Ladies and gentlemen, thank you for standing by. Welcome to Uxin's second quarter 2019 earnings conference call. At this time, all participants are in a listen only mode. After management prepared remarks, there will be a question and answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the call over to Nancy Song, Investor Relations Director of Uxin. Thank you. Please go ahead.
Thank you, operator. Hello, everyone. Welcome to Uxin's second quarter 2019 conference call. Today, DK, our founder and CEO, and Zhen Zeng, our CFO, will discuss our financial results for the second quarter. Following the prepared remarks, DK and Zhen will be available to answer your questions. Before we start, I'd like to remind you that our statements today will contain forward-looking statements that we make under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management's current knowledge and assumptions about future events that involve risks and uncertainties, which would cause actual results to differ materially from our expectations. Uxin does not undertake any obligations to update any forward-looking statements except as required under applicable laws. For more information about the potential risks and uncertainties, please refer to the company's filings with the SEC.
With that, I will now turn the call over to our CEO, DK. Please.
Thank you, Nancy. Hello, everyone. Thank you for joining our second quarter 2019 earnings conference call. As you may already know, we announced a proposed transaction with Golden Pacer to divest our loan facilitation related business this July. As a result, going forward, we will completely divest our 2C interim regional business, no longer provide guarantee services for the 2C cross-region business, divest the corresponding assets and liability, and therefore significantly relieve ourself of guarantee obligation for the existing loan balance of the loan previously facilitated by us. Our 2C business now solely consists of online used car transactions, which previously were recorded as 2C cross-region transactions. The corresponding revenue streams are now commission revenue and value-added service revenue. Before we dive into more details of the proposed transaction, let me first give a quick recap of our second quarter performance.
It is important to note that the financial impact of the proposed transaction has already been reflected in our second quarter results, as required by the accounting policy. With relevant revenue costs and operating expenses of discontinued operations excluded from our financial results, we are pleased to report another strong quarter with a 58% year-over-year increase in total revenue to RMB 439 million. In particular, our 2C business continued a strong growth path. In the second quarter, our 2C revenue substantially increased 11 times year-over-year to RMB 322 million, contributing 73% of total revenues. Looking at our 2C business in more detail, we continued to see robust momentum in our online used car transaction volume during the quarter. We completed over 24,500 unit transactions in our online shopping mall, up 500% year-over-year.
This not only reflects the growing traction of our one-stop online used car buying products and services, but also demonstrated consumers increase acceptance of buying used cars online from us without actually seeing the car when making the purchase decision. As we create the sales opportunity and control the entire shopping progress, coupled with our comprehensive product and service offerings, we have maintained our strong ability to monetize online used car transaction and record a total 2C take rate of 11.2% per unit in the quarter, equivalent to per unit revenue of over RMB 13,000. We have also made notable progress on penetrating low-tier cities. Our nearly 800 franchisees contribute over 30% of total 2C transaction volume in the quarter, significantly up from a low teen percentage in first quarter. More on to our 2C business.
Because of our change of approach in serving consumers with car selling needs, as well as dealers' growing preference to sell used cars on our 2C platform, as expected, our 2B transaction volume declined by 57% year-over-year to 39,500 units. With take rate slightly increased to 3.7% in the quarter from 3.5% in a year ago period. Even though 2B revenue decreased to RMB 68 million, 2B business continues to serve as a complementary pillar of our business as it strengthens our relationship with dealers by offering them a high efficient auction channel to improve inventory turnover. We may also continue to provide favorable terms to our dealer customers on the 2B platform, so as to maintain customer stickiness and encourage them to expand collaboration on our 2C platform at the same time. With that, let me now share more color on the proposed transaction with Golden Pacer.
As we divest our loan facilitation related business, we will only provide a financing product referral services going forward for those customers who want to finance their car purchased from our online shopping mall. We no longer need to provide any guarantee services. Accordingly, we will be freed from putting down restricted cash as deposit at bank escrow accounts. This will gradually lower our capital needs, improve cash flow, and therefore create a more favorable operating environment for our long-term development. In addition, the divestiture will allow us to fully focus on fulfilling online used car transactions, which is exactly our growth priority and strategy. We have always been a transaction-centered platform since day one. Now, with our involved model of a national online used car dealer, we are even better positioned to make the most of our strong suit in executing online transactions.
More importantly, we firmly believe that to purchase used car online is a clear and accelerating trend in China used-car market, mirroring exactly what has happened in the mature market overseas. Our strategy to focus all our resource on the online transaction area will enable us to better capture the massive market opportunities brought by this trend. With our 2C business becoming a pure player, we will be better suited to utilize our innovative supply chain and infrastructure to provide consumer with full core value through our one-stop online used-car product and service offerings. First, a national-wide selection of used cars. As opposed to limited local selection, we are able to expand our inventory from local to national reach by operating a virtual national inventory system with over 18,000 offline dealers being our inventory suppliers.
