Q3 2023 Autohome Inc Earnings Call

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Speaker 1: Thank you for standing by for Auto Home 3rd quarter 2023 earnings conference call. At this time all participants are in a listen only mode.

Ladies and gentlemen, thank you for some device also homes third quarter 2023 earnings conference call.

At this time all participants are in a list.

The only bad news.

Speaker 1: A question and answer session will follow management's prepared remarks.

A question and answer session will follow management's prepared remarks as a reminder, this conference call is being recorded.

Speaker 1: As a reminder, this conference call is being recorded. If you have any objections, you may disconnect at this time. A live and archive webcast of the Ernand conference call will also be available on AutoHose IR website. It is now my pleasure to introduce your host, Sterling Song, AutoHose IR Director. Mr Song, please go ahead.

If you have any objections you may disconnect at this time.

Live and archived webcast of the earnings conference call will also be available on <unk>.

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It's now my pleasure to introduce your host Sterling. So also I'll divert.

Sorry about that Mr. Song. Please go ahead.

Speaker 2: Thank you, Haiti. Thank you. Hello, everyone. Welcome to Auto Home, ZCOTA 2023, Ernie's Conference.

Thank you Heidi. Thank you Hello, everyone welcome to ultra homes third quarter 'twenty three earnings conference call.

Speaker 2: Earlier today, AutoHome Distributed is earning a press release which can be found on the company's IR website at ir.autohome.com.cm

I guess a day old telecom distributed its earnings press release, which can be found on the company's IR website at IR.

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Speaker 2: Joining me today on the call are Chairman and CEO , Ms. Chuan Lung, and Chief Financial Officer, Ms. Craig Yansen.

Today on the call are chairman and CEO, Mr Shan, Li and Chief Financial Officer, Mr. Craig Yeah.

Speaker 2: Management will go through their prepared remarks, which will be followed by a Q&A session, where they will be available to answer questions.

And we'll go through their prepared remarks, which will be followed by a Q&A session, where they will be available to answer questions.

Speaker 2: Before we continue, please know that the discussion today will contain overlooking statements made under the Safe Harbor provisions of the US private.

Before we continue please note that the discussion today will contain forward looking statements made under the safe Harbor provisions of the U S private.

Speaker 2: Securities Dedication Reform Act of 1995. Overlooking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.

Securities Litigation Reform Act of 1995, but there are lots of statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.

Speaker 2: potential risks and uncertainties include but are not limited to those outlined your public filings with the US Secreties and Exchange Commission and the Hong Kong such change. Also, home doesn't undertake any obligation to update any foreign or losing statements except as required and applicable law.

That's all risks and uncertainties include but are not limited to those outlined your public filings with the U S Securities and Exchange Commission on the Ha that's changed auto home doesn't undertake any obligation to update any forward looking statements.

As required under applicable law.

Speaker 2: Please also know that auto homes earning freshly and this conference call include discussions of certain audited non-get financial measures. A reconciliation of the non-get measures for the most directly comparable GAAP measures can be found in our earnings release. I will now turn the call over to auto home chairman, CEO , Mr. Long, for opening remarks. Please go ahead, Mr. Long.

Please also note that although homes earnings press release and this conference call include discussions of the audited non-GAAP financial measures a reconciliation of the non-GAAP measures for the most directly comparable GAAP measures can be found in our earnings release.

I will now turn the call over to older homes, Chairman and CEO for opening remarks. Please go ahead Mr. <unk>.

Speaker 2: Thank you, Sturling. Hello everyone. This is Quan Long, Chairman of CEO of House of Home. Thank you for joining our earnings conference call today.

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Speaker 2: In the third quarter, our new businesses continue to drive auto homes overall growth as we further optimize our revenue structure.

In the third quarter, our new business has continued to drive older homes, our real growth as we further optimize our revenue structure. This marks our fifth straight quarter of topline and bottom line growth on a year over year.

Speaker 2: This marks our fifth street quarter of top line and bottom line growth on a year-over-year basis.

Speaker 2: while consistently maintaining a high net profit margin.

Yes basis, while consistently maintaining a high net profit margin net revenues for the third quarter was 191 billion RMB revenues from online marketplace and others business increased 25, 2% year over year accounting for 41, 4% of total revenue rec.

Speaker 2: Net revenues for the third quarter was 1.91 billion RMB. Revenues from online marketplace and other business increase 25.2% year-over-year, accounting for 31.4% of total revenue.

Speaker 2: From data products, in particular, generated strong growth momentum increasing more than 30% compared to the same period last year. We also made substantial progress in defining our collaborative efforts with NEV automators.

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From data products in particular generated strong growth momentum increasing more than 70% compared to the same period last year. We also made substantial progress in deepening our collaborative efforts with <unk>.

Speaker 2: revenues from AAV brands were up by nearly 70% year over year as a result.

The automakers revenues from EV brands were up by nearly 70% year over year as a result, merolla adjusted net income attributable to auto home for the quarter was up two 3% year over year with our adjusted net margin heating 31, 7%.

Speaker 2: Moreover, adjusted net income attributable to auto home for the quarter was up 2.3% year over year with our adjusted net margin hitting 31.7%.

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Speaker 3: In the field of innovative business, we will continue to work hard to explore multidimensional industry cooperation and build high-tech companies.

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Speaker 3: Recently, we have invested in the car-based energy space station, Chengdu station and Chongqing station, and have been cooperating with Day Day Up to fully explore the positive business scenario of new retail and second-hand cars.

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Speaker 3: In addition, we have upgraded the basic capabilities of the digital platform to enhance the value of multiple products and provide drive and security for digital transformation of retailers with large data and excellent intelligent technology.

