Uxin Ltd (UXIN) Q2 2026 Earnings Call Highlights: Surging Retail Volume and Margin Recovery Ahead

Negative Points

• Gross margin turned negative at -0.7% in Q2 2026, compared with 5.2% in the same period last year and 7% in the previous quarter.

• Average selling price (ASP) of retail vehicles declined to RMB55,000 from RMB59,000 year over year and RMB61,000 sequentially.

• Adjusted EBITDA loss was RMB120 million, primarily due to the temporary impact of lower gross margin.

• New passenger vehicle sales in China declined by more than 20% year over year in Q2 2026, with ICE car sales down nearly 40%, pressuring the used car market.

• Nationwide used car transactions declined by 6% year over year in July and by 11% in August, indicating continued market weakness.

• Nearly 30,000 brick-and-mortar used car dealerships exited the market in the first half of 2026, and 50,000 to 60,000 are expected to exit for the full year, representing more than 20% of the industry.

• The company maintains a prudent operating approach due to elevated risks in the automotive market, which may limit aggressive growth or inventory procurement.

• The CEO's share purchase plan is subject to a 90-day cooling-off period and will be carried out gradually, with actual purchases dependent on trading volume and other factors.

Q & A Highlights

Q: Uxin has further shortened its inventory turnover from approximately 30 days to around 20 days. Could management discuss how you have been able to achieve such rapid turnover? Is this primarily the result of proactively reducing inventory in response to the current market environment? Or is this an operating level you expect to maintain over the long term? A: CFO Feng Lin attributed the improvement to two main factors: the application of AI across pricing, price adjustments, and risk alerts, which has enhanced pricing accuracy, coverage, and response speed; and deeper integration of end-to-end operating systems spanning inspection, reconditioning, inventory management, and CRM. He emphasized that faster turnover reduces price risk exposure and inventory impairment losses without sacrificing per-unit profitability, and allows the same inventory capital and workforce to support larger sales volumes. He stated that around 20 days is not a short-term defensive strategy but a core operating target the company intends to maintain over the long term.

Q: The automotive market experienced a significant adjustment in the second quarter. Could management share what you have been seeing recently in terms of used car market conditions and the competitive landscape? How do you view the industry outlook for the remainder of 2026? A: CEO Kun Dai noted that overall auto consumption remains weak, with nationwide passenger vehicle retail sales down more than 20% year over year in both July and August, and ICE car retail sales down approximately 40%. Used car transactions declined 6% year over year in July and 11% in August. He believes the most severe price adjustment occurred in the second quarter and that conditions are gradually stabilizing. Industry consolidation continues, with nearly 30,000 used car dealerships exiting in the first half and an expected 50,000 to 60,000 exits for the full year, representing more than 20% of the industry. Uxin expects retail transaction volume to grow nearly 50% year over year in Q3, significantly outperforming the broader industry, and will adjust inventory procurement prudently based on market conditions.

Q: The company previously announced a plan by the CEO to purchase additional company shares. Could management provide an update on the execution of this plan? A: CEO Kun Dai stated that given recent share price performance, he decided to use his own funds to purchase additional Uxin shares in the open market as a demonstration of confidence in the company's long-term value. An entity controlled by him established a Rule 10b5-1 trading plan on June 30 to purchase up to $5 million of ADS at a price of no more than $2.85 per ADS. Following the required 90-day cooling-off period, purchases will be eligible to begin on September 28, 2026, and will be carried out gradually in accordance with the pre-established plan and applicable securities trading rules.

Q: What drove the decline in gross margin to negative 0.7% in the second quarter, and what is the outlook for margin recovery? A: CFO Feng Lin explained that rapid price adjustments in the second quarter, particularly for new ICE cars, directly impacted the gross margin of existing inventory, and the company proactively accelerated sell-through of affected cars. With the inventory reset now largely complete and turnover accelerating, per-unit profitability has recovered significantly since the beginning of the third quarter. The company expects overall gross margin to recover to above 6% in the third quarter.

Q: What were the key financial results for the second quarter of 2026? A: CFO Feng Lin reported retail transaction volume of 19,610 units, up 89% year over year and 19% sequentially. Retail vehicle sales revenue totaled RMB1.08 billion, up 78% year over year and approximately 7% sequentially. Wholesale transaction volume was 2,289 units, up 88% year over year and 36% sequentially, with wholesale revenue of RMB37.4 million. Total revenue reached RMB1.51 billion, up 75% year over year and 7% sequentially. Adjusted EBITDA loss was RMB120 million, primarily reflecting the temporary impact of lower gross margin.

Q: How has the average selling price (ASP) trended, and what is the outlook? A: CFO Feng Lin stated that the ASP of retail vehicles was RMB55,000 in the second quarter, compared with RMB59,000 in the same period last year and RMB61,000 in the previous quarter. While lower market prices drove the decline, rapid sales volume growth offset the impact. He noted that the current price range covers the car buying needs of the vast majority of mainstream consumers and that, as price volatility gradually eases, ASP is not expected to decline significantly from current levels and should remain relatively stable overall.

Q: What is the company's guidance for the third quarter of 2026? A: CFO Feng Lin guided retail transaction volume of between 20,500 and 21,000 units, representing year-over-year growth of nearly 50%, with total revenue between RMB1.16 billion and RMB1.19 billion and gross margin recovering to above 6%. He added that as gross margin recovers and operating efficiency improves, profitability is expected to improve further.

Q: What is the status of the company's recent financing activities? A: CFO Feng Lin provided an update, stating that the company recently received $4 million in investment proceeds from NIO Capital, with the closing of the remaining $4 million investment proceeding as planned. NIO Capital has confirmed it will proceed with the remaining investment at $2.86 per ADS. Meanwhile, Joy Capital is actively advancing the overseas direct investment (ODI) filing process for its investment in the company.

Q: How is Uxin positioned relative to the broader used car industry consolidation? A: CEO Kun Dai stated that traditional operating models are rapidly losing ground as the industry shifts from a fragmented, non-standardized model toward a more scaled, standardized, and digitalized retail model. He believes the next two to three years will be a critical period for reshaping China's used car market, and Uxin will maintain its leading position. The company continues to strengthen core capabilities in vehicle pricing, inspection and reconditioning, inventory turnover, and customer service, while six new superstores in Yinchuan, Guangzhou, Wuxi, Chongqing, Shijiazhuang, and Shaoxing are under development.

Q: What operational metrics demonstrate Uxin's outperformance in the second quarter? A: CEO Kun Dai highlighted that retail transaction volume reached 19,610 units, up 89% year over year and 19% sequentially, significantly outper

For the complete transcript of the earnings call, please refer to the full earnings call transcript .