In the second quarter, we provide a real-time selection of over 110,000 used cars in our online shopping mall. More importantly, under our national online used car dealer model, we don't take an actual inventory risk. Only when we receive 100% certain purchase order from the consumer who pay a 10% deposit for the purchase in advance, do we start to procure the inventory from the supplier. Second, online standardization for unstandardized products. Our standardized video inspection reports and VR display for used car create a high transparency on car condition. In addition, our sales consultants will also visit the customer in person and help them interpret video inspection reports, introduce car specifics, assist them in selecting the car they prefer, and help them execute the purchase. All of this will give consumer great peace of mind buying a big-ticket item online. Third, a one-stop online purchasing experience.
In addition to selling a used car, we also provide financing and insurance product referrals and a comprehensive warranty program as value-added service. Comprehensive return policy to better meet consumers' various needs and offer overall solutions. Fourth, national fulfillment services. We have built up a national logistics network to make sure every used car we sell online can be delivered to the consumer on time. We also provide an offline title transfer assistant to ensure a seamless and hassle-free ownership transfer between cities. Our well-rounded fulfillment services make online shopping for a used car finally as convenient as buying any other standardized product online. Looking ahead, we are excited about our growth potential in the year to come.
We believe our new, more focused business structure will boost our core value and more importantly, enable us to leverage the market trend and the growth opportunity in online used car transaction in China. Despite the headwinds that China overall auto market has been facing since last year, we believe the used car market is more resilient in a down cycle because of used car better price to performance. There is a great growth potential in the coming year given the size of the China market. It is, of course, important to note that with the earlier adoption of China 6, the new emission standard, several regions experienced a drop in used car sales to some extent, and we have felt a certain effect as well. However, we believe the used car market will gradually digest the effort effect and the macro environment will improve after short-term adjustment.
Amidst this environment, we have completed 38,000 online used car transactions on our platform in full year 2018, and aim to complete over 100,000 units this year. We are excited about the achievement to date and the target we set for 2019. It demonstrated we have been winning over trust from a faster-growing group of consumers who have accepted the revolutionary way of purchasing used car online from us without seeing the actual car when they make the purchase decision. This is particularly encouraging that our online used car transaction model has not only proven well accepted, but also has led us into a whole new chapter in China used car sector.
We are confident that as we continue to enhance our value proposition to consumers and consistently execute our growth strategy to expand online used car transaction business, we can maintain a strong momentum in the transaction volume share and build a more sustainable business over the long term. I would like to turn the call over to our CFO, Zhen Zeng, to talk through our financials. Zhen, please go ahead.
Okay. Thanks, DK. Hello, everyone. We are pleased to deliver another set of strong results for the second quarter. Before we go through the financial details, let me give you an overview on how the proposed transaction with Golden Pacer reshapes our financial profile. Please note that all the discussion and comparison below are on an apple-to-apple basis. Given the divestiture and in accordance with the applicable accounting standards, we significantly relieve ourselves of guarantee obligations for existing loan balance of RMB 33.2 billion as of June 30th, 2019 for the used car loans previously facilitated by us. In addition, assets of RMB 3.9 billion and liabilities of RMB 0.9 billion were reclassified as assets and liabilities held for sale on our consolidated balance sheet as of June 30th, 2019.
Result of operations related to the divested business were reported as net loss or income from operations of discontinued operations. Revenue of discontinued operations and its corresponding cost of revenue and operating expenses for the second quarter of 2019 were RMB 464 million, RMB 89 million and RMB 378 million respectively. The proposed divestiture will effectively lower our capital needs for and improve our cash flow, setting a solid foundation for our sustainable growth going forward. P&L wise, our 2C revenue stream now include commission revenue and value-added service revenue. As DK mentioned earlier, our strong ability to monetize online used car transactions remains unchanged. We are confident that we can build up the scale in the top line for 2C online used car transaction on a more solid and sustainable basis as we fully focus on expanding this business pillar.
The proposed transaction is expected to temporarily impact the gross margin due to our cost structure. Our cost of revenues mainly includes the salary of inspection professionals and the cost related of offline logistics and the title transfer. This cost item are more associated with our continuing operations, so the majority remain within the risk pool. We are confident that the gross margin will further improve over time as we continue to achieve better economy of scale, convert more used car sales with us, aiding to many used cars inspected, and further optimize logistical routes, and better utilize our delivery capacity with the transaction volume growing larger. Our ability on the front is evidenced by our gross margin improved to 53% in the quarter from 42% in the prior year period.
In terms of operating expenses, the proposed divestiture will save us a significant portion of the operating expenses, mainly due to the relevant employees will be transferred to the Golden Pacer accordingly. We have also streamlined the business operations to improve employee productivity. We continue to take prudent measures in cost and expenses management, we believe our faster-growing online used car transaction volume will bring us greater economy of scale and higher operating leverage. With all the measures in place and being executed, combined with our more focused business model and the streamlined operations, we are confident that we will be able to achieve profitability as soon as possible in the coming years. Let me walk you through our financial details for the second quarter. Please note that all discussions below relates to continued operations only. All numbers are in RMB unless otherwise stated.