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Speaker 2: During the quarter, we accelerated the build-out of our content ecosystem, which combines efficient tools, content, and services to offer users the information they are seeking, motivates creators to produce content and engage with our community, and creates a virtuous cycle that drives growth across the platform.

During the quarter, we accelerated the build out of our content ecosystem, which combines efficient choose content and services to offer users. The information they are seeking multi base creators to produce content and engage with our community.

Create a virtuous cycle that drives growth across our platform. We also continue to explore new ways to develop integrate and create synergies between the diverse business models across our ecosystem. The other home additive space franchise doors, we originally launched in cooperation with.

Speaker 2: We also continue to explore new ways to develop, integrate, and create synergies between the diverse business models across our ecosystem.

Speaker 2: The Autohome energy space franchise stores we recently launched in cooperation with TTP in Chengdu and Chongqing have given us the opportunity to further refine the new retail plus used car business model and drive further business development.

TTP in Chengdu, and Chongqing has given us the opportunity to further refine the new retail plus used car business model and drive further business developments.

Speaker 2: In addition, we also upgraded the foundational infrastructure and capabilities of our digital platform to enhance the value of our data products and seamlessly integrate big data and cutting-edge technologies to empower the digital transformation of the other.

We also upgraded the foundational infrastructure and capabilities, our digital platform to enhance the value of our data products and seamlessly integrate big data on the cutting edge technologies to empower digital transformation.

Speaker 3: The rise of new energy vehicles has accelerated the transformation of the automotive industry.

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Speaker 3: In the new market environment, we focus on using new energy and digitalization to bring great opportunities.

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Speaker 2: The rapid adoption of any visas accelerating

The rapid adoption of any visa is accelerating that transformation of the automotive industry, bringing new technologies and business models to the forefront in this new market environment. We are focused on capitalizing on the major opportunities in Evs and <unk> present supporting our partners.

Speaker 2: the transformation of the automotive industry, bringing new technologies and business models to the forefront. In this new market environment, we are focused on capitalizing on the major opportunities, NEVs and digitalization.

Speaker 2: supporting our partners in the transformation of their businesses and broadening the services.

In the transformation of their businesses and broadening the services. We have on offer this will ultimately create a one stop ecosystem that spans the entire consumer cycle from the research and the purchase space.

Speaker 2: we have on offer. This will ultimately create a one-stop ecosystem that spans the entire consumer cycle from the research and the purchase phase through to the use and exchange of cars to drive long-term sustainable growth.

To use an exchange of costs to drive long term sustainable growth.

Speaker 2: With that, I will now turn the call over to our Chief Financial Officer, Ms. Kris Tseung, for a close look at our third quarter operating and financial results.

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I wish you well.

With that I will now turn the call over to our Chief Financial Officer, Mr. Craig for a closer look at our third quarter operating and financial results.

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Speaker 2: Thank you, Ms. Long. Hello, everyone. I'm Craig Zeng, the CFO of Autohome.

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Speaker 3: In the third quarter, we will continue to strengthen the systematization tool and content construction, and strengthen platform integration.

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Speaker 3: For example, we focus on the coverage of car models in the new energy measurement system.

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Speaker 3: In the third quarter, we completed tests on nearly a hundred popular new energy vehicles to provide users with a more comprehensive and more professional tool to improve the user experience.

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Speaker 3: As of now, we have over 2.6 million users for our tools.

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Speaker 3: In addition, Zhijia's 818 car super-sale and CCTV finance and other video media and social networks have achieved multi-platform joint promotion and a total exposure of 1.45 billion, further improving Zhijia's

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Speaker 2: In the third quarter, we set up our efforts to systematically develop tools and content, widen the platform mode, and broaden our profile across the industry. With interest in NEV's growing, for example, we tested nearly 100 popular models to provide users with comprehensive, easy-to-understand, and professional analysis and information.

In the third quarter, we stepped up our efforts to systematically developed choose and content widened the platform out and broaden our profile across the industry with interest in any of its growing for example, with past at nearly 100 pop with our models to provide users with <unk>.

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Speaker 2: To date, more than 2.6 million users have used our testing tools to assist their card buying decision making.

Date more than $2 6 million users have used our testing tools to assist their car buying decision making.

Speaker 2: In addition, we promoted Autohome's August 18 Super Auto Festival on multiple platforms in collaboration with CCTV Finance Channel and other broadcast and social media platforms.

In addition, we promoted ultra homes August 18, Super Auto Festival, a multiple platform in collaboration with CCTV Finance channel and other broadcast and social media platforms.

Speaker 2: Total exposure exceeded 14.5 billion impressions, which further strengthens our profile in the industry.

Total exposure exceeded 14, 5 billion impressions, which further strengthens our profile in the industry.

Speaker 3: On the other hand, the home-to-work system has also entered a new phase.

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Speaker 3: and other car organizations are traveling to jewellery shops and clothing stores across China to bring them a unique pouquinho experience.

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Speaker 3: From multiple dimensions, we encourage creators to produce and promote content that helps consumers make decision-making decisions.

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Speaker 3: Crest Mobile data shows that the number of daily users of Crest Mobile in September reached 69.01 million and increased by about 39.3% in the same period last year, continuing to lead the car market.

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Speaker 2: At the same time, we launched the next development phase for our service system, which combines online content with offline experiences to further increase our mindshare among users. At the Chengdu Auto Show, we showcased our purchase assistance service for the first time, which offers consumers a hands-on purchasing experience where they can view and evaluate various car models accompanied by our highly experienced editors.

At the same time, we launched the next development in place for our service system, which combines online content with offline experiences to further increase our mind share among users.

