仅需3-4天。
... Secondly, by leveraging the efficient operation of our cutting-edge used car reconditioning factory, we have been able to accelerate vehicle turnover and slash reconditioning costs, all while maintaining the supply of used cars at a super large scale. The integration of sophisticated reconditioning technologies and equipment guarantees superior vehicle quality. We've pioneered the industry's most advanced transparent factory management system, facilitating integrated data transmission for inspection, diagnosis, and repair, while enabling real-time monitoring of our workforce, vehicles, and materials. This system optimizes the production process across the board, implements intelligent parallel processing of workshop tasks, and has dramatically reduced the timeframe from vehicle intake to sales listing to only 3-4 days.
第三，在业内，在各个业务环节中，我们也追求极致的成本费用占比，基于供应链整合和批量整备带来的规模成本下降。此外，工艺的进步，像3D打印、聪明维修等创新技术的运用，也让我们在成本控制上找到了新的突破。
We remain committed to establishing an optimal cost and expense strategy, structure across various facets of our business. This is highlighted by the substantial cost reductions achieved through supply chain integration and large-scale vehicle reconditioning. Furthermore, we've leveraged advancements in operational processes, incorporating innovative technologies like 3D printing and Smart Repair, which have led to groundbreaking improvements in cost control strategies.
最后，线下大卖场在获客上的天然优势也得到了验证。我们通过超级卖场提供海量的车辆选择，优质的对客服务，全面的售后保障，好的客户口碑在区域市场内迅速传播。西安和合肥两个卖场均在投入运营一年内成为当地消费者二手车品牌认知的第一名。我们很清晰地看到，随着线下卖场运营的不断成熟，自然到店流量大幅提升，获客成本显著降低。
Lastly, we have proven the inherent advantages of our offline superstores in attracting customers. Through our superstores, we provide a vast array of vehicle options, exceptional customer service, and all-encompassing after-sales support, all of which had rapidly cultivated a robust reputation among customers in regional markets. Within just one year of operation, our Xi'an and Hefei superstores have ascended to become the leading brands in local used car market recognition. We have distinctly noticed that as our offline superstores evolve, there is a marked increase in organic foot traffic, which significantly lowers the cost associated with acquiring new customers.
我们的业务模式的基本盘已经完全打磨成型，现在我们可以自信地提出公司整体在2024年9月或之前实现整体盈利的时间表。从更长的时间和战略规划来看，我们的超级卖场模式在国内很多地区都可以快速复制，新区域卖场的扩张将结合更创新的模式，实现更强的成本竞争力，在更短的周期内实现单卖场盈利。
Our business model is now fully refined, and with confidence, we anticipate that the company will reach overall profitability by or before September 2024. In our long-term strategic vision, we see the superstore model as swiftly adaptable across various regions in China. Our expansion strategy into new cities will integrate even more innovative approaches, ensuring enhanced cost effectiveness and accelerated profitability for each superstore.
我今天先分享到这里。接下来我们的CFO John会为大家展示财务上的情况。John, please.
Yeah. With that, I'd like to turn the call over to our CFO to walk you through the financial results. John, please.
Okay. 好，谢谢DK。大家好，接下来我来与大家分享公司2024财年第一季度和第二季度的财务情况。Thank you, DK, and hello, everyone. I will provide a closer look at our financial results from the first and the second quarters of fiscal year 2024.
刚才 DK 已经分享了一、二季度的零售销量的状况，那 2024 财年第一季度，我们在波动行情中选择了比较谨慎的收车策略，维持了比较低的库存水平。我们的零售销量是 1,687 辆，环比下降 25%。从第二季度起呢，我们开始拉升库存水平。在财年的第二季度，我们的零售销量是 2,287 辆，环比提升 36%。
DK has already provided an overview of our retail transaction volumes for this period. In the face of the fluctuating market conditions for the first quarter of fiscal year 2024, we adopted a prudent vehicle acquisition strategy and opted to maintain relatively low inventory levels. As such, our retail transaction volume in the first quarter decreased by 25% sequentially to 1,687 units. During the second quarter, we increased our inventory levels, enabling us to grow our retail transaction volume by 36% to 2,287 units in the second quarter.
