Q2 2024 Autohome Inc Earnings Call
Ladies and gentlemen, thank you for standing by for Autohome's second quarter and Interim 2024 Earnings Conference call.
Speaker Change: At this time, all participants are in a listen-only mode. A question and answer session will follow management's prepared remarks. As a reminder, this conference call is being recorded. If you have any objections, you may disconnect at this time.
Sterling Sung: A live and archived webcast of this Earnings Conference call will also be available on Autohome's IR website. It is now my pleasure to introduce your host, Sterling Sung, Autohome's IR Director. Mr. Sung, please go ahead.
Operator: Thank you. Thank you, operator. Hello, everyone. I'm starting soon.
Operator: And welcome to Autohome's second quarter and the interim 2024 earnings conference call. Earlier today, Autohome distributed its earnings release, which can be found on the company's IR website at ir.autohome.com.z. Provolution statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.,,, Thank you, Sterling.
Sterling Sung: Thank you. Thank you, Operator. Hello everyone. I'm Sterling Sung and welcome to Autohome second quarter and the interim 2024 earnings conference call.
Speaker Change: Earlier today, Autohome distributed its earnings release, which can be found on the company's IR website at ir.autohome.com.zn
Speaker Change: Joining me today under this call are Chief Executive Officer, Ms. Cao Wu, and the Chief Financial Officer, Ms. Craig Yen-Tsung. Management will go through their prepared remarks, which will be followed by a Q&A session where they will be available to answer all your questions.
Speaker Change: Before we continue, please know that the discussion today will contain four looking statements made under the Safe Harbor Provision of the U.S. Private Securities Litigation Reform Act of 1995.
Speaker Change: Provolution statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.
Speaker Change: Potential risks and uncertainties include but are not limited to those outlined in our public filing with the US Securities and Exchange Commission and Hong Kong Stock Exchange
Speaker Change: Autohome doesn't undertake any obligation to update any forward-looking statements except as required under applicable laws.
Speaker Change: Please also know that Autohome's Earnings Threshold List and this conference call include discussion of certain non-GAAP, audited non-GAAP financial measures. The reconciliation of the non-GAAP measures to the most directly comparable GAAP measures can be found in our Earnings Relief.
Speaker Change: I will now turn the call over to Autohome's CEO, Ms. Hu, for opening remarks. Please go ahead, Ms. Hu. Ms. Hu, please.
Speaker Change: ????,???,??????CEO ??,???????????????? Thank you, Sterling. Hello everyone, this is Tao Wu, CEO of Autohome. Thank you for joining our early conference call today.
Tao Wu: Hello everyone, this is Tao Wu, CEO of Autohome. Thank you for joining our early conference call today. In the second quarter, the revenue of Qixiazhijia has steadily increased, and the flow of users has also significantly improved. The innovation business has continued to break through, accounting for 33.1%, including data products, new energy vehicles, and many other businesses, to demonstrate a strong system of growth. In terms of profit, while we are ensuring the health and development of our business and fulfilling our commitment to a stable return to shareholders, we continue to maintain healthy profitability. In the second quarter, we adjusted the net profit to RMB5.72 billion, which belongs to the automobile family.
Speaker Change: In the second quarter, Autohome's revenue saw steady growth, user traffic also increased significantly, and innovative businesses continued to make breakthrough progress.
Speaker Change: Promote the continuous optimization and upgrading of the overall business structure of Autohome.
Speaker Change: In the second quarter, Autohome's net revenues grew steadily, user traffic increased noticeably, and our innovative business continued to make breakthroughs, driving the continuous optimization and upgrade of our entire business structure.
Speaker Change: Specifically, in the second quarter, total revenue reached RMB 1.87 billion, representing a year-on-year increase of 2.2%. Among this, online marketing and other business income continued to maintain a double-digit year-on-year growth rate.
Speaker Change: The revenue share reached 33.1%, including multiple business areas such as data products and new energy vehicles, all showing strong growth momentum.
Speaker Change: The year-on-year revenue growth exceeded 15% and nearly doubled, respectively.
Speaker Change: In terms of profit, while ensuring the healthy development of our business and fulfilling our commitment to stable returns for shareholders, we have continued to maintain a healthy profitability. The adjusted net profit attributable to Autohome for the second quarter was RMB 572 million.
Tao Wu: Specifically, in the second quarter, total revenues grew by 2.2 percent year-over-year to reach 1.87 billion RMB, of which revenues from the online marketplace and other businesses continued to maintain double-digit growth year-over-year, reaching 33.1 percent of total revenue. In the field of innovative business, our new retail business model has been further expanded. With the decrease in sales volume, we have also increased the penetration from high-end cities to low-end cities. In terms of digitalization, we continue to promote the innovation and upgrade of products. Based on smart products, we launched a digital management platform.
Speaker Change: Adjusted net profit margin reached 30.6%
Speaker Change: Specifically, in the second quarter, total revenues grew by 2.2 percent year-over-year to reach 1.87 billion RMB.
Speaker Change: Of which, revenues from the online marketplace and others business continue to maintain double-digit growth year-over-year, reaching 33.1% of total revenue.
Speaker Change: Notably, many business lines such as Dataproducts and NEV have experienced robust growth with revenues for the quarter increasing by over 15% and nearly doubling, respectively, year over year.
Speaker Change: In addition, we have maintained a healthy profitability while driving the development of our businesses and fulfilling our commitment to provide stable shareholder returns.
Speaker Change: In the second quarter, adjusted net income attributable to Autohome was 572 million RMB, allowing our adjusted net profit margin to reach 30.6%.
Speaker Change: In the field of innovative business, our new retail business territory has further expanded. As our sales volume increases, we have also intensified our penetration from high-tier cities to lower-tier cities.
Speaker Change: We quickly launched the satellite program based on the existing car bracket space station.
Speaker Change: Using the space station store as the central hub
Speaker Change: Extend the reach into a broader range of lower-tier cities to form a network layout that radiates benefits from points to areas.
Speaker Change: This initiative not only accelerated the penetration of our sales network but also significantly expanded the boundaries of our services, reaching a broader market and user base.
Speaker Change: In terms of digitalization, we continuously drive product innovation and upgrades.
Tao Wu: From building basic facilities, digital tools, to financial management, we have provided our partners with a powerful and systematic digital support platform. [inaudible] In our innovative business arenas, we have further expanded our new retail business reach, increasing and intensifying our penetration from high-tier to low-tier cities. By leveraging our established flagship Autohome space store as the core hub, we have rapidly initiated our satellite plan. This plan utilizes our Autohome space store as the core hub to expand our reach to neighboring low-tier cities, creating a network that radiates from a single point to cover an entire region.
Speaker Change: Relying on our intelligent system products, we have launched a digital business management platform. From infrastructure setup and digital tool empowerment to refined operational management, we provide our dealer partners with a powerful and systematic digital support platform.
Speaker Change: Help them achieve revenue and business management pathways. In addition, our cooperation with Ping An Group has also entered a new stage. In the second quarter, we
Speaker Change: Integrated car purchasing tools, content, and car usage services, creating a comprehensive service system that spans the entire lifecycle of car owners, providing users with a one-stop convenient service experience.
Speaker Change: in our innovative business arenas.
Speaker Change: We have further expanded our new retail business reach, increasing and intensifying our penetration from high-tier to low-tier cities.
Speaker Change: By leveraging our established flagship Autohome State Store as the core hub, we have rapidly initiated our satellite plan.
Speaker Change: This plan utilizes our Autohome space doors as the core hub to extend our region to neighboring low-tier cities, creating a network that radiates from a single point to cover an entire region.
Tao Wu: This network dynamic not only accelerates the reach and depth of the sales network but also significantly broadens the scope of our services, enabling us to assess a broader market and a wider range of users. On digitalization, we continue to drive product innovation and upgrade by leveraging the capabilities of our smart series products, which introduce a comprehensive digital business management platform for our dealership partners. In addition, our cooperation with the Ping An Group has also entered a new phase.
Speaker Change: This network dynamic not only accelerates the reach and depth of the sales network, but also significantly broadens the scope of our services, enabling us to access a broader market and a wider range of users.
Speaker Change: On digitalization, we continue to drive product innovation and upgrade by leveraging the capabilities of our smart series products that introduce a comprehensive digital business management platform for our dealership partners.