Turning to auto show, we showcased our purchase a system service for the first time, which offers consumers a hands on purchasing experience, where they can view and evaluate various car models accompanied by our highly experienced editors. We also launched our shopping guides program to encourage.

Speaker 2: We also launched a shopping guide program to encourage content creators to produce and promote content that facilitates the decision-making process for consumers and boost overall car consumption through our platform.

Content creators to produce and promote conference that facilitates that decision, making process for consumer and boost overall car consumption through our platform.

Speaker 2: According to QuestMobile, mobile DAU in September increased 39.3% year-over-year to 6369.01 million, underscoring our ability to steadily strengthen our leadership position in the automotive media vertical.

According to quest mobile mobile THQ in September increased 39, 3% year over year to six 369 101 million underscoring our ability to further strengthen our leadership position in the automotive media vertical.

Speaker 3: In the field of new energy, after launching the first new energy offline experience line in September last year, we have upgraded this model, trying to make the second-hand car business more sustainable.

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Speaker 3: In addition to providing a one-stop selection of multi-brand new energy vehicles, we also use the second-hand vehicle business to create a capacity-increasing scene and the ability to control the vehicle every day, and provide consumers with a change to buy a new one.

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Speaker 2: Following the launch of our first brick-and-mortar NEV experience store last September , we further refined this business model by integrating our used car business model.

Following the launch of our first brick and mortar store last September we'll further refine this business model by integrating our used car business.

Speaker 2: In addition to providing a one-stop service for NUVs from multiple brands that spans from car selection to purchase services, these stores now offer consumers the option to trade in their cars and apply the proceeds towards the purchase of a new one. This will create additional opportunities for car sales and take advantage of TTP's vehicle disposal.

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Speaker 3: The Chengdu Station, which opened in August this year, combines the culture of young people's favorite cars with the form of an art museum, and holds a series of innovative marketing activities on a regular basis.

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Speaker 3: In addition, the Chongqing Station, which was officially opened two weeks ago, is our first store with a dedicated area for second-hand cars. With a three-in-one service model, we provide customers with a war-safe experience.

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Speaker 3: This innovative service model fully utilizes the business model between new retail and second-hand cars.

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Speaker 2: Auto Home Energy Space Chengdu store which opened this past August has become particularly popular among younger consumers with its innovative marketing activities and automotive culture offerings including a car museum. In addition, the Chongqing store which officially opened two weeks ago is our first location to feature a dedicated used car selection within the store.

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Speaker 2: This provides consumers with a one-stop experience, allowing them to sell their old cars and the pictures at NED or Youth Car at the same time.

Speaker 2: This innovative service model capitalizes on the synergies between our new and the used car business.

Speaker 3: And offers consumers a complete suit of additional services, including reicco inspection, purchase and replacement. This year we listening to.

Speaker 3: In the next two years, we plan to push the T-Mobile energy space station to the whole country to achieve the downstream penetration of multi-city, so that T-Mobile's resource advantage extends from the line to the line, and Day-to-Day Driving will also establish a strategic layout of the space station to achieve the nationwide penetration of the T-Mobile energy space station as quickly as possible.

Speaker 2: Our new retail business at the moment is developing rapidly with the construction of new retail stores in certain cities having already begun. Over the next two years, we plan to increase the penetration of auto home and the space for entire stores across the country, allowing auto home to turn its online advantages.

Speaker 2: into offline business across the board of markets. TTP will also leverage the Auto Home and the Space Network to accelerate the expansion of its operations nationwide.

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Speaker 2: On Digitalization Front, we upgraded our technology and information channels to improve communication and use of profiling and strengthen the efficiency and accuracy of customer outreach.

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Speaker 2: We also broadened the application of AI into our smart products to generate further labor savings, improve content quality, and provide more value to the data customers.

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Speaker 2: In the first nine months of the year, key metrics, such as the average number of data products adopted by each data store and average revenue from data products for data store, both increased by double digits when compared to the same period last year.

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Speaker 2: We are actually expanding our digital products for the folio across a range of application scenarios in order to support dealers as a shift from human driven to digital driven operations to improve their operational efficiency and ultimately lower the door prices for customers.

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Speaker 3: Hi, everybody. Please, take care, then see you in the next break. Bye.

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Speaker 2: Turning to our used car business, in addition to our ongoing cooperation with new retail stores, we launched a one-stop vehicle price inquiry product during the quarter. Based on used car auction and the new car transaction data, this platform provides used car dealers with the real vehicle transaction prices as well as valuation tools supported by large language model capabilities.

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Launched a one stop vehicle price winery product during the quarter based on <unk> option on a new car transaction data. This platform provides used car dealers with the real vehicle transaction prices as well as for the agent choose supported <unk> language model capabilities dealers come.

Speaker 2: dealers can now accurately evaluate each vehicle by querying the transaction prices for new and used vehicles across different regions, brands and models.

How accurately <unk> each vehicle occurring that transaction prices for new and used vehicles across different regions brands and models.

Speaker 2: In addition, we are also boosting the transaction conversion rate by increasing customer and user satisfaction rate.

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Speaker 2: In the third quarter, photo homes matching and auction services platform accounted for about 24.4% of all use car transactions in China, a year-over-year increase of approximately three percentage points.

Set quota motorhomes matching and the options services platform accounted for about 24.4% of all used car transaction in China, a year over year increase of approximately three percentage points.

Speaker 3: As mentioned above, the car industry has seen a steady growth in revenue and revenue in the third quarter. The income structure continues to optimize, and the co-development of multi-billion-dollar business has greatly increased the overall business upstream. And the new retail business is also accelerating into the development of expressways. In the future, we will continue to deepen the ecological strategic layout, open up online and offline channels, and provide new models for the transition of the car industry to solve the new energy trend.