我们的第二季度的总零售收入是2.49亿人民币，相比一季度的1.87亿人民币，增长了33%。那库存结构持续的优化，适应当前经济形势下的市场需求，我们零售车辆的平均售价从去年同期的12万元下降到近两个季度的11万元左右。
... Our retail sales revenue in the second quarter reached RMB 249 million, representing a sequential increase of 33% from RMB 187 million in the first quarter. In response to the evolving economic landscape, we diligently refined our inventory structure to align with current market demands. This strategic adjustment is reflected in the average selling price, or ASP, of our retail vehicles, which decreased from 1,000, sorry, 120,000 RMB in the same period last year to approximately 110,000 RMB over the last two quarters.
Our wholesale business segment remained relatively stable, with a transaction volume of 1,567 units and a sales revenue of RMB 95 million in the first quarter, compared to 1,597 units with a sales revenue of RMB 99 million in the second quarter. Overall, our total revenues for the second quarter were RMB 356 million, a sequential increase of 23% from two hundred and ninety-eight... Sorry, RMB 289 million in the first quarter. Furthermore, we further accelerated our inventory turnover, increased the penetration rate of our value-added services, and reduced the per-vehicle cost, thanks to the efficiencies gained from our modernized factory operations. As a result, we saw a substantial improvement in our gross margin.
Specifically, in the first quarter and second quarters of fiscal year 2024, our gross margins were 6.1% and 6.2% respectively. This represents a year-over-year increase of 5 and 4.9 percentage points. Looking ahead, we anticipate further enhancements in our gross margins, fueled by an increase in revenues from our financial, insurance, and premium, maintenance and repair services, coupled with cost reductions achieved through higher sales, sales volumes. On the front of operating expenses, the second quarter showed a slight uptick to RMB 91.6 million, compared to RMB 87.8 million in the previous quarter. This increase was largely due to the costs associated with opening our Hefei Changfeng Superstore, including expenses related to site relocation. Despite this, we have maintained stringent control over our operating expenses, ensuring they remain stable.
This disciplined approach to managing expenses is key to our strategy for achieving our projected profitability in the future. Loss from operations narrowed by 35% year-over-year to RMB 63.2 million in the first quarter, and 38% year-over-year to RMB 66.4 million in the second quarter. As a result of the government's investment in Uxin Hefei's subsidiary and the financial leasing of the Hefei superstore property, our Changfeng Superstore in Hefei City has recorded a substantial non-cash charges, including depreciation, amortization, and financial expenses.
To provide a clearer picture of our actual business performance, we have started disclosing adjusted EBITDA from this year, and are using it as a key metric to evaluate our operations. Adjusted EBITDA, which removes the effects of stock-based compensation and other one-time or non-cash items from the standard EBITDA, offers a more accurate reflection of our company's profitability. The improvement in our gross margin and a continuous refinement of our cost and expense structure has led to a substantial enhancement in our profitability. A testament to this progress is our Xi'an superstore, which achieved positive adjusted EBITDA in September this year.
In the first quarter, our corporate Adjusted EBITDA was a loss of CNY 46.6 million, representing a reduction of CNY 29.6 million, or 39%, from a loss of CNY 36.3 million in the first period of last year, in the same period of last year. Adjusted EBITDA in the second quarter was a loss of CNY 45.9 million, representing a reduction of CNY 41 million or 47% from CNY 86.9 million in the same period last year. I would like to reiterate the profit target DK just mentioned. Our aim is to reach Adjusted EBITDA profitability at a store level by March 2024, and extend this to the entire company by September 2024.
