Cango Q4 2022 Earnings Report

Cango EPS Results

• Actual EPS: -$0.60
• Consensus EPS: -$0.14
• Beat/Miss: Missed by -$0.46
• One Year Ago EPS: N/A

Cango Revenue Results

• Actual Revenue: $70.63 million
• Expected Revenue: $70.69 million
• Beat/Miss: Missed by -$60.00 thousand
• YoY Revenue Growth: N/A

Cango Announcement Details

• Quarter: Q4 2022
• Date: 3/9/2023
• Time: N/A
• Conference Call Date: Thursday, March 9, 2023
• Conference Call Time: 8:00PM ET

Cango (NYSE:CANG) Inc. (“Cango”) is a leading smart automotive transaction service provider in China, headquartered in Shanghai. The company operates an online‐to‐offline platform that integrates vehicle sourcing, financing, distribution and insurance, offering a comprehensive ecosystem for automakers, dealers and consumers. Leveraging big data analytics and cloud computing, Cango connects buyers and sellers through its proprietary digital infrastructure, facilitating transparent and efficient transactions across the automotive value chain.

Cango’s core offerings include auto financing solutions for new and used vehicles, extended consumer loans and wealth management products. Through strategic partnerships with banks, consumer finance companies and insurance carriers, the company designs and distributes tailored financial products to meet the diverse needs of car buyers. In addition, Cango provides digital marketing and customer relationship management services to original equipment manufacturers (OEMs) and dealer networks, helping partners optimize inventory turnover and enhance customer engagement.

Founded in 2010, Cango expanded rapidly across China’s automotive market before completing a U.S. initial public offering on the New York Stock Exchange in November 2017 under the ticker “CANG.” Today, the company’s integrated platform serves customers in hundreds of cities nationwide, supporting both first‐time car buyers and repeat customers. Cango continues to invest in technology and risk management capabilities to strengthen its credit evaluation processes and drive innovation in China’s automotive aftermarket.

Cango Q4 2022 Earnings Call Transcript

Key Takeaways

• Cango completed its transformation into an integrated automotive transaction service platform, launching the Kango Houcha new-car app and Cango UCAR mini program and app for used cars, engaging 10,112 new-car dealers (+58% YoY) and selling 3,938 cars in Q4 (+11.8% QoQ).
• Car trading transaction revenue grew 24.2% QoQ to RMB430.1 million in Q4 (88% of total revenue), and full-year 2022 transaction revenue reached RMB1.6 billion (80% of total).
• The automotive financing facilitation business reduced its outstanding balance from RMB46.7 billion to RMB25.6 billion in 2022, improving asset quality, lowering risk exposure and freeing up cash for inventory expansion.
• Fourth-quarter net loss widened to RMB558.9 million (RMB539.9 million non-GAAP), while cash and cash equivalents fell to RMB378.9 million and short-term investments to RMB1.9 billion as of Dec 31, 2022.
• Cango forecasts Q1 2023 revenues of RMB500–550 million and expects the China auto market to recover in 2023, driven by pent-up demand and NEV incentives as it scales its transaction platform.

Presentation

[Operator]

Good morning and good evening everyone. Welcome to Cango Inc fourth quarter and full year 2022 earnings conference call. At this time, all participants are in a listen-only mode. This call is also being broadcast live on the company's IR website. Joining us today are Mr. Jiayuan Lin, Chief Executive Officer, and Mr. Michael Zhang, Chief Financial Officer of the company. Following management's prepared remarks, we will conduct a Q&A session. Before we begin, I refer you to the safe harbor statement in the company's earnings release, which also applies to the conference call today as management will be making forward-looking statements. With that said, I am now turning the call over to Mr. Jiayuan Lin, CEO of Cango. Please go ahead, sir.

[Jiayuan Lin, CEO at Cango]

呃 大 家 好 ， 欢 迎 参 加 灿 谷 二 零 二 二 年 第 四 季 度 及 全 年 财 报 电 话 会 议 。

[Translator]

Hi, everyone, and welcome to Cango's fourth quarter and full year 2022 earnings call.