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Speaker 3: We believe that multidisciplinary business development will help the automobile industry achieve the next stage of growth.

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Speaker 2: In summary, we delivered steady revenue and profit growth during the quarter while continuing to optimize our revenue structure.

In summary, <unk> revenue and profit growth during the quarter, while continuing to optimize our revenue structure, our new retail business is gaining momentum as synergies among our diverse business lines.

Speaker 2: Our new retail business is gaining growth momentum as synergies among our diverse business lines begin to take hold, which will greatly strengthen overall growth prospects going forward.

Takeout, which real greatly strengthen our real growth prospects going forward.

Speaker 2: Looking ahead, we'll continue to advance our ecosystem approach by creating new business models that connect the online and offline channels to help automakers transform and adapt to NEB trends.

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Speaker 2: We are confident that our diversified business will drive autohome growth to the next level.

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Speaker 3: Next, I will explain to you the main financial statements of the 3rd quarter of the 2023 Car Expo.

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Speaker 3: Please note that in today's discussion, I will only use RMB as an example, unless there is an explanation.

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Speaker 2: Next, let me walk you through the key financials for the third quarter of 2023. Please note that, as with prior course, I will reference RMB only in my discussion today, unless otherwise stated.

Next let me walk you through the key finance shows for the third quarter of 2023, please know that as with prior costs a reference armed B only you might discussion today.

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Speaker 2: Net revenues for the third quarter were $1.91 billion, up 3.4% year-over-year.

Net revenues for the third quarter, one point 91 billion, 3.4% year over year.

Speaker 2: Breaking it down by segment, media services revenues were $477 million. Least generation services revenues were $830 million. And online marketplace and other revenues were $599 million, up 25.2% year over year, driven primarily by increasing revenue contribution from data products.

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Speaker 3: In terms of cost, the operating cost of the third quarter is 3.74 billion yuan, and the year-on-year stock price is 3.75 billion yuan.

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Speaker 2: Moving on to costs, cost of revenues in the third quarter was $374 million compared to $331 million in the third quarter, 2022. The increase was primarily attributable to an increase in content and operational costs. Growth margin in the third quarter was 80.4% compared to 82.1% in Q3, 2022.

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Speaker 3: In terms of operating costs, the third quarter sales and market costs were 9.35 billion yuan, and the same period last year was

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Speaker 3: The increase is mainly due to the increase in market promotion costs, and the R&D cost is 3.55 billion yuan.

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Speaker 3: Finally, the general management cost is 1.41 billion yuan, and the annual total is 1.36 billion yuan.

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Speaker 2: Turning to operating expenses, sales and marketing expenses in the third quarter were $935 million compared to $863 million in Q3 2021.

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Speaker 2: The increase was primarily attributable to the increase in marketing and promotional spending.

Speaker 2: Product and development expenses were $355 million compared to $387 million in Q3 2020.

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Speaker 2: The decrease was primarily attributable to a decline in personnel related expenses. Finally, general and administrative expenses were 141 million compared to 136 million in Q3, 20.

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Speaker 3: In general, the gross profit of the third quarter is 1.66 billion yuan.

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Speaker 2: Overrower, we delivered operating profit of 166 million in a set quarter compared to 192 million in the corresponding period of 2020.

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Speaker 2: Adjusted net income attributable to Autohome Inc was $604 million in the third quarter compared to $590 million in the corresponding period of 2022, representing an increase of 2.3% year-over-year.

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Speaker 3: In the third quarter, the US stock and bond net profit was $1.23, and last year it was $1.18. In the third quarter, the US stock and bond net profit was $4.93 and $4.92, and last year it was $4.73 and $4.72.

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Speaker 2: 9-GAP-basics and diluted earnings per share in a set quarter were 1.23 respectively, compared to 1.18 respectively in the corresponding period of 2022. 9-GAP-basics and diluted earnings per ADS in a set quarter were 4.93 and 4.92 respectively, compared to 4.73 and 4.72 respectively in the corresponding period of 2020.

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Speaker 3: The cash flow from the third quarter is 4.25 billion yuan.

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Speaker 2: As of September 30, 2023, our balance sheet remained very strong with cash, cash equivalent and short-term investment of $23.43 billion. We generated net operating cash flow of $425 million in the third quarter of 2023.

As of September 30th 2023 are balance shaped remains very strong with cash cash equivalent of a short term investment of 23 point 43 billion regenerated net operating cash flow of $425 million and a quarter of 2020th.

Speaker 3: In November 2021, the Board of Directors approved a 12-month stock buyback plan with a total amount of less than US$200 million. In November 2022, the Board of Directors extended this buyback plan for another 12 months, and in November 2023, the Board of Directors approved a 12-month stock buyback plan with a total amount of less than US$200 million.

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Speaker 3: As of October 27, 2023, we have repurchased about 6.25 million U.S. stocks, a total of about 1.87 billion.

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Speaker 2: On November 18, 2021, our Board of Directors authorized a shared repurchase program under which we were permitted to repurchase up to $200 million of AutoHome's ADS.

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Speaker 2: for a period not exceed 12 months thereafter. On November 3rd, 2022, our board of directors authorized an extension of the share repurchase program for another 12 months.

To our board of directors authorize <unk> of that share repurchase per west for another 12 months expiring on November 17th 2023.

Speaker 2: expiring on November 17, 2023.

Speaker 2: As of October 27, 2023, we have repurchased approximately 6.25 million ADS for a total cost of approximately 187 million US dollars.

