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Previously,Excellent creditBusinesses such as One-Percent Purchase, YouCredit, and Finance have been divested one after another to promote the national purchasing business. Today, the performance of the national purchasing business, which relies on excellent trust to survive, is not optimistic. Under the influence of the epidemic and external competition, it is even more inadequate.
Recently, the used car online store Youxin Group released its financial report for the first quarter of fiscal year 2021. The financial report shows that Youxin's revenue for the first quarter of fiscal year 2021 was 62.2 million yuan, a year-on-year decrease of 84%. The net loss after non-GAAP adjustments was $157.1 million, compared to a loss of $213.7 million for the same period last year.
Compared to the previous quarter (January to March), when the epidemic was severe, Youxin's overall revenue did not increase, but fell quite a bit month-on-month and year-over-year. According to Youxin's financial report for the first quarter of 2020 (April 26, Youxincai adjusted the fiscal year due date), total revenue was 103.9 million yuan (approximately US$14.7 million), compared to 335.8 million yuan for the same period last year.
Obviously, at a time when the used car market is picking up, Youxin is still struggling in the cold winter of the epidemic.
The used car market is picking up
A few months ago, the outbreak of the epidemic caused serious economic damage to the automobile industry, particularly the used car market, which relied on offline channels.
According to data from the China Automobile Dealers Association, affected by the epidemic, the country completed a total of 5,516,400 used cars from January to June 2020, a cumulative year-on-year decrease of 19.61%, and the decline narrowed further; the transaction amount was 339.428 billion yuan, and the cumulative transaction volume fell 21.72% year on year.
Fortunately, the domestic epidemic has been properly controlled, and the automobile industry has actively resumed work and resumed production. Coupled with favorable policies, the used car market is gradually picking up.
On the one hand, due to the impact of the epidemic, some consumers' income has shrunk and they are unable to make ends meet. At this time, the promotions carried out by used car dealerships are in the midst of consumers' feelings. Because the threshold for used cars is lower and the cost performance ratio is higher than that of new cars, the demand for used cars has increased dramatically, and used car dealers are also considered a blessing in disguise.
On the other hand, in order to speed up the pace of resumption of work and production, as well as to promote consumption, the state determined that the value-added tax on used car sales would be reduced by 0.5%.
According to the “Notice on Value-added Tax Policies Related to Used Car Dealers”, from May 1, 2020 to December 31, 2023, taxpayers engaged in used car dealership sold used cars they purchased from a simple method to levied value-added tax by 2% at a 3% levy rate reduced by 2% to a reduced rate of 0.5%.
Policies to reduce taxes and increase revenue are favorable, market demand and sales have improved, and the used car market has gradually returned to the state of growth before the pandemic. However, it seems that Youxin has not been able to slow down as the market recovers.
Youxin is still mired in a cold winter
Since its establishment for many years, Youxin Used Car has been facing problems such as growing losses and tight cash flow for a long time.
According to financial data, from 2016 to 2019, losses were 1.39 billion, 2.74 billion, 1.53 billion, and 1.99 billion, respectively. Also, as of June 30, 2020, Youxin's cash and cash equivalents decreased from RMB 342.5 million (US$48.4 million) in the previous quarter to RMB 240.8 million (US$34.1 million).
I had originally thought that after a series of “big business sales”, Youxin would be on the right path of profit. Unexpectedly, due to the pandemic, Youxin 2C's trading volume declined year over year, and revenue continued to decline, and it was still struggling in the winter of losses.
According to Youxin's financial data for the first quarter of FY2021, Youxin's 2C business revenue was 51.7 million yuan (equivalent to 7.3 million US dollars), down from 341 million yuan in the same period last year. Among them, commission revenue was RMB 28.6 million (equivalent to US$4 million), compared to RMB 178.9 million for the same period last year; revenue from value-added services was RMB 23.1 million (equivalent to US$3.3 million), compared to RMB 162.1 million for the same period last year.
The main reason for the decline in commission revenue and value-added service revenue is the decrease in transaction volume and GMV. According to financial reports, the trading volume of Youxin 2C in the first fiscal quarter was 3,887 vehicles, down from 24,585 vehicles in the same period last year; the total volume of 2C transactions was 426 million yuan, down from 2,864 million yuan in the same period last year.
Obviously, although good credit is promoting the national purchasing model, the epidemic is so aggressive that it is difficult for the global purchasing model that was possible before to withstand the sudden bad market news. Moreover, even at a stage where the market is recovering, Youxin's old problems are still difficult to heal, and they have no interest in trading volume.
