NEW YORK, June 10 (Xinhua) -- Uxin Limited, a Chinese leading used car e-commerce platform, extended share losses on Monday, after its latest quarterly report showed the company's intention to shift focus onto cross-regional business, particularly the to-customer (2C) transactions.
Shares of Uxin dropped 6.16 percent to settle at 1.98 U.S. dollars apiece around the closing bell. As of Monday, the company was valued at a bit over 581.2 dollars in market capitalization, since it was listed on Nasdaq on June 27, 2018.
The e-commerce company saw its total revenues surged 54.6 percent year on year to 149.1 million dollars in the first quarter (Q1), according to its Q1 earnings released on Monday.
The striking growth was primarily driven by dramatic increases in 2C transaction volumes, gross merchandise volume (GMV,) and the amount of loans facilitated.
More specifically, the overall revenue of 2C business skyrocketed 94.4 percent year on year to 131.1 million dollars, among which intra-regional 2C business went up 33.3 percent year on year to 88.9 million dollars. Cross-regional 2C business hit 42.2 million dollars, expanding by 54 times year on year.
"Our 2C cross-regional business continued the robust growth momentum from the peak season in the fourth quarter," Kun Dai, founder, chairman and CEO of Uxin, said in a conference call on Monday.
However, a decline was shown in the aggregate revenue of to-business (2B) business, which reached only 10.3 million dollars in Q1, representing a sharp year-over-year fall of 36.2 percent.
The CEO admitted that China's automobile market has been navigating through a tough period since June 2018, as the overall used car market witnessed slowing growth, and new car market suffered losses.
"I think the trend will continue in the next few months," Dai said, adding that the company would scale down its outlook for the total transaction volume for the whole year.
Yet he noted that online used car business would be a future trend for the automobile market not only in China, but also in the United States and Europe.
Dai also stressed that the company would strive to drive sustainable growth by implementing three initiatives, which prioritizes shifting resources to cross-regional business, where they saw great opportunities and would better position Uxin to achieve long-term profitability.
The other two measures are improving operational efficiency by taking a more rigorous approach to cost control and expense management, and adopting more stringent risk-control procedures.
"Looking ahead, we will take more prudent measures to control costs and manage expenses, maximize the impact of every dollar we spend and continue to optimize operational efficiency," said Zhen Zeng, chief financial officer of Uxin.
Besides, the company is set to collect an additional 230 million dollars, as it signed a convertible note purchase agreement with affiliates of 58.com, U.S. private equity firm Warburg Pincus, U.S. investment firm TPG Capital and other investors on May 28.
Through a private placement, the transaction is expected to close soon.
Uxin has also entered into a strategic partnership with 58.com, a 14-year-old Chinese classified online marketplace, in areas including traffic and inventory acquisition, used-car inspections and big data analysis.
"In recent years, 58.com has been penetrating into lower tier cities as well. This is aligned with our strategic focus on cross-regional transactions and the expansion of our service network into lower tier cities across China," said Dai, highlighting its partner's huge volume of targeted used car traffic and a large user base.
Uxin's cross-regional transaction business has been generating strong growth momentum over the last several quarters, Michael Yao, chairman and CEO of 58.com, said in a statement earlier, adding that investment would "create strong synergies for both companies."
"We see enormous growth potential in China's used car market and believe that the volume of used-car transactions will overtake that of new cars in the years ahead," he noted.
Founded in 2011, the e-commerce platform provides selling and purchasing services on second-hand cars online and offline. Relevant services also include car inspection, title transfer, warranty, financing, and insurance.
So far, Uxin's online presence is supported by an offline network of more than 1,300 service centers in more than 400 prefecture-level cities throughout China, according to the company.