Speaker Change: encompassing everything from infrastructure setup and development digital tools empowerment
Speaker Change: implementation of sophisticated operations management, providing our dealership partners with an advanced and systematic digital support system, allowing them to achieve increased efficiency in their business operations.
Tao Wu: During the second quarter, we integrated various resources, including car purchasing tools, content, and vehicle services, to establish a comprehensive service system that spans the entire lifecycle of a car owner, providing users with a convenient one-stop service experience, a more high-quality, convenient, and efficient car service experience. In this process, we will also fully explore and make use of the advantages of Ping'an Group's resources and technological developments to seek more opportunities Automobile Home will achieve the next stage of high-quality development.
Speaker Change: In addition, our cooperation with Ping An Group has also entered a new phase.
Speaker Change: During the second quarter, we integrated various resources, including car purchasing tools.
Speaker Change: content, and vehicle services to establish a comprehensive service system that spans the entire lifecycle of car owner providing users with a convenient one-stop service experience.
Speaker Change: Looking ahead, we will continue to align with user needs, drive development through innovation, and constantly explore new business models that integrate online and offline experiences.
Speaker Change: Committed to providing users with a more premium, convenient, and efficient car purchasing service experience.
Speaker Change: In this process, we will also fully explore and utilize the advantageous resources and technological aspects of Ping An Group, actively promoting deep cooperation between both parties in various fields of the automotive ecosystem.
Speaker Change: Seeking more opportunities for collaborative development
Speaker Change: We firmly believe that with a solid business foundation and diversified strategic layout, Autohome will achieve high-quality development in the next stage.
Tao Wu: Looking forward, we'll remain focused on our user-centric approach, harnessing innovation to drive development while continuously exploring new models of online to offline integration, and in the process, strive to provide users with an even higher quality, even more convenient, and even more efficient service experience.
Speaker Change: Looking forward, we'll remain focused on our user-centric approach.
Speaker Change: harnessing innovation to drive development while continuously exploring new models of online-to-offline integration.
Speaker Change: and in the process, strive to provide users with even higher quality, even more convenient and even more efficient service experience.
Zeng Nian: Over this course, we'll fully explore and elaborate on the extensive resources and technology of Ping An Group to seek even greater synergies and identify additional opportunities in the automotive ecosystem. We believe that, with our solid business foundation and diversified range of businesses, Autohome is well positioned to achieve a new phase of high-quality development. Thank you, everyone. Thank you.
Speaker Change: Over this course, we will fully explore and leverage the extensive resources and technology of Ping An Group to seek even greater synergies and identify additional opportunities in the automotive ecosystem.
Speaker Change: We believe that, with our solid business foundation and diversified range of businesses, Autohome is well positioned to achieve a new phase of high-quality development.
Greg Zeng: Next, please have CFO Mr. Zeng give a detailed introduction of the business and financial situation for the second quarter of 2024. Meanwhile, I will hand it over to our CFO Greg Zeng to review the economic and financial results for the second quarter.
Speaker Change: Thank you, General Manager Wu Tao
Craig Leung: This is Craig Leung, the Chief Financial Officer of Otohome. We have added a set of evaluation content for mixed, new energy, and diesel vehicles.?? We have also added content under specific scenarios, such as design, culture, and amusement parks. [inaudible] We will also include live broadcasts, short videos, and other formats in the content to form a more comprehensive content that meets the needs of users in different consumption scenarios.
Speaker Change: Hello everyone, I am Zeng Yan, the Chief Financial Officer of Autohome.
Speaker Change: Thank you, everyone. Thank you, Amitabh. Hello, everyone. This is Craig Leung, the Chief Financial Officer of Otohome.
Speaker Change: In the second quarter, we continued to focus on user content, updating content in two directions: professional and car trading, and established the Autohome IP matrix.
Speaker Change: In the second quarter, we continued to deepen our focus on enhancing our content portfolio, revitalizing the content through two categories, professional content and broader general auto-related content, establishing Autohome's new IP matrix.
Speaker Change: For example, in terms of professional evaluations, we have added targeted evaluation content for hybrid, new energy, and fuel vehicles.
Speaker Change: In terms of Han cars, we have added content related to design, culture, and specific scenarios such as off-road vehicles.
Speaker Change: Overall, it has created eight IT programs, including the Light Car Manual, Top 10 Layer Screen, and Rise Road.
Speaker Change: We will also integrate live streaming and short videos into our content, forming a more comprehensive content matrix that meets different user consumption scenarios.
Craig Leung: Currently, the total exposure of the eight-part program is more than 860 million., We have also created a content play style that covers the pre-middle and late stages of the car listing. , C Crest Mobile, In June, the number of daily users reached 67,910,000, which is an increase of 8.3% in the same period of 23 years, which proves our leading position in the automotive industry., As Mr. Wu just mentioned, in mid-May, we launched the Satellite Plan.
Speaker Change: Currently, the total online exposure of these eight programs has exceeded 860 million times.
Speaker Change: For example, regarding professional evaluation, we have expanded our content to include targeted evaluation for hybrid vehicles, NEVs and ICE vehicles.
Speaker Change: On general auto-related content, we've expanded our design, automotive culture, off-road vehicles, and other content for unique scenarios.
Speaker Change: Resulting in the creation of eight IT programs, including SoFaSoTest, Top-10 Horizontal Evaluation, and Road of RISE.
Speaker Change: We are also integrating live streaming and short video formats into our content to form a more comprehensive content matrix that caters to our users' diverse consumption preferences.
Speaker Change: To date, these eight IP programs have garnered a total exposure of 860 million views across the entire network, significantly enhancing the influence of our platform.
Speaker Change: In addition, there is extreme focus on the new car launch event surrounding the brand.
Speaker Change: We have also created content strategies covering the pre-launch, launch, and post-launch phases of new cars, from early exclusive 3D model predictions to in-depth mid-phase analysis.
Speaker Change: In the later stages, customized evaluations effectively extended the exposure time of new car selling points. This not only helped B-end clients efficiently communicate product value but also greatly enhanced the influence of the brand among C-end users.
Speaker Change: Quest Mobile data shows that the average daily user volume of Autohome's mobile end reached 67.91 million in June , an 8.3% increase compared to the same period in 2023, proving our leading position in the automotive vertical field.
Speaker Change: In addition, by focusing on the new vehicle launch event, prioritized by OEM, we've developed a set of content offerings that spans the pre-launch, during-launch, and post-launch stages of each new car launch.
Speaker Change: This approach begins with exclusive 3D car model speculations during the pre-launch, progressing to an in-depth introduction during launch and then customized evaluation post-launch, effectively prolonging the exposure time for each new car's starting point.
Speaker Change: This not only helps CN customers.
Speaker Change: efficiently promote their products, but also allow Autohome to gain influence among CN users.
PressMobile: According to PressMobile,
Speaker Change: Our number of average mobile DAU reached 67.91 million in June , an increase of 8.3% from a year earlier, and scoring our leading position in the auto media vertical.
Speaker Change: In the field of new energy, as Mr. Wu Tao just mentioned
Mr. Wu: In mid-May, we launched the satellite program.
Mr. Wu: With the Autohome Space Station as the core, build satellite stores in surrounding first-tier cities.
Mr. Wu: Formed a core space station store
Speaker Change: Driving an ecosystem of one plus N collaborative services with N satellite ships
Speaker Change: Extend service touchpoints downward to explore more regional market opportunities.
Speaker Change: At present, we have established Space Station storefronts in 28 cities nationwide, including first-tier and super first-tier cities, achieving full coverage of core cities.
Speaker Change: At the same time, we have also started to pilot the satellite ship model in five cities.
Speaker Change: By effectively linking space stations and satellite stores, a close-knit sales and service network is formed.
Craig Leung: to realize the new retail model, from a single-point breakthrough to a fully-covered model upgrade. We believe that with the continued and in-depth promotion of the Satellite Program, we will influence and serve more users in low-end cities. Turning to NEV, as Ms. Wu just mentioned, we initiated the Satellite Plan in mid-May, a strategic initiative to establish satellite stores in low-tier cities adjacent to the flagship autohome space stores. This initiative establishes a 1-plus-N synergistic service ecosystem where a single core autohome space store could support multiple satellite stores, thereby broadening our service reach to more regional markets.