We are confident in our trajectory towards high quality, sustainable development, and our strong financial position is a cornerstone for future business growth and profitability objectives. In September, we entered into an equity investment agreement with the Hefei local government investment platform. Under this agreement, they have committed to investing up to RMB 1.5 billion in Uxin's Hefei subsidiary over the next decade, with the first tranche of roughly RMB 115 million essentially completed. Additionally, we have arranged with our investors to finalize the remaining disbursement of nearly $30 million from previous funding rounds before the end of the year. Moreover, we recently secured new inventory financing from two financial institutions, amounting to a total credit line of close to RMB 300 million.
For the third quarter of fiscal year 2024, between October and December 2023, we anticipate a return to steady growth in sales as market conditions improve and inventory levels increase. Our retail transaction volume is expected to be around 3,100 units, while the ASP for retail vehicles is expected to be around 105,000 RMB. We also expect our wholesale transaction volume to be around 1,400 units, with ASP expected to be around 67,000 RMB. We estimate that our total revenues, including retail vehicle sales revenue, wholesale vehicle sales revenue, and value-added services revenue, to be in the range of RMB 410 million-RMB 430 million. That concludes our prepared remarks today. Operator, we're now ready for questions.
Thank you. If you wish to ask a question, please press star, then one on your telephone, and wait for your name to be announced. If you wish to cancel your request, please press star, then two. If you are on a speakerphone, please pick up the handset to ask your question. When asking a question in Chinese, please restate your question in English immediately afterwards for the convenience of everyone on the call.
...Today's first question comes from Kai Cheng with CITIC Securities. Please go ahead.
哎，各位领导好，感谢这个机会能够在这里，向各位领导请教，同时也恭喜我们跟河北省政府取得了更紧密的这样的一个关系。当然我还想，回到我们的业绩，想问一下，就是，在我们这个，包括二季，包括这个Q2和Q3，也对应到过去两个季度，它的毛利改善的因素当中，您能否再给我们细拆解，就是各自的这个贡献的这个幅度，特别是，西安的这个修复成本的下降，对于我们总体的这个毛利的这个改善贡献的幅度是多少？So I have another question, which is about the changing the gross profit margin.
So in the second quarter of 2023, which means, from the July to September, we have achieved a big progress on the rebound of the gross profit. And we maintain and despite where the third quarter of 2023, so we know there are a lot of factors that contributed to that rebound. So could you give us more detailed information about the rate of different factors, especially the contribution from Xi'an's IRC operation?
OK, 好的，那这个问题，我来回答。我们毛利率呢，从去年第二季度的1.3%提升到最近一个季度的6.2%，还是一个比较大的提升。那对于每一台零售车辆，我们的毛利的来源主要来源于两个方面：一个是车辆销售毛利，一个是增值服务产生的毛利。那最近一个季度的毛利的同比提升，大概有70%是由车辆的销售毛利贡献的，30%是由增值服务的毛利贡献。
Hi, this is John, and I'll address that question. Right, our gross profit margin has seen a notable improvement, rising from 1.3% in the same period last year to 6.2% this quarter. The growth in profit, in gross profit for a retail vehicle primarily stems from two aspects: vehicle sales and value-added services. In the last quarter, the year-over-year improvement in gross profit was approximately 70%, driven by vehicle sales and 30% by value-added services.
我们的车辆销售毛利的提升，主要还是因为我们的大卖场模式逐渐地跑通，我们车辆的定价更加准确，我们的销售效率也更高，所以车辆的周转也更快。另外，市场的整体行情也逐渐地企稳，我们的二手车销售的价差较去年有非常显著的提高。
The uptick in gross profit from vehicle sales can be attributed to the success of our large superstore model. This success translates to more accurate vehicle pricing, increased sales efficiency, and faster inventory turnover. Additionally, as the market stabilizes, the price spread in our used car sales has significantly improved compared to the previous year.