Please note that some numbers I refer to are non-GAAP. You can find a reconciliation of these numbers in our earnings release. In the second quarter, total revenues increased by 58% to RMB 439 million, from RMB 277 million in the prior year period. The increase was primarily due to the increases in C2C transaction volume, GMV, commission rate, and value-added service take rate. Drilling down to our business pillars, in terms of our C2C business, total C2C revenue was RMB 322 million, representing a substantial increase of 11 times year-over-year from RMB 28 million in the prior year period. Online used car transaction volume increased by 500% year-over-year to 24,585 units, and its corresponding GMV increased by 482% year-over-year to RMB 2,864 million. Moving on to more details.
Commission revenue was RMB 179 million, representing a substantial increase of 893% from RMB 18 million in the same period last year, primarily due to the increases in the transaction volume, GMV, and commission rate. Benefiting from our enhanced service, improved user experience, and higher pricing power, commission rate increased to 6.2% from 3.7% in the same period last year. Value-added service revenue was RMB 144 million, representing a substantial increase of 14 times from RMB 10 million in the same period last year, primarily due to the increases in the transaction volume, GMV, and VAS take rate. The VAS take rate increased to 5% from 1.9% in the same period last year. Due to our optimized services, which result in a higher pricing power and a higher percentage of C2C online used car transactions that are successfully referred with VAS.
In terms of our C2B business, C2B transaction facilitation revenue was RMB 68 million, representing a decrease of 57% year-over-year. Our take rate for C2B transaction facilitation slightly increased to 3.7% from 3.5% in the prior year period. Cost of our revenues increased by 27% year-over-year to RMB 205 million. The increase was primarily due to the increases in fulfillment cost, which was corresponding driven by the increase in our transaction volume, as well as the increase in salaries and benefits of employees engaged in car inspection, quality control, customer service, and after-sales service. Gross profit increased by 101% to RMB 234 million from RMB 116 million in the prior year period. Gross margin increased to 53% in the quarter, compared to 42% in the prior year period, driven by the better economy of scale. Total operating expenses was RMB 577 million.
Non-GAAP operating expenses, excluding share-based compensation, was RMB 550 million. Sales and marketing expenses decreased by 14% year-over-year to RMB 347 million. The decline reflects our continuous efforts to enhance operating efficiency. Sales and marketing expenses, including share-based compensation expenses of NIO as a percentage of total revenue, decreased to 79% during the quarter from 144% in the prior year period. G&A expenses decreased by 81% to RMB 174 million. The decreases was primarily attributable to the decrease in the share-based compensation expenses. G&A expenses, including share-based compensation expenses, was RMB 147 million, representing 33% of total revenue in the quarter, compared to 31% in the prior year period. R&D expenses increased by 28% to RMB 56 million. The increases was primarily due to the increase in the salaries and benefits expenses.
R&D expenses, excluding share-based compensation expenses, was RMB 56 million, representing 13% of total revenue in the quarter, compared to 10% in the prior year period. Loss from continuing operations was RMB 342 million, a decrease from RMB 1,258 million in the prior year period. Non-GAAP loss from continuing operations, which excluding share-based compensation expenses was RMB 315 million, a decrease from RMB 398 million in the prior year period. Non-GAAP loss from continuing operations as a percentage of total revenue was 72%, a significant decrease from 143% in the prior year period. Fair value change of derivative liabilities was new in the quarter compared to a gain of RMB 1,544 million in the prior year period. We no longer see any impact of derivative liabilities as the preferred shares were converted into ordinary share at the time of IPO.
Net loss from continuing operations was RMB360 million, compared to a net income from continuing operations of RMB285 million in the prior year period. The change was mainly due to that of the fair value change of derivative liabilities no longer exist in the quarter compare again in the same period last year. Non-GAAP net loss from continuing operations, which excludes the share-based compensation expenses, was RMB333 million in the quarter, a decrease from RMB399 million in the prior year period. Non-GAAP net loss from continuing operations as a percentage of total revenue was 76%, decreasing significantly from 144% in the prior year period. Turning to our cash position. As of June 30th, 2019, we have cash and cash equivalents of RMB783 million. Moving on to the guidance.
Factoring the divestiture of our loan facilitation related business to Golden Pacer, we expect total revenue for the third quarter of 2019 to be in the range of RMB440 million to RMB460 million, excluding the loan facilitation related business. This forecast reflects the company's current and primary view on the market and operational conditions, which are subject to change. That concludes our prepared remarks.
Thank you, Mr. Xu. Operator, we'd like to open the call for questions now.
Certainly. Ladies and gentlemen, at this time, if you want to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel a request, please press the pound or hash key. Once again, to ask a question, please press star 1. If you would like to ask questions in Mandarin, kindly translate your questions in English as well. First question comes from the line of Eddie Wong from Morgan Stanley. Please go ahead.