Furthermore, due to poor performance, Youxin's stock price continued to fall and was in the green for a long time, while its market value had shrunk to the extreme. The stock price of Youxin is 0.88 US dollars (2020-09-09 EST), and the total market value is 262 million US dollars. Compared with the market value of nearly 2.8 billion US dollars at the beginning of the listing, it has dropped sharply by about 90%.
Judging from the current revenue data, the pressure on Youxin to achieve profit in a short period of time is not too small. However, the good news is that the cost reduction and efficiency measures taken by Youxin in response to the epidemic have had some effect.
Reduced costs, high intensity throttling
Salary cuts, layoffs, work stoppages... In order to fight the impact of the epidemic, used car platforms have all chosen to reduce various expenses and preserve their ability to preserve their ability.
To this end, Youxin has also taken measures such as flexible work, layoffs, and salary cuts. However, after active adjustments, Youxin's marketing expenses, management expenses, and R&D expenses have all been drastically reduced.
Financial data for the first quarter of fiscal year 2021 showed that sales and marketing expenses fell 60.6% year on year to RMB 115.8 million (US$16.4 million); general management expenses fell 29.0% year on year to RMB 86.9 million (US$12.3 million); and R&D expenses fell 28.5% year on year to RMB 22.8 million (US$3.2 million).
Also due to lower costs, Youxin's losses have narrowed slightly this quarter, and it is slowly moving on the right path to profit. According to financial data, after non-GAAP adjustments, Youxin had a net loss of 157.1 million yuan and a loss of 213.7 million yuan for the same period last year. More importantly, the success in reducing costs and increasing efficiency during the pandemic also demonstrated to the outside world the management strength of Youxin as a leading used car platform.
Of course, not only Youxin is a used car platform that has banned noise from elevator rooms, but also Melon Zi Used Car and Renren Car.
Chaoduo Group, the parent company of Guazi Used Car, announced that it has implemented a phased remuneration and vacation adjustment plan for group positions. The adjustments are tentatively covering the two months of February and March 2020; there are also internet rumors that although Renren Auto did not reveal any layoffs due to the pandemic, employee salaries will be discounted by 50%.
Today, the impact of the epidemic has come to an end, and used car platforms that “cut back on clothing and diet, stock up on food for the winter” have also begun to calculate how to further improve the customer experience and enhance their competitive advantage, with a view to reviving their momentum as soon as possible.
Self-built used car inventory “open source”
After divesting a series of businesses, in the face of questions from the outside world, Youxin's launch of a nationwide purchase blocked the public's popularity. However, as platforms such as Melon Zi Used Car and Renren Auto continue to support the national purchasing model, Youxin is clearly not secure enough with only one weight left for the country to buy.
Judging from monthly activity alone, Melon Seed's monthly activity for used cars is already three times that of Youxin. It is clear at a glance who is strong and who is weak.aurorasiApp recently released app statistics showing that the top four active users of used car e-commerce platforms in May 2020 were: Melon Used Car, Youxin Used Car, Renren Car, and RowCar Used Car. The number of monthly active users was 6.882 million, 2.057 million, 607,400, and 109,000, respectively.
Facing fierce market competition, Dai Kun, founder, chairman and CEO of Youxin, said: From strong finance to product and service-driven transformation, Youxin is focusing more on providing cost-effective used cars and high-quality car purchase services.
Meanwhile, in the new financial report, Youxin further clarifies the goal of “focusing on providing cost-effective used cars and high-quality car purchase services” into “Youxin prepares to build its own used car inventory.”
Building a self-built used car inventory means that the quality of used cars sold in-house is guaranteed, and to a certain extent, it satisfies the purpose of Youxin to improve car purchase services. As Dai Kun, founder, chairman and CEO of Youxin, said: Choosing used cars on the market, purchasing these vehicles, and arranging for repairs and refurbishment to upgrade them to new conditions and then selling them to customers ensures the quality of the vehicles.
However, from being a platform to connect car dealers and customers to doing self-revenue car business, the change in model is bound to face capital investment issues. According to reports, Renren Auto has previously launched a similar contract sales business, but it has come to a standstill due to insufficient funding. Furthermore, as a B2C platform, Youxin's self-operated car business will inevitably form competitive relationships with car dealers, and the painstaking efforts to establish good partnerships will inevitably be affected.
It is undeniable that if Youxin's self-built used car inventory business runs smoothly, then it will also become a major “powerful tool” after purchasing throughout the country. However, where there are interests, there is competition. Of course, the used car market is not exempt from the rules, and building a self-built used car inventory business is also inevitable, and it will become a position for used car platforms to compete for the first place.
By Liu Kuang's official account, ID: liukuang110