Speaker Change: Achieved a new retail model, upgrading from single-point breakthroughs to comprehensive coverage. We believe that with the continued advancement of the satellite plan, we will influence and serve more user groups in lower-tier cities.
Speaker Change: Turning to NEV, as Ms. Wu just mentioned.
Ms. Wu: We initiated the Satellite Plan in mid-May, a strategic initiative to establish satellite stores in low-tier cities adjacent to the flagship Autohome space stores.
Ms. Wu: This initiative establishes a one-plus-N synergistic service ecosystem, where a single-core autohome space store could support multiple satellite stores, thereby broadening our service reach to more regional markets.
Craig Leung: To date, we have established autohome space stores in 28 cities, including first-tier and super-first-tier cities across China, achieving full coverage in these key urban areas. Additionally, we are piloting and testing the water for the satellite store model in five cities.
Ms. Wu: To date, we have established autohome-based stores in 28 cities, including first-tier and super-first-tier cities across China, achieving full coverage in these key urban areas.
Craig Leung: Through effective collaboration between core Autohome space stores and these satellite stores, we've developed a comprehensive sales network, upgrading the new retail model from a single plant to an upgraded comprehensive model. We are confident that the ongoing implementation of the satellite plant will be able to influence and serve more users in low-tier cities., On the other hand, we actively respond to the country's call to save the new government.
Ms. Wu: Additionally, we are piloting and testing the water for the satellite store model in five cities.
Ms. Wu: Through effective collaboration between core autohome space stores and these satellite stores, we've developed a comprehensive sales network, upgrading the new retail model from a single point to an upgraded comprehensive model.
Ms. Wu: We are confident that the ongoing implementation of the centralized plan will enable us to influence and serve more users in low-tier cities.
Craig Leung: ,, For consumers, we provide immersive driving, multi-brand comparison, and driving-by-car service. We will bring more mainstream new energy brands, under-the-hood models, and second-hand car replacement services to the consumer market. The event lasted for two months and attracted more than 100 vehicles at the off-site exhibition.
Ms. Wu: On the other hand, we actively respond to the national policy of replacing old items with new ones, using the Autohome Space Station and the Holographic Caravan as carriers.
Ms. Wu: A 100% Trade-in New Car Festival was held, providing consumers with immersive car viewing, multi-brand comparisons, test drives, and other services. It brought more mainstream new energy brands, their models, and used car trade-in services to the regional consumer market.
Craig Leung: Consumers participated more than 500,000 times. Zhijia's second quarter income from the new energy brand has continued to climb, and revenue has increased by nearly 100%, continuing to run in the industry and selling well. In response to the National Trustee for New Policy, we leveraged our Autohome space doors and holographic exhibition tracks as platforms to organize the 100 Cities Trick in for New Car Buying Festival, providing consumers with immersive car searches, multi-brand comparative test drives, and other services. The event brings even more mainstream NEV brand models and used car exchange services to regional markets. Spanning two months, the festival featured over 100 offline auto shows and attracted more than 500,000 consumers.
Ms. Wu: The event lasted for two months, with over 100 offline car shows, and more than 500,000 consumer participants.
Craig Leung: We are also pleased to see that revenues from NEV brands saw a continuous rise in the second quarter, nearly doubling compared to the same period last year, consistently updating industry growth rates. We adapt to the trend of brand mechanization operations. ,,,,, With the combination of software and AI, Intelligent Marketplace solves the pain of invisible information in the marketplace scene, providing customers with a digital management tool for the entire marketplace process, and improving the user market experience.
Craig Leung: In the second quarter, the overall data product revenue increased by more than 15%. In the digital realm, we are embracing the trend of refined operations and have introduced smart digital connections, a data product using model algorithms to improve user profiling, helping customers to more accurately identify target users and assess vehicle replacement intentions, leading to increased store visit rates. Smart Test Drive, another data product, integrates software, hardware, and AI-driven quality control capabilities to address the customer's pain point of information opacity in test drive scenarios.
Ms. Wu: We are also pleased to see that in the second quarter, revenue from new energy brands in Chicago continued to rise, with revenue nearly doubling year-on-year, consistently outperforming the industry's sales growth rate.
Craig Leung: This solution provides dealership clients with digital management tools covering the entire test drive process, enhances the user test drive experience, and helps dealers establish a closed-loop data-driven ecosystem for their offline service. During the second quarter, total data products achieved an increase in revenue year-over-year of over 15%.
Ms. Wu: In response to the National Tweet-In for New Policy, we leveraged our Autohome space doors and holographic exhibition tracks.
Ms. Wu: as a platform to organize the 100 Cities Trick-in-for-New Car Buying Festival.
Ms. Wu: providing consumers with immersive car searches, multi-brand comparative test drives, and other services.
Ms. Wu: The event brings even more mainstream NEV brand models and used car exchange services to regional markets.
Ms. Wu: Spanning two months.
Ms. Wu: The festival featured over 100 offline auto shows.
Ms. Wu: and attracted more than 500,000 consumers.
Speaker Change: We are also pleased to see that revenues from NEB brands
Speaker Change: saw a continuous rise in the second quarter, nearly doubling compared to the same period last year, consistently uppacing industry growth rates.
Speaker Change: In the digital field, we are adapting to the trend of brand mechanized operations.
Speaker Change: Launched the Smart Tree Lotus, utilizing model algorithms to improve user tags, helping clients more accurately select target users, diagnose abnormal car noises, promote reverse electricity rate, and enhance deceleration.
Speaker Change: The intelligent testing framework combines hardware, software, and AI inspection capabilities to address the issue of information opacity in testing scenarios.
Speaker Change: Provided distributors with a digital management tool for the entire market price process, improving the user market price experience and helping distributors form a data closed-loop for offline services.
Speaker Change: In the second quarter, the overall revenue from data products increased by more than 15% year-on-year.
Speaker Change: In the digital realm, we are embracing the trend of refined operations and have introduced smart digital connections, a data product.
Speaker Change: using model algorithms to improve user profiling.
Speaker Change: helping customers to more accurately identify target users, assess vehicle replacement intentions, leading to increased store visit rates.
Speaker Change: Smart Test Drive, another data product, integrates software, hardware, and AI-driven quality control capabilities to address the customer's pain points of information opacity in test drive scenarios.
Speaker Change: This solution provides dealership clients with digital management tools covering the entire test drive process, enhances the user test drive experience, and helps dealers establish a closed-loop, data-driven ecosystem for their offline services.
Speaker Change: During the second quarter, total data products achieved an increase in revenue year-over-year of over 15 percent.
Speaker Change: In the used car section, our car mining query product continues to make strong progress.
Craig Leung: In the car park, the proportion of high-quality vehicles that have been strictly verified has steadily increased. In the first half of this year, Chengxin increased by 55.4% to promote the standardization and improvement of the entire industry. In this mode, the second-hand vehicle business of Zhijia is combined with the space station as a guide for offline services. At the same time, the car service center that cooperates with Ping'an certification provides after-sales insurance. The two-car one-stop service is well received in Chengdu City Hotel.
Speaker Change: The proportion of high-quality vehicles among the fleet that have undergone rigorous verification is steadily increasing.
Speaker Change: In the first half of this year, the number of honest cars on the Zhijia platform increased by 55.4% year-on-year.
Speaker Change: It has strongly promoted the standardization of the entire industry. In terms of the model, the used car business of the bracket combines the space station as an offline service hub, and at the same time, collaborates with the Ping An certified car owner service center to provide after-sales guarantees.
Craig Leung: This model will continue to mature and improve in the future. In the second half of the year, we plan to launch it in more cities. In the used car segment, our vehicle condition inspection tools have seen continuous momentum, with the proportion of strictly verified high-quality vehicles in our system consistently on the rise. In the first half of this year, there was an increase of 55.4% year-over-year in the number of authenticated used cars on our platform, effectively promoting the standardization of the entire used car industry.
Speaker Change: The jointly established one-stop second-hand car service has been well received in hotels in Chengdu. After this model matures and improves further, we plan to roll it out in more cities in the second half of the year.
Speaker Change: In the used car segment, our vehicle condition inspection tools have seen continued momentum, with the proportion of strictly verified high-quality vehicles in our system consistently on the rise.
Speaker Change: In the first half of this year, there has been an increase of 55.4% year-over-year in the number of authenticated used cars on our platform, effectively promoting the standardization for the entire used car industry.