Hey, DK, Michael, Nancy, how are you? Thank you for taking my question. I will first ask in Chinese, and then I will translate it myself. I actually have two questions. The first one is still related to the industry. My first question is that I saw that in the past few years, before and after the listing, our own company strategy may be becoming more focused, especially since the last quarter, when we spun off the auto finance facilitation part of the business. Now we are focusing on the Nationwide Buy business. Can you talk a little bit about this, DK, what the overall implication for the entire industry might be? From the perspective of the entire second-hand e-commerce industry, it seems that we have already reached a stage where mainstream platforms no longer pursue transaction volume or market share as the primary goal.
Everyone is changing this approach. Now, it seems that the platforms are moving towards using the advantages they have accumulated over the years as their foundation and adopting a more refined management approach, rather than the previous focus on market share. In terms of strategy in the future, whether it's us or our competitors, we will all become more focused. In terms of the competitive landscape, does this mean that the strategic focus of everyone has led to the overall industry competition not being as intense as it was two years ago? This is the first question. The second is a related follow-up question. Since 58 became our strategic investor, have there been any collaborations or synergies that can be shared with us in these few months? I will translate it quickly. I have two questions.
The first is that, given our current strategy is more concentrated on the online used car transaction business, may I have your view on the used car e-commerce industry? Does that mean that for the industry wise, we have passed the stage of market share as the first priority and the leading used car platform will leverage on their own advantages and more focus on their own strategies? What's the implication in terms of the competition? Will the competition among this leading platform be not as intense as before? This is the first question. The second question is about our strategic investor, 58.com. Is there any cooperation or synergy we can share after they become our strategic investor in the second quarter? Thank you.
好的，谢谢 Eddie。我会来回答这两个问题，然后我用中文回答，然后请 Nancy 帮我翻译一下，好吗？谢谢。第一个是关于整个行业，大家在聚焦和追求规模上的一些变化。这个点在过去几年的时间里面，中国二手车行业不同的参与者和友商，大家都在各种交易形式上做了一系列的尝试。那么这个历史就不回顾了。但是今天回来我想说的一个核心问题是，我想先分享一下，其实各位的投资者可能也都清楚，在美国的一些实际情况。那么在——Okay。
Yeah. Look at the overall industry. Over the past years, all the industry players are trying different models. We don't want to take more time to look back about the history. Now let me introduce how we look at the comparable mature market in the U.S.
对，美国两家现在最主要的二手车的公司，一家是CarMax，还有一个是Carvana。那么我们看到CarMax它的交易量，实际上在经过几十年的发展以后，现在占到全美总交易量的2%。那么现在美国在线二手车交易平台的领导者是Carvana，他们以今年的交易量去核算的话，大约占在全美市场份额的0.5%。
Yeah. If we look at the U.S. market, two main players are CarMax and Carvana. Look at CarMax after their decades of operation, based on their current volume, their current market share is around 2%. If we look at Carvana, the U.S. online used car e-commerce platform, based on their volume projection this year, their market share will be like 0.5%.
购买二手车是一个非常低频的行为，而且其实非常难以推动客户持续的复购。那么它复购周期比较长，一般都是在三到四年的时间里面。所以我们觉得，如果我们回头看，那么拍卖的业务，B2B的业务，因为客户复购率很高，所以在追求规模和量的这个过程之中，这个战略是正确的。但是当我们在服务消费者的过程中，因为复购的这个重要因素，不能够被整个的市场份额有效驱动。因此我们的第一个大的观点是，觉得在To C的这个业务过程里面，在当前如何把单车的服务、单车的利润和单车的成本控制好。那么这件事情是进一步扩大规模和扩大市场占有率的前提。
Yeah. Purchasing a used car is a low frequency activity. Normally it would take like three to four years before a consumer to buy a second car. If we look at the transaction frequency, if we look at for our B2B business, if we hit more higher volume or the scale, it would be the right strategy. It is not necessarily true for our 2C business, because for individual purchasers, there will be take more years before they can buy their second car. In this case, we care more or the consumers care more about the service. For us, we care more about service and as well as the per unit margins and how we can drive down the per unit cost. That's our focus.
现在优信践行的二手车在线交易，我认为从规模和量的角度来说，它的天花板非常非常的高。因为消费者在传统的线下购买环境中，他的选择其实是非常有限的。那么就像刚才在之前的财报说明里面，我们在第二季度的时候，实时的二手车供应量达到了11万台。那这样的一个供应量水平，我们相信会是这个行业里面最佳的去满足消费者需求的一个实践。因此，我们相信当把单车的服务做好，把单车的收益和成本管理好之后，那么在这个业务层面上是可以有更长足的发展。
For online used car transactions, we believe the ceiling is quite high. Because actually for the traditional way of purchasing a used car, the selection in a local city is quite limited. For us, our real-time inventory supply on our platform was about 110,000 used cars in Q2. We believe we are the best choice for the consumer. We believe Chasing for the high quality of services and to maintain a high level of per unit revenue, as well as achieve better margin profile for per unit will be our target and focus.