优势呢，依托于我们的这个超级卖场和我们最先进的工厂啊，提供了全场景的增值服务，包括金融、保险、延保、精品、保养、维修等等。这是我们从传统二手车商相比的，自然的一个业务模式上的优势。我们可以拿到更适合客户的金金融险产品，更高性价比的精品，啊。并通过线下大卖场，啊，这种全面，全面的领先传统二手车市场的购买体验，啊，这种模式实现销售转化。那我们的增值服务的渗透率一直在提升，啊最后呢，我们认为仍有较大的提升空间。
At Uxin, we leverage our superstores and factories to provide a comprehensive array of value-added services, including finance, insurance, extended warranties, accessories, maintenance, and repairs. This business model represents a natural advantage over traditional used car dealers. We can offer customers more suitable finance and insurance products, cost-effective accessories, and achieve sales conversions through an offline superstore experience that surpasses traditional used car marketplaces. We are consistently improving the penetration rate of our value-added services, and we believe that there is still significant potential for further growth.
因为西安IRC也是我们准备工厂的成立，的确是对准备成本的下降，有非常大的帮助，那对毛利的贡献有明显的影响。那刚才DK提到了，我们拥有现在世界上最先进的手车再制造工厂，那么我们已经实现了透明工厂管理体系，我们检、整、修一体，全链路的工序管理，极大地提升了车辆流转的效率，减少了时间成本上的损耗。同时，我们也不断地引进了最先进的设备，最先进的工艺，比如3D打印，聪明维修等等。而且结合我们的整体的配件供应的体系，我们现在单车的准备时间和成本进一步降低。比去年，现在每一台的整备成本比去年，一年前要低50%以上。关于整备环节的优化，对整个毛利率大概就有百分点的贡献。
With our Xi'an IRC up and running, the reduction in reconditioning costs has indeed made a noticeable impact on gross margin improvement. DK mentioned earlier, our transparent factory system, featuring the world's most advanced used car reconditioning factory, facilitates integrated end-to-end process management for inspection, diagnosis, and repair. This has significantly improved the vehicle turnover efficiency and reduced the time cost. At the same time, we continue to roll out advanced reconditioning equipment and processes such as 3D printing and smart repairs...while integrating the spare parts supply system. As a result, the reconditioning time and cost per vehicle has further decreased. As of now, the reconditioning cost per vehicle is more than 60% lower than a year ago. The optimization of the reconditioning process alone contributed about 1.5 percentage points to the improvement in our gross profit margin.
这是我对你的问题的回答。
That is my answer to your question.
哎，谢谢领导，那我这边可能还有一个问题还想请教一下，就是我们在上季度，在过去的7到9月，其实看到了，零售我们直接说成交量的环比快速回升，我们认为就是在当下，其实是不是在新车市场企稳的价格企稳背景下，其实二手车市场的价格以及供需已经恢复了稳定，以及，在明年年初或者可能更长一段时间，这个稳定趋势都可以持续，我们可能不太会受到来自新车市场的下一次这样的冲击。在这种背景下，是不是随着我们的这个品牌认知以及大卖场模式的这个逐渐发挥效果，我们是不是可以在可能比这，比，比这个季度可能更远，比如2024年，都可以展望得到这个零售交易量回升的这个趋势。So we saw our retail transaction volume quarter on quarter in the last quarter of 2023 from July to September. Do we think currently in the fourth quarter or maybe in the next few months, this stable trend can we continue?
There may be not strong short impact from the new car market. And so in 2024, where our, the retail transaction volume rebound trend can continue in the next year. Thank you.
Hello，我是戴坤，我来回答你的问题。首先，先说关于销量的这个问题，因为我觉得你问的是销量和这个销售均价的两个共同的结合，就是最后是销售额的问题。那么，首先从销量角度，是的，那么在这个2023年的七到九月份，新车价格企稳后，二手车市场行情也逐渐回归了正常。我们的销量从七月份开始回到一个增长的轨道，七到九月份比四到六月份的销量环比增长了35%。那么这个期间整个中国二手车市场的环比交易增幅是5%，我们的表现还是要远远好于市场的。
Hi, this is DK, and I will address the sales perspective of your question first. So from July to September 2023, after new car prices stabilized, the used car market gradually returned to normal. Our sales volume began to recover in July, showing a 35% growth in the September quarter compared to the June quarter. In the same period, the domestic used car market only saw an average sequential transaction volume growth rate of 5%, so our performance significantly exceeded the market.