Craig Leung: In terms of our business model, our used car business combines autohome space stores for offline services with Ping An's extensive network of car owner service centers to provide after-sales support. This one-stop used car service model has achieved strong results at our Chengdu Pilot Store. We plan to expand this model to additional cities in the second half of the year as the model continuously improves and matures.
Speaker Change: In terms of our business model, our used car business combines autohome-based work
Speaker Change: for offline services with Ping An's extensive network of car owner service centers to provide after-sales support.
Speaker Change: This one-stop used car service model has achieved strong results at our Chengdu Pilot Store. We plan to expand this model to additional cities in the second half of the year as the model continuously improves and matures.
Craig Leung: , to reflect the solid progress we have made in implementing the car eco-strategy. In the long term, we will upgrade and upgrade our product technology to provide users with more rich content and professional services and provide customers with more personalized and intelligent solutions. At the same time, we will actively seek to seize the opportunity to grow in the new business field and inject new energy into the company's development to create long-term, stable, and positive returns for shareholders.
Speaker Change: Overall, Autohome's core business remains stable, and innovative businesses are progressing in an orderly manner, continuously bringing incremental revenue, reflecting the solid progress we have made in executing our automotive ecosystem strategy.
Speaker Change: In the future, we will continue
Speaker Change: Focusing on the long term, we aim to bring users richer content and more professional services through product and technology upgrades and iterations.
Speaker Change: Provide customers with more personalized and intelligent solutions. At the same time, we will actively seek to seize growth opportunities in new business areas, injecting new vitality into the company's development.
Craig Leung: Overall, Autohome's core businesses remain strong and stable, while our innovative businesses steadily make constant progress, contributing to generate incremental revenue streams. This reflects the substantial strides we have made in implementing our automotive ecosystem strategy. Looking ahead, we will continue to focus on long-term development by enhancing our users' experience with more diverse and richer content, professional services, and more personalized and intelligent solutions.
Speaker Change: With the aim of creating long-term stable positive returns for shareholders
Speaker Change: Overall, Autohome's core businesses remain strong and stable, while our innovative businesses steadily make constant progress, contributing to generate incremental revenue streams.
Speaker Change: This reflects the substantial strides we have made in implementing our automotive ecosystem strategy.
Speaker Change: Looking ahead, we will continue to focus on long-term development by enhancing our users' experience with more diverse and richer content, professional services, and more personalized and intelligent solutions.
Craig Leung: Furthermore, we will seek out and seize opportunities for growth in new business areas, injecting new vitality into the company's development with the aim of creating stable, long-term, positive returns for our shareholders. Please note that I will only use RMB as a currency unit in today's discussion unless there is another explanation. Next, let me briefly walk you through the key financials for the second quarter of 2024. Please note that, as with previous courses, I will reference RMB only in my discussion today, unless otherwise stated.
Speaker Change: Furthermore, we will seek out and seize opportunities for growth in new business areas, injecting new vitality into the company's development with the aim of creating stable, long-term positive returns for our shareholders.
Speaker Change: Next, I will briefly outline the main financial situation of Autohome for the second quarter of 2024. Please note that I will use RMB as the currency unit in today's discussion, unless otherwise specified.
Craig Leung: In detail, media services earn 4.33 billion yuan, and clue services earn 8.21 billion yuan. Online marketing and other income is 6.19 billion yuan, which is an increase of 14%. Net revenues for the second quarter were $1.87 billion, breaking it down by segment. Media services revenues were $433 million, and least generation services revenues were $820 million.
Speaker Change: Next, let me briefly walk you through the key financials for the second quarter of 2024. Please note that, as with prior quotes, I will reference RMB only in my discussion today unless otherwise stated.
Speaker Change: Total revenue for the second quarter was 1.87 billion yuan.
Speaker Change: Specifically, media service revenue was 433 million yuan, and clue service revenue was 820 million yuan.
Speaker Change: Online marketing and other revenue reached 619 million yuan, an increase of 14% year-on-year.
Craig Leung: And online marketplace and others revenues were $619 million, up 14% year over year. 3.3, 81.5% In terms of operating expenses, the second quarter sales and marketing expenses were 7.53 billion yuan. 8.24, The R&D cost is 3.15 billion yuan. 3.13, The general and management expenses are 1.18 billion yuan, and the annual balance sheet is 0.91 billion yuan. Turning to operating expenses, sales and marketing expenses in the second quarter were $753 million, compared to $824 million in the second quarter of 2023. Product and development expenses were $315 million, compared to $330 million in the second quarter of 2023. General and administrative expenses were $118 million, compared to $91 million during the same period last year.
Speaker Change: Net revenues for the second quarter were $1.87 billion, breaking it down by segment.
Speaker Change: Media services revenues were $433 million. These generation services revenues were $820 million, and online marketplace and others revenues were $619 million, up 14% year over year.
Speaker Change: In terms of cost, the operating cost for the second quarter was 346 million yuan.
Speaker Change: The same period last year was 330 million yuan.
Speaker Change: 第二季度毛利率為81.5%
Speaker Change: ?????82% House of Revenues in the second quarter was $346 million compared to $330 million in the second quarter.
Speaker Change: 2023. Gross margin in the second quarter was 81.5% compared to 82% during the same period last year.
Speaker Change: In terms of operating expenses, sales and marketing expenses for the second quarter were 753 million yuan, compared to 824 million yuan in the same period last year.
Speaker Change: The research and development expenses were 315 million yuan, compared to 313 million yuan in the same period last year.
Speaker Change: General and administrative expenses were 118 million yuan, compared to 91 million yuan in the previous year.
Speaker Change: Turning to operating expenses.
Speaker Change: Sales and marketing expenses in the second quarter were $753 million compared to $824 million in the second quarter of 2023.
Speaker Change: Product and development expenses were $315 million.
Speaker Change: compared to $330 million.
Speaker Change: in the second quarter of 2023. General and administrative expenses were $118 million compared to $91 million during the same period last year.
Craig Leung: In total, the second quarter of Automobile Home had a profit of 4.12 billion yuan and a loss of 3.42 billion yuan last year, which is owned by Automobile Home Group Co., Ltd., with an adjusted profit of 5.72 billion yuan. 5.69 Overall, we delivered an operating profit of $412 million in the second quarter this year, compared to $342 million for the same period of 2023 Adjusted net income attributable to Autohome was $572 million in the second quarter, compared to $569 million in the corresponding period of 2023. In the second quarter, the total amount of US$1.18 for the adjustment of the fund and US$1.18 for the US stock market was US$1.16 and US$1.15 for the same period last year.
Speaker Change: Overall, Autohome's operating profit for the second quarter was 412 million yuan, compared to 342 million yuan in the same period last year.
Speaker Change: The adjusted net profit attributable to Autohome is 572 million yuan.
Speaker Change: The same period last year was 569 million yuan.
Speaker Change: Overall, we delivered an operating profit of $412 million in the second quarter this year, compared to $342 million for the same period of 2023.
Speaker Change: Adjusted net income attributable to Autohome was $572 million in the second quarter compared to $569 million in the corresponding period of 2023.
Speaker Change: In the second quarter, the adjusted basic and diluted earnings per share were both 1.18 yuan, compared to 1.16 yuan and 1.15 yuan respectively in the same period last year.
Craig Leung: , The net profit of US stocks is 4.72 yuan and 4.71 yuan, respectively. 4.624.61, Non-GAAP basic and diluted earnings per share in the second quarter were 1.18, up from 1.16 and 1.15, respectively, in the corresponding period of 2023. Non-GAAP basic and diluted earnings per ADS in the second quarter were 4.72 and 4.71, respectively, compared to 4.62 and 4.61, respectively, in the corresponding period of 2023.
Speaker Change: In the second quarter, the adjusted basic and diluted net profit per American Depositary Share was 4.72 yuan and 4.71 yuan, respectively.
Speaker Change: In the same period last year, they were 4.62 yuan and 4.61 yuan respectively.
Speaker Change: non-GAAP basic and diluted earnings per share in the second quarter were 1.18, up from 1.16 and 1.15, respectively, in the confounding period of 2023.
Nangab: Nangab's basic and diluted earnings per ADS in the second quarter were 4.72 and 4.71 respectively, compared to 4.62 and 4.61 respectively in the corresponding period of 2023.