October 27th 2003, we have repurchased approximately six 125 million a D. S for a total cost of approximately 187 million U S dollars.

Speaker 2: ????????????,??????????? With that, we are ready to take your questions. Operator, please.

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Speaker 1: Thank you. If you wish to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again.

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We will take our first question.

Speaker 1: Your first question comes from the line of Kami Wang from CICC. Please go ahead, your line is open.

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Speaker 4: Thank's show: the ky J ong lching the fing moment.

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Speaker 4: The first one is that we see that the third quarter test is a relatively mild warm-up for the border. At present, it seems that the overall main factory is still in a state of crisis in this price strategy. I would like to ask the management team how to view the trend of development in the next year's test and the structural opportunities.

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Speaker 4: The second question is about the new energy business model. We can see that our business experience store has been expanded from Shanghai to Chengdu and other areas. So far, we can see how the operating indicators of the core city are, and how the management level is looking at the investment plan and growth goals for the new energy business next year.

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Speaker 4: So thanks for management for taking my questions. And I got two questions here. So first of all, could you please share your views on market outlook for the upcoming quarters and do you expect continuous price competition in the month or year?

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Speaker 3: For the first question about the test, I already have an answer.

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Speaker 3: In the third quarter, the economy of China continued to recover and improve, and the National Bureau of Statistics released relevant data. In the third quarter, the GDP of domestic production was 4.9% higher than expected, which was higher than expected in the market.

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Speaker 3: But we also see that according to the data of the city council, the retail sales of third quarter used cars have increased by 1.8%, which is a big slowdown compared to the second quarter, which rose by 21.4%.

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Speaker 5: The main reason is the high technical impact of the same period last year. In addition, consumers are still cautious about the consumption of mass products. So the automotive industry is still facing challenges.

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Speaker 6: Okay, I will take the first question. In Q3, the economy continued to recover and rebound. According to the statistics released by the National Bureau of Statistics, in Q3, our GDP grew by 4.9% year-on-year, higher than market expectations. However, according to the data from CPCA, in Q3, passenger vehicle retail sales grew by 1.8%.

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Speaker 6: In Q2, this number was 21.4%. You can notice there's a big slowdown of the growth speed. This is because of the high base number of the same period last year, while at the same time, the consumers continue to be precautious about the commodities consumption. As a result, there is still challenges for the entire auto industry.

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Speaker 5: According to the data from the annual meeting, China's car industry has a 4.9% profit margin from January to September this year. This is an average of 5.7% of the overall industrial enterprise profit margin at the same time.

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Speaker 5: The main reason for this is because of the profit of the oil car, but the market share has fallen sharply. Although new energy vehicles are growing at a high speed, most of them are at a loss. So for the automotive industry, this structural adjustment is still ongoing.

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Speaker 6: According to the data from CPCA, in the first nine months of 2023, the overall profit margin for the Chinese auto industry is 4.9%, much lower than 5.7%, which is the overall industrial company's profit margin. However, I think that this is because even though ICE cars are still making profit, but their market share is declining, while NEVs experienced a high speed growth, but most of them are still suffering from losses. As a result, the entire auto sector is still going on restructuring.

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Speaker 5: In order to stabilize car production and expand market consumption, the central and state governments have introduced a series of policies to promote car consumption.

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Speaker 5: For example, the policy of optimizing automotive procurement and management, supporting the update and consumption of old and new automobiles, speeding up the development of the second-hand car market, and strengthening the construction of new energy vehicles, we believe that a series of good policies will promote the acceleration and recovery of automobile consumption.

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Speaker 6: So far, central and different levels of the local government, they have been paying great effort to uplifting and stabilizing the auto production and also released a series of policies and incentives to promote auto consumption. For example, there is policy about optimizing the car purchase restriction management to support the trading of the old cars for the new ones and accelerate the development of the used car market and accelerate and strengthen the development of the supportive facilities. We believe that with the above mentioned favorable policies, the auto sector consumption will continue to recover in a very speedy way.

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Speaker 5: As for the development trend of next year's test, we think there are mainly two aspects. The first is that the new energy field is still a key development point for the industry.

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Speaker 5: According to the relevant data released by the city council, as of September this year, the market penetration rate of new energy vehicles has reached 36.7%.

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Speaker 5: The central and regional governments continue to push for more targeted and practical solutions.

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Speaker 5: to stimulate the consumption of new energy vehicles. So we expect that the penetration rate of new energy in the market next year will continue to rise. This is one aspect.

Speaker 5: Secondly, the potential of the second-hand car market will continue to expand. We can see that the consumption of second-hand cars in China is in a fast-rising stage. So far this year, the number of second-hand cars has reached 13.49 million units in September . The transaction volume has reached 8,598 billion yuan. China's second-hand car market is at an all-time high.

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Speaker 5: With the development of new energy vehicles, more consumers will have the advantage of buying and using low-cost vehicles. At the same time, the implementation of a separate rental policy for second-hand vehicles also gives car dealers more space for rampant development in the second-hand vehicle industry. So the potential for the development of the second-hand vehicle market in China is huge.

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Speaker 6: In terms of the outlook and the trend for the auto market of next year, we think that there are mainly the following two aspects. First of all, NEV will continue to be the priority of the development. According to the data of CPCA, by the end of September , NEV passenger vehicle market penetration hit 36.9%, and central as well as the local government continue to launch more targeted and effective measures to promote the consumption of the NEV. We estimate that next year, NEV penetration will continue to go higher. And the second trend is that the used car market will continue to expand its market potential. We've noticed that the used car consumption

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Speaker 6: car development in China. In a word, the Chinese auto sector in the medium and long term will enjoy a stable and upward trend. And we are very confident about the long-term development trend and its potential of the Chinese auto market. Autohome will continue to grow our

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Speaker 5: So to sum up, in general, the long-term situation of the Chinese automotive industry is stable and optimistic. We are also confident in the long-term development of Chinese cars. As a car company, we will continue to develop new energy vehicles and second-hand cars, seize the opportunity in the new market, and develop a long-term health with a diversified production of renewable vehicles.