好，然后我现在回答Eddie说的第二个问题，就是和五八的合作的一些情况。那我想还是首先简单地回顾一下，当初我们和五八在合作过程之中，我们曾经已经强调过的一些优势，包括两家公司都是在中国二手车领域里面消费者最偏好的选购平台。那么在这个层面上的话，双方首先在流量方面是会建立很多的合作。那在过去几个月的时间，如果投资者在翻阅五八的时候，会发现今天优信在五八上面呈现的车辆已经是高度定制化的，拥有更完整的检测报告，更全面的客户信息，也将一系列有效的客户偏好的一些预判的技术逐渐进行定制。
Yeah. 58.com and us are two leading used car platforms for China's consumers. In terms of the traffic cooperation over the past few months, if investors look at 58.com applications, our inventory has already been available on their platform. Also our customized and standardized video inspection reports are also available on 58.com applications as well as their customer profile, customer information are also there. We also have the algorithms being optimized to pre-assess what the consumers' preferences are as well.
那从合作本身对双方的一个分别的收益角度，对优信我们通过这样的合作获得了更多的消费者用户。那么在过去的三个月时间里面，通过我们在技术打通等等各个方面的这一系列有效合作，现在五八为优信带来的整个的有效客户已经基本上占到我们总体有效客户的约15%。
Our cooperation with 58.com has been benefiting us quite a lot. We get more users from 58.com. Over the past three months, if we look at the effective users, it actually accounting for about 15% of our total effective users.
同时因为更多高品质、可塑性强的这些货源，优信在五八平台上作为展售，我们也相信对五八二手车整个平台的用户体验和客户选择的丰富度也带来了很好的帮助。
Yeah. Our high quality inventory has been available on 58 platform will also benefit 58 user and their customers to have a better purchasing experience.
那下一个阶段呢，我们会更进一步地在车源的数据分析和用户的数据分析方面做更多的投入和建设工作。那么在这些层面上，大家会共同地建模，来帮助消费者更加准确地推荐他的车辆。那么我相信这进一步的一系列动作也会继续加强刚才我已经提及的两个点。我们希望58为优信带来的有效客户会不断增加，优信对58客户的服务能力和在线的选购规模也能够带来更进一步的帮助。
Yeah. When we move to the next level of our cooperation, we will work more on the inventory data sharing as well as the user data sharing. Based on the data analytics and co-build our models, we will enhance our ability to recommend relevant inventory to the consumers. As we mentioned the previous two benefits we can mutually enjoy from each other, we believe we will further drive the synergies out of it. Thank you.
[Foreign language] Eddie.
谢谢，非常感谢DK，谢谢。
Thank you for the questions. Next questions comes from the line of Ronald Keung, Goldman Sachs. Please go ahead.
谢谢。跟我分享。我有两个提问。那第一就是我们现在基本上都非常重视全国购，那这些跨省类型的这种交易能分享一下，比如我们现在过去一个季度的这两万多台，那我们大概的买家是从哪些城市，或者有一个1到5线城市的可以跟我们分享一下，让我们感受一下跨省的这个业务，我们未来觉得那个增长点是从哪些城市，哪些类型的城市的3到5线，还是因为现在大家都说下沉嘛，想感受一下我们对下沉现在整个业务是不是也是focus在这些一线城市的这些需求，我们觉得最后这个全国购业务，如果说全国来讲，跨省的这些交易比例，还有我们觉得在这个范畴的一个市场率的一个目标。那第二呢，就想听一下我们现在单车的收入已经到13,000了，那想听一下，我们觉得未来的要做到一个盈利的模型的话，我们是希望单车的成本，从收度和成本是要到哪个水平，然后我们是不是一个量的，每个季度要到比如哪一个量，我们能覆盖到现在的一些固定的成本，然后我们能看到做到利润的一个track是应该怎么看？那我先翻译一下，谢谢。 Thanks for taking my question, and two questions. First, I see we now focus on inter-regional, can you share what is the profile of your buyers, maybe in the last quarter by city tiers, so we can understand how lower tier cities are focused or what kind of focus we are on the user side, and how do we see cross-regional volumes will track as a percentage of nationwide transactions and our market share in that segment.
Second is could you walk through some of the unit economics? We hear how unit revenue per car is now around RMB 13,000. Want to hear what is the path to profitability based on our current model on the revenue side and maybe on the cost side. Are there any sort of volumes that we need to reach in order to cover the fixed cost and to a path of profitability? Thank you.
好的，谢谢Ronald。那我来回答第一个问题，然后到时候邓臻来回答第二个问题。第一个问题我还是用中文回答，然后请Nancy帮我来翻译。我想从两个方面来解答Ronald你的这个提问。第一个的话，我还是先讲一下我们全国购的这些用户类型。经过过去接近20个月，我们在整个全国购业务上的发展，我们现在发现第一个特色是我们的全国购的客户，主体还是在购车预算上中等偏上的这些客群，这个其实也很好地反映在了我们现在全国购业务的单车成交价格，现在大约是RMB11万。那这类消费者群体，他们因为预算比较高，所以他们对于购买车辆选择的丰富度的要求也就很高。他们有特别喜欢的品牌、型号，特别的颜色等等一些特殊的配置。
Yeah. I like to address this question from two aspects. For the past 20 months, if we look at our online used car transactions in our interregional business, our clientele are normally the group of consumers with relatively high purchasing budgets. They are normally the mid to high-end customers. This is also evidenced by our ASP of around RMB 110,000 currently. This group of consumers are caring more about the rich selection of used cars. Normally they have their preference of certain car makes and models, interiors and colors etc.