Operator: As of June 30, 2024, our assets and liabilities continue to perform strongly. Cash, cash prices, and short-term investments amount to 234.7 billion yuan. In the second quarter of 2020, cash flow from operating activities was $2.57 billion. As of June 30, 2024, our balance sheet remained quite strong with cash, cash equivalents, and short-term investments of $23.47 billion. We generated net operating cash flow of $452 million in the second quarter of 2024. Thank you. We will now begin the question and answer session. To ask a question, please press star 1-1-1-0 to keep out. Please stand by while we compile the Q&A roster.
Nangab: As of June 30, 2024, our balance sheet continues to perform strongly, with cash, cash equivalents, and short-term investments totaling 23.47 billion yuan.
Nangab: Cash flow from gold and silver activities in the second quarter of 2020
Nangab: The amount is 452 million yuan
Nangab: As of June 30, 2024, our balance sheet remained quite strong with cash, cash equivalents, and short-term investment of $23.47 billion. We generated net operating cash flow of $452 million in the second quarter of 2024.
Nangab: The above is the company's financial data summary. Next, we will start the Q&A session.
Speaker Change: The above is our financial summary. With that, we are ready to open up the Q&A session.
Speaker Change: Operator, please open the line for Q&A session, please.
Speaker Change: Thank you. We will now begin the
Speaker Change: To ask a question, please press star 1, 1, or 2 to keep out.
Speaker Change: You will then hear an automated message advising your hand is raised. To re-enroll your question, please press star 11 again.
Speaker Change: Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Thomas Chong from Jefferies. Please ask your question, Thomas.
Questioner: Thank you for accepting my question. My question is about the recent luxury brands such as BBA launching a car market price war in detail. What do you think is the reason behind it? I also saw that the government introduced a new car market policy a few days ago. How will this affect the industry and our company? Translator myself. Thank management for taking my question.
Speaker Change: Thank you, administrator, for accepting my question.
Thomas Chong: My question is about some luxury brands like BBA recently launching a price war.
Speaker Change: Then you ask me what the reason behind it is.
Speaker Change: Also, I noticed that the government introduced new policies for the car market a few days ago. What impact will this have on the industry and our company?
Speaker Change: Go ahead, share some of this out.
Speaker Change: Thanks, management, for taking my question. So recently, we saw some luxury car brands exit the price war. So what do you think the reason is behind? And also, government launched some policies a couple of days ago. So how it will positively impact us and the whole industry? Thanks.
Questioner: So recently, we saw some luxury car brands exit the price war. What do you think is the reason behind it? And also, the government launched some policies a couple of days ago. So how will they positively impact us and the whole industry? Thanks.
Tao Wu: The strength of the internal roll-out is also gradually increasing, and the price war is getting worse and worse for the market share of major car companies. The price war will continue for a long time, and the impact it will have on the industry is beyond everyone's expectation. From the beginning of last year to now, the price has already exceeded 500, 500,000. A luxury brand like BBA, after a year of participating in the price war, chose to withdraw from the price war at this time. ?? Okay, thank you for raising this question.
Speaker Change: Actually, since last year, the competitive landscape of our entire car market has
Speaker Change: The extent of the price cuts and the profound impact on the entire industry have exceeded everyone's expectations.
Speaker Change: Luxury brands like BBA, after participating in a price war for a year, have chosen to exit the price war at this point in time.
Tao Wu: Last year, we saw that the auto market competition became even more fierce with very severe rat racing, and all kinds of automakers started to wage a price war in order to gain more shares from the market. You can see that the duration of this round of price wars, the intensity of the price cuts, as well as the depth of this impact, go beyond everybody's expectations. Since the beginning of last year to now, the price war has already lasted for more than 500 days. So BBA, as well as the other luxury brands, have decided to withdraw from the price war after participating for more than one year. We think there might be the following reasons.
Speaker Change: 我们认为呢,肯定有一些原因。
Speaker Change: Okay, thank you for raising this question. Since last year, we see that the auto market competition becomes even more fierce with very severe rat racing, and all kinds of automakers start to wage the price war in order to gain more shares from the market.
Speaker Change: goes beyond everybody's expectation. Since the beginning of last year to now, the price war has already lasted for more than 500 days.
Speaker Change: So for BBA as well as the other luxury brands, they decided to withdraw from the prize pool after participating for more than one year. We think that there might be the following reasons.
Tao Wu: Let's look at this issue from two perspectives. First, let's look at the main factory, which is our production plant. We observed that the strategy of reducing the price and preserving the quantity did not slow down the decline in sales. In fact, let's take an example. A car worth more than 300,000 yuan is now sold for about 200,000 yuan, which is a very high price range of up to 100,000 yuan. In this case, in fact, we see that in the first half of this year, Mercedes-Benz and BMW's sales in China still appeared to be at the same rate.
Speaker Change: Let's look at this issue from two aspects. First, let's look at the OEM, which is our manufacturing plant. We have observed that the strategy of reducing prices to maintain volume has not actually slowed down the decline in sales.
Speaker Change: In fact, let's take an example: a car that originally cost over 300,000 yuan is now around 200,000 yuan, with a price drop of up to 100,000 yuan, which is very significant. In this situation, we can see that in the first half of this year, the sales of Mercedes-Benz and BMW in China have still shown a year-on-year decline.
Speaker Change: Moreover, price reductions can also impact the image of high-end brands. Additionally, the most fatal aspect of ongoing price wars is that they harm the profit margins of car companies.
Speaker Change: So first of all, from the OEM perspective, we have observed that the price for volume strategy doesn't slow down the decline of the sales.
Speaker Change: You can see there's one example that originally priced at $300,000 cars now only sold at $200,000 with a price cut of $100,000. Even like that, in the first half of this year, Mercedes-Benz and BMW here in China still continue to decline versus December period last year. However, at the same time, the price cut also imposes negative impacts on the brand image of those luxury brands.
Tao Wu: Besides, we can see that continuous price falls also harm the profitability of the automakers. On the other hand, from the point of view of the merchants, the ongoing price war is actually a huge business pressure for the merchants. Let's look at it from two perspectives. First, there is higher deposit pressure.
Speaker Change: Besides, we can see continuous price fall also harms the profitability of the automakers.
Speaker Change: From another perspective, from the standpoint of dealers, the ongoing price wars actually put them under tremendous operational pressure. We can look at it from two aspects: one is the high inventory pressure.
Tao Wu: 60.8% for the mainstream, and 61.5% for the self-owned. From these three data, we can see that the storage pressure of luxury brands is already far above that of the other two types of brands. So high storage is also a pressure for financial institutions. And secondly, from the dealer's perspective, those dealers are also under big operation pressure because of the continuous price war. There are two aspects of this.
Speaker Change: The mainstream joint ventures are at 60.8, and the domestic brands are at 61.5. From these three sets of data, it can be seen that the inventory pressure of luxury brands has far exceeded that of the other two types of brands. Therefore, high inventory also poses a financial pressure on dealers.
Speaker Change: And secondly, from the dealer's perspective, those dealers are also under big operation pressure because of the continuous price war. There are two aspects of this.
Tao Wu: The first thing is pretty high inventory pressure. According to the statistics of the Chinese Association of Automobile Manufacturers, in June, you can see that the Chinese dealers' inventory alert index was 62.3%, which is already above the threshold of PMI. And five brands, luxury and imported brands, their inventory early alert index was 66.4%.
Tao Wu: And for those mainstream joint venture brands, 60.8%. And for Chinese domestic brands, 61.5%. We can see that luxury brands are under the biggest pressure, much higher than the other two categories.
Speaker Change: The first thing is a pretty high inventory pressure. According to the statistics of the Chinese Association of Automobile Manufacturers, in June , you can see that the Chinese dealers' inventory alert index was 62.3 percent, which is already above the threshold of PMI. And by brands, luxury and imported brands,
Tao Wu: The price war has also led to a large area of loss for BBA dealers. In fact, in the past, across the entire dealer channel, the sale of luxury cars was relatively good in terms of revenue. But now, in the first half of this year, in fact, more than 80% of car dealers have not completed the sales task. In fact, if we fight again, the price will change. And the second side is that, according to the statistics, in the first half of this year, more than 80% of the dealers cannot complete their sales goals and tasks.