那么，从零售的单车均价上，7-9月份和4-6月份都是在RMB 11万左右，现在总体保持是稳定的，那么年初大概是RMB 12万，去年同期大概是RMB 14万。那么，零售车辆的均价有些下降，啊，这个主要原因呢，一方面是我们优化库存结构，第二个呢，就是当前经济形势下，整个新车和大的市场行情下行的这样的一种状态。那在我们库存结构调整完成后，我们的库存车辆主要是车龄在3-8年的二手车。那总体来说，受新车市场的影响啊，不是那么大了。那么10月份开始，新车又有一波新的降价，但我们的ASP基本保持在一个比较稳定的水平。
Regarding the ASP of retail vehicles, both in the September and June quarters, our ASP remained stable at around 110,000 RMB. At the beginning of the year, it was approximately 120,000 RMB, and in the same period last year it was around 140,000 RMB. The ASP of retail vehicles experienced a slight decline, mainly due to our practice optimization of inventory structure to align with the current economic conditions and market demands. So after completing the adjustment of our vehicle structure, our inventory now mainly consists of used cars aged 3-8 years. Overall, the impact of the new car market on us has lessened. Starting in October, new cars underwent a new round of price reductions, but our ASP has remained relatively stable.
好，以上是我的回答，谢谢。
That's my answer to your question.
好，谢谢各位领导，非常清晰。谢谢。
Thank you. Our next question today comes from Fei Dai with TF Securities. Please go ahead.
各位领导好，可以听到我吗？
可以，你说。
Given that the current economic conditions are quite challenging, from the company's perspective, is there any change in market trends and consumer behavior? How is the company addressing the impact of economic change? This is my first question. Thank you.
好的，这个问题我来答，就是，我认为实现盈亏平衡，最主要的是三个点。那么一，是以合理的价格持续拉升这个销售的库存水平，那么二是保持目前的销售周转效率，那么三是持续推动降本增效。
...Hi, this is DK, and I will answer that question. So for us, attaining profitability really centers around, you know, three key aspects. Firstly, it entails consistently evaluating inventory levels through reasonable pricing. Secondly, it necessitates maintaining the current efficiency of sales turnover. And thirdly, it involves an ongoing commitment to drive cost reduction and enhance efficiency. So the most notable potential impact that we observe is the market volatility stemming from the continual reduction in new car prices. On the vehicle acquisition side, the increasingly competitive pricing strategies in the new car market this year had repercussions in the used car market, lowering the acquisition prices for used cars. Leveraging our AI-driven digital pricing system, we can determine the most reasonable acquisition prices.
Customers selling their cars may require some time to adjust their price expectations, potentially influencing the pace of inventory increase. On the sales front, as evident from the market response during the new car price reduction wave in March, customers may adopt a wait-and-see approach to purchasing used cars. However, we're confident in continuously expanding inventory and maintaining a healthy sales turnover within 45 days by leveraging our retail competitiveness model for vehicle selection, dynamically adjusting inventory structure, utilizing AI systems for digital pricing with timely market feedback, and benefiting from the high sales conversion efficiency driven by our leading brand influence and reputation in regions that we operate. Furthermore, we anticipate the new car market to return to a new stable level.
The price reductions are definitely not sustainable, and we also expect the supply and demand in the used car market to normalize. We're confident in achieving our profitability goals. That will be the answer to your question.
All right. Thank you.
Thank you. This concludes our question and answer session. I'd like to hand the call back to management for any closing remarks.
Thank you all 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. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.