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Speaker 6: In a word, the Chinese auto sector in the medium and long term will enjoy a stable and upward trend, and we are very confident about the long-term development trend and its potential of the Chinese auto market. Autohome will continue to grow our AEV and used car business to grasp the new market opportunities and use a diversified ecosystem to empower our long-term sales development growth.

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Speaker 3: Hello, I'm Zheng Yan. I'm here to answer your second question about our offline experience store.

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Speaker 3: In terms of quantity, this is also a very important indicator for us. This year, in addition to Shanghai, Haikou, Chongqing and Chengdu, we have officially opened. Before the end of the year, we may have close to 20 new retail stores that will gradually open.

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Speaker 3: We haven't made any official announcement about the indicators in the core cities. But from the data we have seen so far, we are quite satisfied with them. Our clients are very satisfied with them.

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Speaker 3: and gave a very positive feedback. So the acceptance of this new model is also very good. We also welcome everyone to visit our stores to learn about the situation of the first-hand.

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Speaker 3: In the next 1-2 years, we will work with our partners in different cities and countries.

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Speaker 3: We want to promote our model in different cities. We have a big advantage in this model. In addition to the first, second, and third lines, we will have a strong reputation even in the fourth and fifth lines. So our goal next year may be 50 cities. In 2025, we will have more than 100 cities.

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Speaker 3: The energy-saving model is continuously improving its penetration rate and contributing more financial data to the infrastructure in the future.

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Speaker 6: OK, Mr. Zeng will take the second question. So for the second question, the first thing we should look at is the number of the stores we build.

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Speaker 6: end of the year we're going to build another 20 new shops so this is very important indicator for us the number of the stores. Well in the same time you can see that now for the numbers and indicators we haven't disclosed these numbers in the essential cities however the speed of building our stores as well as the feedback we get from the consumers are pretty positive and I think that this is a very popular trend in the future and if you get chance we welcome all of you to visit our stores in different cities and in the next one or two years according to our development in different cities as well as our cooperation with different partners we will continue to promote the number of our stores we have not only stores in tier one tier two and tier three cities but also tier four and tier five we see very strong vigor and vitality in different tiers of the cities we plan that next year we're going to cover another 50 cities and by the end of 2025 we're going

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Speaker 7: We plan that next year we're going to cover another 50 cities, and by the end of 2025, we're going to cover a total of 100 cities in China. We expect that with the further penetration of the AEV, in the future, new retail business will continue to contribute more in our financial contribution.

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We'll take our next question.

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Speaker 1: Your next question comes from the line of Richie Sun from HSBC. Please go ahead, your line is open.

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Speaker 8: Mr. Long, Mr. Zhang, Mr. Sterling, good evening. Thank you for giving me the opportunity to ask questions. I have two questions.

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Speaker 8: First of all, could you please clarify what expectations do you have for the second-hand car market next year? And what expectations do you have for the company's second-hand car business income and profits? The second question is about different Internet platforms. AI and big models have now been used to enhance advertising.

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Speaker 8: Good evening, management. Thank you for the opportunity to ask questions. I have two. So firstly, after the previous question that talked about used car, can management further quantify the expectation towards the used car market growth outlook in the next year? And what is your expectation towards the revenue and margin for this business?

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Speaker 8: Second of all, various internet platforms are using AI and large language models to improve ad monetization, content production, and lease filtering efficiency. So what is Autohome's strategy in this front? And in media services, lease generation, data products, and among other business lines, do we see any room to improve the efficiency further? Thank you.

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Speaker 3: The second-hand car is a very important part of car consumption. The second-hand car market has also been heavily valued by the government. Recently, the government has also released a lot of policies to promote the second-hand car market.

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Speaker 3: According to the data from the Chinese Automobile Flow Association, in the third quarter of this year, the size of domestic second-hand car transactions reached nearly 13.5 million taels, an increase of 12.5% compared with the previous year.

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Speaker 3: The Government Exchange of China predicted that 20% of sued in China will moving up in the new year

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Speaker 3: We expect that the second-hand car market will continue to be good this year. Keep up the good work and welcome a new phase of high-quality development.

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Speaker 6: First of all, I will address the question about the used car market. The used car market is a very important segment in the entire auto sector, and the used car market always got high attention from the government. Recently, the government

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Speaker 3: 5 million by 12.6% year-on-year. And also according to the forecast of auto dealers association, this year our national used car trading volume is expected to hit a historical high. We expect that next year used car market will continue to keep today's and this year's good trend and continue to be very active and embrace the new stage of high quality development. In terms of our income, this year's second-hand car sales is a challenge for the second-hand car industry. The business of second-hand cars has shown good performance. In the first three quarters of this year, the sales volume of used cars is expected to hit a historical high. We expect that next year used car market will continue to keep today's and this year's good trend and continue to be very active and embrace the new stage of high quality development.

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Speaker 3: In terms of our revenue, this year's second-hand car sales have brought a positive impact to the second-hand car industry.

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Speaker 3: We are also confident that we will continue to expand our second-hand car business next year. You can also refer to such a chart of the entire second-hand car market.