Speaker Change: The price war has also caused dealers, specifically the BBA dealers we mentioned, to start experiencing widespread losses.
Speaker Change: In fact, traditionally, the profitability of luxury car dealers within our entire dealership channel has been relatively good.
Tao Wu: If they continue to go for the price for volume strategy, quite a few BBA dealers cannot survive anymore. In this circumstances, BMW Brilliant CEO said that BMW will continue to keep in close contact and discuss with upstream and downstream partners so as to explore the commercially viable model and to ensure all the partners can make enough money so as to live for the future. Therefore, under the pressure of the decline in sales, profit, brand value, and merchant channels, BBA decided to withdraw from the price war.
Speaker Change: But now, let's look at the first half of this year
Speaker Change: Actually, in more than 80% of the cases
Speaker Change: So it should be said that a considerable amount of
Speaker Change: Its profitability has shown a significant hidden risk. In this situation, in fact, the CEO of BMW Brilliance also stated that BMW will maintain intensive discussions with upstream and downstream partners.
Speaker Change: Exploring how to implement sustainable business models to ensure that all partners can make enough money to survive into the future. In fact, this means that for the dealer channels, the main manufacturers must maintain their operational capabilities; otherwise, their sales channels will cease to exist.
Speaker Change: And the second side is actually DBS dealers that already start to suffer from big losses.
Speaker Change: You can see according to the statistics.
Speaker Change: In the first half of this year, more than 80% of dealers cannot complete their sales goals and top. If they continue to go for the price for volume strategy, quite a few BBA dealers, they cannot survive anymore. In this circumstance,
Speaker Change: BMW Brilliant's CEO said that BMW will continue to keep the close contact and discussion with upstream and downstream partners so as to explore a commercially viable model and to ensure all the partners can make enough money so as to live for the future.
Speaker Change: Therefore, under the multiple pressures of declining sales, profits, brand value, and dealer channels, BVA decided to exit the price war.
Tao Wu: After BBA withdrew from the price war, we saw that the actions of different companies were not the same. Some followed and withdrew from the price war, but more companies were actually watching. We think that the price war will not completely stop in the short term. In the case that the price of the car has dropped, and the sales are generally not good, if the price is adjusted, and the price station is withdrawn, it may bring more pressure on the sales of the car. So we say that market competition should still be in the white-hot stage. Next, I will answer questions about policy.
Speaker Change: After BBA exited the price war, we observed that different car manufacturers reacted differently. Some followed suit and exited the price war, but more manufacturers are actually in a wait-and-see mode. We believe that in the short term, it is difficult for the price war to completely stop.
Speaker Change: In the context of car manufacturers lowering prices and generally poor sales, if prices are adjusted back and the price war is exited, it may put even greater pressure on car manufacturers in terms of sales. Therefore, we believe that market competition is still in a white-hot stage.
Speaker Change: As a result with the decline of the sales volume with all kinds of pressures such as profitability
BeBe: brand's value as well as dealership, BeBe decided to withdraw from the press war.
BeBe: So after BBA decided to withdraw from the price war, we see that different automakers, they don't act in a consistent manner. Some choose to follow and the others choose to withdraw from the price war. However, most of the automakers still adopt a wait-and-see attitude. We think that in short term, the price war cannot be totally ended, and with price cuts as well as poor sales performance, the price adjustment as well as withdrawal from the price war may impose pressure on the sales volume of the automakers.
Tao Wu: On July 25, the Ministry of Finance of the National Development Commission issued several measures to encourage the expansion of support for large-scale equipment updates and consumables in order to encourage the promotion of automobile consumption and improve the subsidized standards for designated expensive vehicles. In terms of the policy update since July 26th, NDRC and the Ministry of Finance have printed out a document called several opinions on intensifying the support on large-scale equipment replacements and consuming products trading for new.
Speaker Change: Below, I will answer some questions regarding policies from the National Development and Reform Commission on July 25.
BeBe: 关于
Speaker Change: Increase support for large-scale equipment upgrades and measures for replacing old consumer goods to encourage the replacement of old items and promote automobile consumption. Raise the subsidy standards for designated scrapped vehicles.
BeBe: Purchasing a new energy vehicle can receive a subsidy of 20,000 yuan. Purchasing a fuel vehicle with a displacement of 2.0 liters or less can receive a subsidy of 15,000 yuan. Compared to previous policies, the subsidy standard for scrapping and updating vehicles has already doubled.
Speaker Change: In terms of the policy update, since July the 25th, NDRC and the Ministry of Finance has printed out the document called several opinions on intensifying the support on large-scale equipment replacement and consumer products trading for new, so as to encourage trade-ins to promote the consumption of the automobiles. And also, at the same time, the designated car scrappage subsidy standards have been greatly improved, and now, for the purchase of the NEV passenger vehicles, you can get a subsidy of RMB20,000, and the purchase of 2.0 liters, and below,
Tao Wu: So as to encourage trade-ins to promote the consumption of automobiles and also at the same time, the designated car scrappage subsidy standards have been really improved. Now, for the purchase of NEV passenger vehicles, you can get a subsidy of 20,000 RMB, and for the purchase of 2.0 liters and below, ICE cars can get a subsidy of 15,000 RMB then.
Tao Wu: So versus the previous policy, now car scrappage can get a doubling subsidy. China Automobile Transport Association Secretary-General Cui Dongshu said, This time, the expense of the car, the expansion of the updated subsidies, and the subsidies are a major benefit to the car market. It is also conducive to increasing consumption by more than 100 billion yuan.
Speaker Change: ICE cars can get a subsidy of 15,000 RMB then. So versus the previous policy, now car scrappage can get a doubling subsidy.
Tao Wu: For Zhijiang, the demand for new energy vehicles is growing and will benefit the development of our new energy business., We will better meet the needs of customers who choose cars and buy cars. As for the income scale of new energy brands, [inaudible] Mr. Cui Dongshu, Secretary General of the CECA, also said that this round of car scrappage and replacement subsidy expansion and doubling is very favorable news for the entire auto market. It is expected to drive around 2 million car consumption this year. Sorry, 2 million cars will be scraped this year and also in favor of driving more than hundreds of billions of replacement-related consumption.
BeBe: It is also beneficial for driving an incremental increase of over 100 billion to update consumption.
Speaker Change: For our own company, the demand for replacing vehicles with new energy cars is increasing, which will be beneficial for the development of our new energy business.
BeBe: It is also expected to continue to expand at any time.
Speaker Change: Mr. Cui Dongshu, Secretary General of the DA, also said that
Cui Dongshu: and replacement subsidy expansion and doubling is a very favorable news for the entire auto market.
Speaker Change: It is expected to drive around 2 million car consumptions of this year Sorry, 2 million car scrap-use of this year and also in favor of driving more than 100 billion of replacement-related consumption And for Autohome, you can see that with the increase of the NEV replacement it will be favorable for our NEV business And with the opening of the offline franchising stores we will better satisfy the customers' needs on car selection and car purchase And for Autohome, we can see that the revenue coming from the NEV brand will also quickly arise in the near future
Tao Wu: And for Autohome, you can see that with the increase in NEV replacement, it will be favorable for our NEV business. And with the opening of the offline franchising stores, we will better satisfy the customers' needs for car selection and car purchase. And for Autohome, we can see that the revenue coming from the NEV brands will also quickly rise in the near future. In the short term, the year-on-year internal roll-in of the industry has seriously reduced the profit of the car industry and caused a series of problems.
Speaker Change: In the short term, over a year of intense competition within the industry has caused a significant decline in vehicle body profits, leading to a series of problems. We have also been affected by the headwinds in the industry.
Tao Wu: But in the long run, as the price war gradually slows down, we also believe that the future of cars will still have a long-term growth space. We are still optimistic about the long-term and healthy development of the Chinese automotive industry. Thank you.
Speaker Change: However, in the long run, as the price increase slows down
Speaker Change: The government can continuously introduce new favorable policies to support the consumption in the car market.
Speaker Change: We also believe that Cheshir will continue to have long-term growth potential in the future. We remain optimistic about the long-term healthy development of China's automotive industry. Thank you.
Speaker Change: And in short term, you can see that more than one year of red racing in this industry really compromised the profitability of the automakers and also triggered a series of issues and were also affected by this industrial headwind. However, in the long run, with the mitigation of the price war and with government keep launching favorable policies to support the auto market consumption, we strongly believe that the auto market still equipped with long-term growth potential and we are also bullish about the long-term sound development of the auto industry in China.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Brian Gong from Citi. Please ask your question, Brian .