那同时，这些消费者他们对于购买二手车的要求也比较高，他们希望能够得到更加透明的车况，然后他们也希望能够获得比较完善的售后服务，以及在整个的购买过程之中，这些消费者希望能够得到更加便利和友好的服务。那我想这些点，是和Uxin本身我们在全国购业务的价值主张上是不谋而合的。
Yeah. This type of consumers normally have higher requirements for the used cars and services. They care more about the car conditions, the after sales services, as well as the convenience of the service. All of the focus they care about are more in line with our value proposition to the consumers actually.
第二个部分关于城市的划分。那么在这里面第一点是，其实通过过去一段时间的观察，我们发现其实无论是消费者居住在大城市、中型城市，还是小型城市，全国购的业务对他们都是有吸引力的。因为拿北京来举例，现在在全国购上面可提供给消费者的车辆是11万台，那么当然我们的ASP是11万人民币。那么在这个等当量的价位区间，这个价位里面，我们提供了大约20到30倍于北京本地的选择。
Yeah. No matter for top tier cities or lower tier cities, our product and service offerings are equally attractive to them. Even for Beijing, the top tier city in China, our unit selection are also attractive to them. If we look at the price range of the car price of our current ASP RMB 110,000, if we look at this car price range, our selection can be like 20-30 fold larger than the local selection in Beijing.
具体到分城市的角度来看，因为我们在下沉的业务是从去年第四季度才逐渐开始，特别12月份，那么现在在整体的交易的量里面，大约有40%的交易是来自于低线级城市，那么今天60%的交易还是来自于一二线城市这样的水平。
Yeah, we started to penetrate into lower tier cities since last December. If we look at our own transaction volume, about 40% comes from the lower tier cities and 60% from upper tier cities.
对低线级城市和下沉会是未来的网点拓展的一个重要环节，因为我们相信在这些城市，全国购的优势会比在大城市更加明显。
Going forward, we will penetrate into more lower tier cities because our value propositions are stronger in those cities.
那现在从城市渗透率的角度，我们做得较好的城市，在大型城市里面，我们已经拿到了单个城市约1%的交易量。那么在小型城市里面，虽然我们进入的时间短，但是也可以体现出全国购的价值优势。很多小的城市，我们现在已经接近2%的市场交易量。
Yeah, if we look at market share in certain cities, if we look at top tier cities, our market share there was close to 1%. If we look at lower tier cities, our value proposition is stronger in those cities, our market share would be almost close to 2%.
最后一个部分补充一下的概念是，Ronald你问现在在整个所有的交易里面，跨城和同城的百分比。因为消费者其实在优信平台上购买车辆的时候，他并不知道这个车辆所在地是什么。但是从我们现在的交易结果上来看，大约92%的车辆均是跨地域购买的，那么8%的车辆消费者可能购买的恰巧是本地的这台。
If we look at the transaction volume, whether it's intra-regional or inter-regional on our platform, actually the consumers don't know where the inventory is located. If we look at the breakdown, 92% are the cross-regional transactions and only 8% happened locally.
好的，这是第一问题。
Okay, thanks Ronald. It's Michael here. I will address your second question on unit economics and the path to profitability. For our top line, I think our current total 2C take rate was about 11.2%, or to say our per unit revenue of one car is over RMB 13,000. We are confident that we can continuously increase our 2C take rate, and we still have the room or space to increase that, because we continue to enhance our value proposition to our consumer. For our cost, I think there are mainly two items.
One is the inspection and one is logistics and the title transfer. For our inspection, that's mainly the salary and benefits on the inspection professionals. Our strategy is we don't expect to add too many professionals to inspect more used cars in the future. Instead, we focus more on the conversion from cars inspected to the cars sold. We also will filter the car for the inspection by the sustainable price range and no material damage car conditions. We will select the car which will be inspected in order to save the inspection productivity only for those qualified cars. With optimized inventory structure, we believe we can sell much more cars without inspecting equally that many. This will greatly drive down the per unit inspection cost. For the logistics and the delivery, as we grow our transaction volume, we are able to further optimize the delivery route planning and better utilize our delivery capacity. This will also significantly lower our per unit delivery cost. Our ability to on the front is actually evidenced by our gross margin improved to 53% in the quarter from 42% in the prior year period. Looking ahead, we are confident that we can further improve gross margin as we continue to grow our scale, increase the take rate, and optimize each cost item. For the OPEX, we now more focus on the conversion of our traffic. We will continue to optimize the traffic acquisition channel to generate more cost-effective sales leads and enhance the conversion rate. With the traffic spending stabilized at the current level, we are confident to lower the per unit traffic acquisition cost as well. For the number, I think with all the optimization measures in place, we believe we can reach break-even point when we carry out about 50,000 cars per quarter. Thanks Ronald.