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Speaker 6: In terms of the revenue, you can see that this year, the new car price cards and promotion campaigns do generate some challenges for the used car market. So for Autohome, our used car business shows a very strong resilience. In the first three quarters,

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Speaker 6: You know, the overall used car business, including TTP, maintained a very good growth momentum. And TTP still makes profits so far and next year with more and more new retail shops and stores operating in different cities. I believe that TTP will also leverage the space stations and to have their businesses all over China. And we're very confident that next year the overall used car business revenue will continue to expand.

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Speaker 3: Regarding AI, at the application end, we continue to use technology related to AI models to seek more business cooperation opportunities to improve product competitiveness and customer satisfaction.

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Speaker 3: At the beginning of the year, we reached a strategic cooperation with Baidu's Wenxin One Speech Ecology. Through Baidu Smart Cloud, we will integrate the capabilities of Wenxin One Speech with our own data and technical advantages, and implement the comprehensive integration of smart dialogue technology and car digitalization services. This is also the first time that AI model technology has landed in the domestic car digitalization service scene.

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Speaker 6: And the second question, you know, from the application side, we continue to apply AI and large language model related technologies and to seek more business cooperation opportunities as to improve our product competitiveness as well as customer satisfaction. At the beginning of the year, we enter into strategic partnership with Baidu, ErnieBot, and we will leverage their capability of Baidu smart cloud connecting with ErnieBot. And based on our own data and technology strengths, we're going to have a comprehensive convergence of intelligent dialogue technology with the auto digital services. This is also the first application scenario of the AI large language model technologies on the auto sector in China.

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Speaker 3: For example, in the first half of this year, we launched an AI-based smart choice tool called Cloud Smart Choice to help marketers quickly choose the right products for their customers.

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Speaker 3: For example, our AI intelligent writing is one of the functions of our intelligent assistants, which can help marketers to produce high-quality content and writing.

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Speaker 6: And product-wise, in the first half of this year, we have launched an AI-based intelligent tool, which is called Smart Selection, to facilitate and empower the dealers to quickly segment their clients and to reach out to the high-networth individuals as soon as possible, release their capacity, and improve service quality. And based on GPT model, we are also helping the users and the clients to select the cars and also help the dealers to do the operation analysis.

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Speaker 6: And for another example, our AI smart writing instrument is also one of the functions in our intelligent assistant. It can actually facilitate and empower the dealers to complete high quality and very good writing as well as the content release.

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Speaker 7: We hope that by relying on this kind of large language model products, we can continue to help the dealers to cut cost and improve efficiency, as well as to enhance their overall operation efficiency.

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Okay next question.

Thank you we will take our next question.

Speaker 1: Your next question comes from the line of Thomas Chong from Jeffreys. Please go ahead, your line is open.

So next question comes from the line of comes telephone Jeffries. Please go ahead, you're lying his iPad.

Speaker 3: Good evening. Thank you for accepting my question. I have two questions. The first one is about the stock market's forecast for the second half of the year and the beginning of the year in 2021. The second question is, can you update the second-hand car market?

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Speaker 8: Thanks, management, for taking my questions. My first question is about the budget spent by ODM in the second half this year, as well as the 2024.

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Speaker 3: My second question is related to the overall used car market as well as the strategies for 1010pi. Thank you.

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Speaker 3: Thank you, Thomas. Let me answer the question about the stock market and the market forecast for next year. In the second half of the year, especially in the fourth quarter,

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Speaker 3: We will apply this budget to specific shops specifically to oil companies and add more support to our suppliers.

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Speaker 6: Okay, I will firstly take the question about the budget plan for the OEM in the second half as well as next year. In the second half of this year and in particular since Q4, we see that actually the OEMs, they would like to invest more of their budget in promoting the transaction from the user side. For example, to support the lease generation as well as to invest on advertisements or directly subsidize the consumers.

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Speaker 3: As for next year, as Mr. Long said, we are optimistic about the overall market.

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Speaker 3: However, due to the profits of the mainframe itself and the pressure of the self-profit situation of the merchants themselves, the mainframe may still continue this trend this year, and will still prioritize the support of the merchants.

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Speaker 3: and some mid-range stocks. So they will be more cautious and pay more attention to the effect on the placement of ads. It will also be more diversified. So in this area, we may still see a fierce competition next year.

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Speaker 6: And for next year, just like Mr. Long mentioned, we think that actually for the market investment, we will continue to be precautiously optimistic. Because for the OEMs, since their profit margin are under some pressure, they will pay more attention to the effectiveness of the budget investment. For example, they will prioritize the support to the dealers or directly subsidize the consumers.

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Speaker 6: As a result, in terms of the ad investment, they will be more precautious and they tend to further diversify their investment. So they will also pay more and higher attention to the effectiveness of the ad.

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Speaker 3: In the future, we will keep up with the trend of the industry. One is to speed up the digitalization of AI to improve efficiency in the entire field. The other is the rapid development of new energy sources. So we will improve our own ability around these two points and also challenge more customers' budgets.

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Speaker 6: And looking into the future, I think that we will continue to grab the opportunities, in particular in two areas. First of all, accelerate the digital application of AI, and secondly, still prioritize and focusing on NEV. And by leveraging our strengths, we will also try to win more customers and try to get their budget and investment.

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Speaker 3: As for the second-hand car market, I just mentioned that in general, due to the low price of new cars in recent years,

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Speaker 3: In the past few years, we think that the price of new cars has basically reached a certain stage, so in the next few years, we think that second-hand cars will be a double-digit increase in the overall market status.

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Speaker 6: And for the used-car market, I already mentioned that due to the price cut of the new vehicles and because of COVID-19, we do see that used-car market has been under some pressure as well as some restrictions. But I believe that in the future years, you know, the price cuts for the new cars already come to a specific limit. And we believe that used-car market can expect a double-digit growth.