Brian Gong: Thank you to the management for accepting my question. I have two questions. First, a follow-up: since DBA has already launched a price war, I would like to know what the situation is in the used car market?
Speaker Change: Is there any observation of a trend towards improvement in editing?
Speaker Change: The second question is that traditional fuel vehicle dealers are currently under significant pressure. Have we observed any cases of dealers withdrawing from the network or closing stores? Or does the management anticipate a large-scale withdrawal from the network in the future?
Speaker Change: Thanks for taking my question. I have two questions. First question is regarding the used car markets. Given recently easing price war by OEMs, what's the latest situation for used car markets?
Speaker Change: Have you observed any, you know, improvement, marginal improvement for used car market? And the second question is about our dealers.
Speaker Change: Have we seen a lot of closure of those dealers recently, or do you expect any large-scale closure in the future? Thank you.
Tao Wu: The second-hand car market has been hit hard by the decline in the price of new cars. In June, the new car also had a half-year charging situation, which led to a certain decrease in the price of the new car. So the risk of second-hand cars is also increasing. From the data on the market, we can see that there are two characteristics. One is that the price is hovering at a low point. The price of a second-hand car in June was 6.44 million yuan, which is a low point in the year.
Speaker Change: Okay, thank you, let me answer that.
Speaker Change: The second-hand car market has been consistently pressured by the declining prices of new cars.
Brian Gong: The sales of second-hand cars in June actually decreased by one percent year-on-year.
Speaker Change: Now, many potential second-hand car buyers are opting to buy new cars because new cars are very cheap. Current car owners might feel that the prices for second-hand cars are not very good, so they may not be very willing to sell.
Speaker Change: By the time June arrives, new cars will have been on the market for about six months, which leads to a certain degree of price reduction for new car transactions. Therefore, the risk of accepting cars for Alcar is also increasing.
Speaker Change: Therefore, the Used Car Manager Index for the entire month of June further declined to 41.2%, a year-on-year decrease of 2.4 percentage points, highlighting that the used car market is still in a relatively non-urgent range with very high competitive pressure.
Speaker Change: Okay, thank you for raising this question. If you look at the used-to-car market,
Speaker Change: because the new car price has been keeping declining. As a result, it imposes a lot of pressure on the used car market. In June , you can see that the used car sales dropped by one percentage point year on year. Well, in the meantime, a lot of used car potential buyers tend to purchase the new car and the car holders because of their price volatility, they wouldn't like to sell their cars.
Speaker Change: So here you can see that we are already approaching the half year. So for the half year volume campaign resulted in a very big volatility of the new card transaction price. As a result, the sales rate for the used card is already intensifying. And in June , you can see that used card UCMI index is also defining to 41.2%, a drop of 2.4 percentage points year-on-year. And also highlighting that the used card market is not performing pretty well with a lot of big competition as well as the pressure of the entire market.
Speaker Change: From the market data, we observed two characteristics. One is the hovering of prices at a low level. The average price of used cars in June was 64,400 yuan, which is a low point for the year. Considering the situation with new car prices, this is not too surprising.
Tao Wu: It is not surprising to see the price of the new car. Another one is that the cross-region traffic is active, and the market still has a lot of vitality. China's characteristic is that the second-hand car sales have a very strong characteristic of cross-region.
Speaker Change: Another factor is that cross-regional circulation is active, and the market still has strong vitality.
Tao Wu: This also shows a demand, that is to say, trust, how to be trustworthy, and how to get a trustworthy car is also a very important demand in the market. So if you look at the market, we can observe the following two characteristics of the used-car market. The first thing is that the price remains low. And in June, you can see that the used-to-car average price remains at about 64,400 RMB, which is the lowest point this year.
Speaker Change: A characteristic of China is that the sale of used cars has a strong cross-regional feature. This highlights a demand, which is trust. How to ensure honesty and gain trust in cars is also a very important market demand.
Speaker Change: So if you look at the market, we can observe the following two characteristics of the used-to-car market. The first thing is that the price remains low. And in June , you can see that the used-to-car average price remains at about 64,400 RMB, which is the low point within this year. And I think that this is within our expectation because of the new car price. And the second thing is that the cross-regional trading is very active. And the entire market still has a lot of vigor and vitality. This is pretty unique in the Chinese market. As a result, to construct an integral and trustworthy and transparent industrial environment is very important.
Tao Wu: And I think that this is within our expectation because of the new car price. And the second thing is that cross-regional trading is very active, and the entire market still has a lot of vigor and vitality. This is pretty unique in the Chinese market. As a result, building an integral, trustworthy, and transparent industrial environment is very important.
Speaker Change: Although there may be some challenges in the second-hand car market in the short term, in the long run, we believe that its scale, policy environment, market, consumer demand, and our expectations have not fundamentally changed.
Speaker Change: With the expansion of automobile consumption and the increase in consumer acceptance of used cars, we remain optimistic about the long-term prospects of the used car market.
Speaker Change: From our own perspective, in such a difficult environment, we are still focused on developing our own abilities.
Speaker Change: Especially as we have improved our ability to trust in the car mine.
Speaker Change: In the first half of this year, as I just mentioned, the number of trustworthy cars on the Zhijia platform has increased by more than 50% year-on-year.
Speaker Change: By bringing in reputable and well-known players like Zhijia, we hope to give consumers more confidence in purchasing used cars in the future. When the used car market becomes active again, we will also become a winner.
Tao Wu: Even though there are some challenges in short term for the used car market but in the long run we think that the scale, the policy environment, market structure as well as the consumer demand of the used car market doesn't fundamentally change and I think that with the car consumption market expansion as well as the rising recognition of the consumers for the used car in the longer future we think that used car market is still got a lot of potential and expected to grow in a sound manner and you can see from autohome perspective we're also very much focusing our own capacity building for example we intensify our products in terms of the car conditions and car status inquiry products. In the first half of this year I already mentioned on our platform the authenticated high quality vehicles number increased by 50 percent year-on-year.
Speaker Change: Even though there are some challenges in short-term for the used car market, but in the long run, we think that the scale, the policy environment, market structure, as well as the consumer demand of the used car market doesn't fundamentally change. And I think that with the car consumption market expansion, as well as the rising recognition of the consumers for the used car, in the longer future, we think that the used car market is still got a lot of potential and expected to grow in a sound manner. And you can see from autohome perspective, we're also very much focusing our own capacity building. For example, we intensify our products in terms of the car conditions and car stature.
Speaker Change: In the first half of this year, I already mentioned, on our platform, the authenticated high-quality vehicles number increased by 50% year-on-year. We hope that with the entrance of Autohome into this market,
Tao Wu: We hope that with the entrance of autohome into this market, consumers can actually purchase a used car in a reassured manner, and the used car market can become very active again. But this is not a one-way thing for adjustment.
Speaker Change: the consumers can actually purchase the used car in a reassured manner and the used car market can become very active again.
Speaker Change: The second question is about whether there have been any key instances of traditional fuel vehicle dealers withdrawing from the network, or if there will be large-scale withdrawals in the future.
Speaker Change: Everyone has also seen the sales data of fuel vehicles in the market.
Speaker Change: Indeed, everyone is under considerable pressure. The situation of store closures and going offline is unavoidable and will happen. According to public data, there have been nearly 5,000 such cases of store closures or going offline in the first half of this year.
Speaker Change: The second question is about whether there is a closure of the stores for the traditional ICE fillers
Speaker Change: And I think that if you look at the I.C.E. sales volume as well as any of the announcements of the listed company, I think that the closure of the traditional I.C.E. dealers is inelastable. If you look at the first half of this year, there are almost 5,000 stores are shut down.
Speaker Change: However, this is not entirely one-sided, because from the overall car sales, we feel that there hasn't been a significant decline this year. So this is a structural challenge. On one hand, there are different types of models emerging, including new energy vehicles.
Speaker Change: There is also the growth in different markets, especially in some lower-tier cities. Today, we see that both OEMs and dealers need to make adjustments to respond to these market changes.