Thank you.
Thank you DK, thank you Michael.
好，谢谢Ronald。
Thank you for the questions. Next question comes from the line of Ashley Xu from Credit Suisse. Please go ahead.
谢谢管理层接受我的问题，我代表Tina提问两个问题。一个是想了解一下我们今年的target的transaction volume是多少，然后会有哪些主要的推动因素？第二个是在全国购方面，我们在增长上面临的主要挑战有哪些，以及怎么解决？
Thanks management for taking my questions. Two questions from me representing Tina. The first one is about target volume growth for this year in 2C business and what would be the key drivers? The second question is about the cross-regional business. What do you see as the major challenges ahead and how to solve them? Thank you.
好，谢谢。那我来用中文回答，然后Nancy帮我翻译。就像刚才前面讲的，今年上半年我们总共完成了44,000台的全国购交易。我们希望今年全年的交易量要超过100,000台。那去推动这个增长，包括在未来长期的增长，我觉得主要有三个方面的工作，我们会去落实和执行。第一个是不断地去加强我们现在已经凸显出来的四个全国购的优势。那么第一个就是全国范围内的选择。
With our first half transaction volume was over 44,000 units. We are looking at over 100,000 transactions for the whole year.
我们会不断地优化我们的会员选择的引擎，因为历史上的车辆成交已经给我们带来了对市场行情和整个车辆偏好度和热度方面的一系列的知识。那我们的智能系统，我们的AI系统会帮助我们在选品方面做更优的推动。
Yes. Look at longer term, as we just mentioned, based on our value propositions, we believe we can further drive our transaction volume. The first one is the wide selection of used cars. Now based on our AI intelligence system, we have a better understanding of people's preference and know which type of inventory are more preferred by the consumers and to enhance our inventory structure.
那么第二个就是进一步加强我们在在线标准化车辆展示方面的能力，更加友好地向用户真实地披露车辆的细节和情况。那同时做好我们的一站式服务，让客户在购后有一个良好的口碑。那同时加强我们在交付方面的时效，让客户能够更快地获得车辆。我相信这三点会帮我们进一步地去积累良好的用户口碑，通过提升全新的用户体验而带来更好的增长。
The rest three of the values are the online standardization, one-stop purchasing experience and our offline fulfillment network. For the online standardization, we will enhance our ability to provide the most accurate car conditions for the consumers. For the one-stop solution, we will enrich our value-added services. For the fulfillment, we will make the delivery more convenient to the consumer. All of the three values will build up our brand and increase the word of mouth among the consumers.
那第三个驱动的核心要素，实际上是我们在销售力方面的加强。这主要体现在，因为全国购是一种全新的销售模式，在我们这个在用户没有看到实车的情况下就要购买。所以这个对于我们的销售人员的成长，那么在我们整个的这个pipeline里面，实际上是我们一直在加强着力去做的。那我们今天已经看到我们相当比例的这个销售人员，当他在公司的就职时间达到12个月的时候，他们在等同线索状态下的转化率是远远高于我们新的销售人员。那么怎么样能够把销售人员的转化效率做有效的提升，那也是我们在这个方面需要去加强的。
Yeah. The third driver is our sales productivity. Because online used car transaction is a whole new model for the consumers as well as for our sales force. How to convince consumers to buy the car without seeing the car in the first place is important. The seniority of our sales staff are important for us to drive up the volume. If we look at our sales people, if they have been with us for more than 12 months, their sales conversion rate is much higher than the new guys in terms of if they receive the same bunch of sales leads. Our focus will be increasing the sales productivity and conversion rate from our sales force.
第二个问题是问全国购业务增长面临的一些挑战，以及如何解决。首先，我想先说今年是会面临挑战的一年，主要是两个大的外部环境的原因，对这个汽车市场还是造成一些影响。第一个是大的车市今年不太景气，其实从去年就开始。这个不景气的状态，虽然二手车行业受到的影响小于新车行业，但这个大环境的问题本身是存在的，像刚才在财报里面讲了。
Yeah. For your second question, the challenges this year we think comes more from the macro side. The first one is the overall auto market is facing some headwinds, though the used car market is less affected than the new car market.
第二个问题是在今年7月1号实施的国六限迁的问题。从现在来看，总共计有44个城市现在限制国六车辆的迁入。这个问题对今年的二手车的行业，对全国购还是带来一些挑战，主要的原因是现在市面上符合国六标准的二手车还非常非常的少。
Yeah. Another factor is the early adoption of what China says the new emission standard. The early adoption did drag the used car sales in some cities, about 40 cities in China. Given the China 6 standard is pretty newly introduced, there are not enough used car inventory supplied in the used car market.