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Speaker 3: We have also launched a three-in-one service model in the latest XINLINSHOU document. On the one hand, it is convenient for customers to change cars. On the other hand, it can also help Day Day Up to expand its high-speed and low-cost service.

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Speaker 6: And for TTP, you know, TTP is already generating cross-set.

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Speaker 7: into the state of expansion and future development. In the future, we will continue to leverage the resources from the group as well as the other partners to facilitate the development of TTP. And in the previous answered the questions, we also mentioned the three-in-one service format. So we think that it will greatly help TTP to develop and will continue to facilitate this high-speed growth. All right. Next question. OK, next question.

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Speaker 6: Okay, next question, please. Thank you.

Uh huh.

Okay next question please.

Thank you.

We will take our final question.

Speaker 1: Your final question comes from the line of Brian Gong from City. Please go ahead, your line is open.

You'll final question comes from the line to find golf and city. Please go ahead your line as I said.

Speaker 5: Hi, good evening. It's almost the end of the year, so I'd like to know when the contract with Li Zheng will be launched. Do we have any expectations for this contract? Do we have any room to raise the price?

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Speaker 9: Now with the increasing sales of the new power, I don't know what the management team thinks about the number of traditional car dealers, that is, the number of SaaS stores, will it be less and less? Thank you. Let me translate it myself.

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Speaker 10: commitment share, you know, when we will start the contract renewal with dealers for each generation? And what's our expectation for the contract renewal this time? Do we still have room to raise our price?

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Speaker 10: And along with the rising proportion of new auto sales from new EVs, how does management think about the numbers of dealers from traditional OEMs? Will the number gradually decline in the future? Thank you.

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Speaker 3: It's the same as usual. We've basically started it now. We'll finish it by the end of next year. It's the same as last year. You mentioned the price increase. In fact, the price increase has never been one of our strategic goals. In the past, there may be some in the market who think that the number of money we receive from retailers has increased. But the reality is that we actually provide more services, digital products. In fact, it's not the result of a price increase. We've never pursued a price increase to increase our business.

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Speaker 3: Hence, our economic situation is not really ideal at all. Therefore, this year...

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Speaker 6: Thank you, Brian , for reading this question. Yes, we already initiated a contract to renew with our dealers. However, we will not use price increase as a strategy for us to gain more profit. It has never been our strategy. Of course, sometimes you think that we charge more from the dealers. That is because we have been providing more services to our dealers, including offering more digital products to them. And I think that we never take a price increase as a strategy for us to gain more and higher performance. And this year, as we know, the dealers, they generally encounter some difficulties. So we will, of course, never raise the price.

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Speaker 6: So from our side we would like to empower and enable the dealers by offering more digital products and helping them to cut cost and improve efficiency. So in a word in the past and in the present we have never been using the price increase as a strategy for us to gain more profit.

Side, we would like to empower and enable the tellers.

By offering more digital products, and helping them to cut costs and improve efficiency. So in a way in a past and present, we have never been using the price increase as a strategy for us to Kmart profits.

Speaker 3: You mentioned the quantity of the oil cars, in terms of oil cars, the oil car sales in the past 3 quarters have dropped by 9%. The oil car sales in the past 3 quarters have dropped by 9%.

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Speaker 3: So if you just look at traditional oil trucks, the number of dealers will definitely decrease in a big way, but at the same time, you can also see that the penetration ratio of our new energy is already very high, which is 37% in the 3rd quarter of this year, which is a very high penetration rate, which is a very high penetration rate, which is a very high penetration rate, which is a very high penetration rate, which is a very high penetration rate,

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Speaker 3: So the new energy brand has a rapid development and a lot of new dealers are looking forward to it.

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Speaker 3: Our XINLINSHOU is also helping XINGENGYUAN to do sales. So overall, this is still a very active market. Because we expect the overall car sales to increase between 2% and 3% this year. It will be a stable trend next year. So overall, we think the number of dealers is not the core problem.

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Speaker 3: The core problem is how to adapt to the new energy and how to help the merchants get a new positioning in this change. So in this aspect, whether it's digital products or the retail model, we are all working on this.

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Speaker 6: And the second thing is about the number of the dealers in your question. In Q3, we see that the sales from the ICE car dealers dropped by a little bit less than 9%. Of course, the dealers are under some impact and see that the sales of the ICE vehicles have been declining. However, at the same time, the EV penetration has been on the rise. And you can see that in Q3, the penetration already hit 37%. So there are some rapid development trends for the NEV brands. Well, and at the same time, some traditional dealers are also transforming themselves into the NEV dealers. So for our new retail business model, we are also trying to help those NEV dealers to further expand and to tap deeper into this market because the market in a whole is very vigorous.

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Speaker 6: And I believe that the number of dealers itself is not an issue at all. The thing is that how we can better adapt to all kinds of changes and dynamics to reposition those dealers so as to be more adaptable. So by offering those digital products and by facilitating them with our new retail model, I believe that we can do a better job in the future.

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Okay Sir.

Speaker 1: Thank you. There are no further questions at this time. I will turn the conference back to management for closing comments.

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Speaker 5: Dear Chairman Expert, there is a new story to end the discussion

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Speaker 2: If you have any questions or suggestions, please feel free to contact us. Thank you.

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<unk>. Thank you for joining us today appreciate your support.

Look forward to <unk> next quarter's conference call in a few months.

Meantime, please feel free to contact us if you have any further patterson. Thank you. Thank you bye bye.

Speaker 1: This concludes today's conference call. Thank you for participating. You may now disconnect.

This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker 11: You

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Speaker 11: And.

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[music].