Tao Wu: If you look at the overall auto sales volume, actually, there's actually no big decline. So this is actually the restructuring of this industry. We see the emergence of the NUV as well as bigger penetration into the lower tier cities. So I think that in these circumstances, no matter for the OEMs or the dealers, they have to adapt and have to transform according to this trend. So from Zhijia, we also help customers to deal with this change.
Speaker Change: But this is not a one-way thing for adjustment. If you look at the overall auto sales volume, actually there's no big decline. So this is actually the restructuring of this industry. We see the emergence of the MUV as well as the bigger penetration into the lower tier cities.
Speaker Change: So I think that in this circumstances, no matter for the OEMs or the dealers, they have to adapt and have to transform according to this trend.
Tao Wu: As we mentioned earlier, we have a satellite plan in our new retail business. In our other businesses, we have also strengthened our cooperation with retailers and sports venues offline. We are also promoting the use of cars to help retailers get more customers for their later use of cars.
Speaker Change: Therefore, from the perspective of Chicago, we also help customers respond to this change. As we mentioned earlier, in our new retail business, we have this kind of satellite plan.
Speaker Change: In our other businesses, we have also strengthened our cooperation with offline dealers and organizations. Additionally, we are promoting the use of vehicles, helping dealers to acquire more customers for post-sale vehicle services.
Tao Wu: So from Zhijia, we think this is a challenge and an opportunity. Thank you. Third, we also expand our cooperation channels. We actively cooperate with other media to build a traffic control system to achieve public opinion, which increased to 28% in the same year.
Speaker Change: Therefore, from our perspective, we believe this is a market where challenges and opportunities coexist.
Speaker Change: So from Autohome's perspective, we also actively empower our clients to cope with this kind of challenges. As I mentioned before, in our new retail businesses, we also launched a centralized plan to enable our dealers as well as our OEM partners. And for dealers, we also actually help them in the car use services acquisition as well as expansion. So for Autohome, it builds opportunities as well as challenges.
Speaker Change: bye. Bye. Bye.
Speaker Change: Okay operator, the next one please.
Richie: Thank you. Our next question comes from the line of Richie Sun from HSBC. Please ask your question, Richie.
Richie Sun: Good evening, Mr. Wu, Craig, and Sterling. Thank you for your time. I have two questions. The first one is about competition. Besides advertising, we have observed that some internet platforms are also engaging in many automotive lead-related businesses and are using large models to improve efficiency and lead conversion rates. How is our management responding to the challenges posed by these players?
Speaker Change: The second question is about the use of cash. Currently, our cash reserves are very ample, and our profits are relatively stable. What is the management's view on developing special dividends or further increasing the dividend payout ratio? Will the management consider launching another large-scale stock repurchase plan in the future?
Speaker Change: Thank you, Manish, for taking my questions. I have two. First of all, in terms of competition, we have observed that a lot of Internet platforms
Speaker Change: started to develop the least generation businesses as well as using large language model to improve the efficiency and conversions. So what does management do to address these challenges?
Speaker Change: Second of all, in terms of cash balance, it is very adequate and profit is also quite stable. What does management feel on the potential special dividends or even lifting the dividend payout ratio? And would management consider launching a big-scale buyback program? Thank you.
Speaker Change: The first question is about other internet platforms also engaging in the business related to automotive leads. This is not a new thing; it has been going on for a long time, as they have always been doing this. For Zhijia, the challenges we face are always long-term. We are not aiming to monopolize a lead.
Speaker Change: Therefore, more people are coming in, and this has always been the market situation we are facing.
Speaker Change: So, for your first question, which is actually about the other entrance into the next generation businesses. Actually, this is not something new and it already happened for quite a long time. And for Autohome, we think that this is a long-term challenge for us because we cannot monopolize this business.
Speaker Change: So we already had these search platforms and such in place to generate leads for cars before we even entered the car mount market.
Speaker Change: We have been in this market for more than ten years now, constantly facing various kinds of competition. Our approach is based on our professionalism. We are a professional black media company, and we look at the entire lifecycle of buying, using, and replacing.
Speaker Change: Go provide services for our customers. Go gather leads.
Speaker Change: So before Autohome entered into this area, actually there are already some search platforms as well as some pan-media engaging in this business. And after we entered into this area for more than 10 years, we still face quite fierce competition. And for Autohome, we think that our specialty is about professionalism in the verticals. And we actually cover the whole life cycle, including car selection, car purchase, car use, as well as car replacement.
Speaker Change: So our countermeasures are actually what we have been doing all along, mainly focusing on three aspects. The first is that we need to continuously innovate in terms of content. In recent years, Zhijia has also introduced short videos and live streaming to continuously enrich this.
Speaker Change: Thirdly, we are also expanding our cooperation channels. We actively collaborate with other media to create a traffic matrix and achieve mutual benefits.
Speaker Change: And in terms of the countermeasures to these challenges, we have three solutions.
Autohome: First is in terms of the content innovation. In recent years, Autohome have introduced a lot of short-form videos and live streaming, as well as the other new formats that enrich our ecosystem of the content. Well, at the same time, we also build a lot of exclusive and unique IPs that you have our IP ecosystem to differentiate from our competitors. And the second is in terms of the user experience enhancement, we keep optimizing our website as well as app interface design so as to offer more convenience to our users. And third one is in terms of the cooperation channel expansion. We have been cooperating with a lot of 10 media platforms so as to build.
Autohome: traffic matrix and so as to deliver win-win against the competition.
Autohome: As for the shareholder return, I will review it first. We have been improving the shareholder return.
Speaker Change: From 2019 to 2021, the company distributed 20% of its annual profits as dividends to shareholders. In 2022, we updated our dividend policy to a fixed amount of no less than 500 million yuan.
Craig Leung: In 2023, in December, the company further revised its dividend policy. So the second question is about the dividend payout. Let me first review our dividend payout history. Over the past two years, we have been continuously enhancing the return to our shareholders. From 2019 to 2021, we actually distributed 20% of our net margin to the shareholders as a dividend. And in the year 2022, we also updated our dividend payout policy with a fixed amount of 500 million RMB Yuan, which is equivalent to 28% of our net margin for the same year.
Speaker Change: Equivalent to an increase to 28% that year. By December 2023, the company further revised its dividend policy.
Speaker Change: Bye-bye.
Craig Leung: And in December 2023, we keep amending our dividend payout policy and announced about 1 billion RMB Yuan dividend payout decision, which is enhanced our dividend payout ratio to 50% of our net margin. So I think that in the next three years, from 2024 to 2026, the annual dividend payout amounts will be no less than 1.5 billion RMB.
Operator: Please remain on the line; your conference will resume shortly. Thank you. The next question comes from the line of Xiaodan Zhang from CICC. Okay, thank you all for attending today's meeting.
Speaker Change: Please remain in the line. Your conference will resume shortly.
Speaker Change #104: Please ask your questions.
Speaker Change: Thank you for accepting my question. Just now, Mr. Wu and Mr. Zeng also introduced the model of the satellite shop in the Prepare Remarks. I would like to ask, under this new expansion model, how should we expect the expansion speed of the space station shop and the satellite shop in the core city in the future?
Speaker Change #105: So, thanks, management, for taking my questions, and my question is regarding your new retail model for NEVs. At Autohome launched the so-called satellite plan in the second quarter, so how should we think of your expansion plan going onwards? Thank you.
Speaker Change #106: Since the opening of their first store in September 2022, Space Station has now opened stores in 28 cities across the country.
Speaker Change: As of now, the satellite ship model has already been tried in five cities: Yueyang, Yiyang, Loudi, Xiangtan, and Zhuzhou. We are starting to experiment, and in the future, we will continue to...
Speaker Change: Try from multiple angles, because this is also an experimental plan. The current pace of opening stores is basically in line with ours.
Speaker Change: It is basically consistent with what we communicated with everyone at the beginning of the year.
Speaker Change: Of course, this satellite store might be a new entity that emerges during this process. Its core purpose is to cover and adapt to market changes, serving more lower-tier cities. This will enable our space station to have a better service network and better coverage.
Speaker Change: Okay operator, that's the end of the Q&A session.
Speaker Change #102: Thank you.
Speaker Change #101: I'll now turn the conference back to the management for closing comments.
Speaker Change: Looking forward to discussing the company's latest developments with everyone on the next earnings call.
Speaker Change #103: If you have any questions or suggestions, please feel free to contact us at any time. Thank you.
Speaker Change #100: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.