那面对这两个问题，我想大的宏观环境一定是会改善的。因为中国现在每千人的汽车普及率还非常的低，我们还有相当多的城市消费者是非常需要一台车作为交通工具来改善生活。所以我觉得这个环境会伴随着大的经济环境改善，然后得到调整。那第二个国六的问题，因为中央的对于推动二手车发展的文件，这次这44个城市恰巧是当时中央文件里面排除的限迁城市。那么从目前来看的话，不会有新增的城市再加入到对二手车迁入的限制上面。
Yeah. For the overall auto market, we think the market condition will improve because we think the current car ownership in China is still low. With the macro economy is picking up, the auto market will pick up as well. Regarding the China 6 new emission standard, the government policy actually ruled out these 40 cities from the restrictions of the car cross-regional transactions. Besides that, we don't see more cities will adopt the new standard in the short term.
伴随着时间的发展，在明年的上半年开始，国六标准的二手车也就会逐渐在市场里面开始增加和出现。
Yeah. If we look into next year, in the first half, we think there will be more used car with high I mean, the new emission standard used car will be supplied to the market.
好了，谢谢。
Thank you.
这两点。
Thank you for the question. The last question comes from the line of Rebecca Wen from J.P. Morgan. Please go ahead.
Hello, this is Rebecca from J.P. Morgan. I'm asking for Alex Yao. My first question is, what's the reason for the massive uptick of the second 2C transaction take rate from 6% to 11% in the second quarter? Could you provide us with some breakdown and also any guidance for the take rate in the second half of the year or longer term? Second question is on the business model transition. What's the long-term implication to business risk and scalability? Thank you.
Okay, I'll address your first question about the take rate this month here. In terms of the total 2C take rate, as a result of the VAS feature, our 2C revenue stream now is converted to the commission revenue and a value-added service revenue. Accordingly, we changed the commission rate and value-added service take rate from the consumer. Thanks to the sales opportunity we create, our control in the entire shopping process, and our comprehensive product and service offering, our ability to monetize online used car transaction remain as strong as before. This is evidenced by our total 2C take rate to 11.2% per unit in the quarter, up from 5.6% in the same period last year. I think our strong monetization ability is also well-supported by our unmatched value proposition to the consumer. Like DK mentioned, we have the four main value proposition.
First, the nationwide selection of used car, which is much wider than the local market can provide. The second, the online standardization for the unstandardized product, such as the standardized video inspection report and a VR display for the used car, which creates higher transparency on the car condition and thus gave the consumer greater peace of mind to buying a used car online. The third is a one-stop online purchasing experience, which means we recommend the value-added service to the best to meet the consumer's various needs.
The last but not least, the national service and the fulfillment network, which make online purchase of a used car as convenient as buying another standardized product online.
我们相信这四个核心价值主张能够让消费者在选购车辆的过程中，货品变得前所未有的丰富。第二，消费者在选购车辆的过程里面，对于车辆的价格有了更多的话语权和主动权。同时，在推动透明化和服务一体化的过程里面，我们也让消费者在购买二手车的时候能够体验到和购买新车一样的标准和服务，让消费者满意。
Yeah. As we previously mentioned, online used car transactions will be an accelerating trend globally, because it brings greater value to consumers. Like we just mentioned, the wide selection of used cars, as well as better prices provided to the consumers. They have higher saying or bargaining power during the process. The third one is the transparency of the car condition. With the online used car transaction products and the service offerings, consumers can finally enjoy standard services when they purchase used car, the same as they purchase a new car.
在大的趋势不变的情况下，那么对于优信全国购业务最主要的风险，我理解还是应当我们如何将这个全新的模式执行得更好，特别是在用户体验、用户感受这些层面上的系列建设。因为毕竟在不看实车，购买一台大宗的非标的二手车商品的这件事情上面，消费者还是需要做出很多的改变，他的购买模式和行为要做出很多的改变。
Yeah. Amid this trend, I think the largest risk for us is all about execution. That is to say how we can further enhance user experience. Because this [Foreign language] whole new experience for consumers to purchase a car without physically seeing the car, how we can convince them to choose to do so is more important.
那具体说来的话，如何让非常专业和复杂的车况问题，让用户非常友好和简单地就可以透明化地看到。那么如何能保证车辆及时地送达，如何能保证消费者在购买车辆以后的售后服务能够得到及时的响应和完美的修复。那我相信在这些工作和工序方面，是我们在打造一个全新的商业模式过程中不可或缺的用户体验部分。那我们看到在这件事情上改变的挑战和难度，我们也意识到这些是有风险，所以这也是为什么我们要集中起来，不单单是在公司资金的投入方面，也包括所有管理层和全体员工，大家心力脑力的投入方面，要把用户体验的事情做到极致，做到最好。
The transparency on car's condition, how we can help consumers to better understand the car's condition, as well as if we can deliver the car in time, whether we can provide well-rounded after services and the products. All of the three things are very important to enhance user experience. I think our challenges are more on this front. That is why we will focus not only our capitals or our resources on this business, but also all of the management and our employees will work together to work towards this initiative.
好的，谢谢。
Thank you.
Thank you for the questions. There are no more questions from the line. I would like to hand the call back to management for closing.
Thank you everyone for joining our call today and for your continuous support for Uxin. We look forward to speaking to you again in the near future. Thank you.
Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect your line.