[Jiayuan Lin, CEO at Cango]

二 零 二 二 年 无 疑 是 艰 难 的 ， 疫 情 反 复 、 供 应 链 受 阻 以 及 芯 片 短 缺 等 多 重 因 素 持 续 为 行 业 带 来 巨 大 的 不 确 定 性 。 全 球 政 治 经 济 形 势 的 波 谲 云 诡 也 深 刻 影 响 着 包 括 中 国 汽 车 在 内 的 社 会 方 方 面 面 。 面 对 复 杂 严 峻 的 外 部 环 境 带 来 的 挑 战 ， 灿 谷 沿 着 新 的 战 略 路 径 稳 步 前 行 ， 展 现 出 较 强 的 业 务 韧 性 。

[Translator]

In 2022 was a challenging year. Multiple headwinds, including COVID pandemic, supply chain disruptions, and chip shortages, continued to create significant uncertainties in the auto industry. In addition, political and economic turmoils worldwide have profoundly impacted all aspects of society, including China's auto industry. Despite this complex and challenging external environment, Cango has steadily progressed along its new strategic roadmap, demonstrating strong resilience.

[Jiayuan Lin, CEO at Cango]

2022 年 是 Cango 实 质 性 转 型 升 级 的 一 年. 在 新 车 交 易 方 面, 继 上 一 年 推 出 Cango Haoche 小 程 序, June Cango Haoche APP 上 线, October 系 列 标 准 化 服 务 产 品 逐 步 上 线, 通 过 多 系 统 all-in-one 的 平 台, 向 车 商 提 供 以 车 源 为 核 心 的 一 站 式 车 交 易 综 合 解 决 方 案. 二 手 车 方 面, May Cango U-Car 小 程 序 上 线, 年 底 Cango U-Car APP 成 型, 涵 盖 车 源, 寻 车, 限 时 报 价, 交 易 支 持 服 务 和 数 字 化 服 务 等 功 能 板 块, 满 足 二 手 车 商 多 样 业 务 需 求.

[Translator]

Cango underwent significant transformations in 2022. For the new car trading transactions business, we launched our Cango Haoche app in June, following the successful debut of the Cango Haoche mini program in 2021. We gradually integrated an array of standardized service products into the multi-system all-in-one platform in October, providing dealers with one-stop comprehensive car trading solutions centering on car sources. For the used car trading transactions business, we launched our Cango U-Car mini program in May and developed our Cango U-Car app at the end of 2022. Cango U-Car app encompasses functions such as vehicle sourcing, online car research, online auctions, transaction support services, and other digital services to meet the diverse needs of used car dealers.

[Jiayuan Lin, CEO at Cango]

至 此 ， 我 们 的 新 车 加 二 手 车 的 双 平 台 双 循 环 格 局 已 基 本 确 立 ， 市 场 反 馈 与 车 商 需 求 也 不 断 验 证 着 灿 谷 转 型 交 易 平 台 的 合 理 性 。 平 台 价 值 通 过 一 站 式 服 务 初 步 显 - 初 步 显 现 。 二 零 二 二 年 第 四 季 度 ， 公 司 实 现 总 收 入 人 民 币 四 点 九 亿 元 ， 环 比 增 长 百 分 之 十 七 ， 其 中 车 交 易 服 务 业 务 收 入 人 民 币 四 点 三 亿 元 ， 占 总 - 占 比 总 收 入 超 百 分 之 八 十 八 ， 环 比 增 长 百 分 之 二 十 四 点 二 。 二 零 二 二 年 全 年 ， 公 司 实 现 总 收 入 人 民 币 十 九 点 八 亿 元 ， 其 中 车 交 易 服 务 业 务 收 入 为 人 民 币 十 六 亿 元 ， 占 比 总 收 入 超 百 分 之 八 十 。

[Translator]

As a result, our automotive transaction service platform covering both the new car and used car markets has been largely established. Strong market feedback and dealer demand testifies to the validity of our transformation into a transaction service platform with one-stop new proposition. Total revenues in the fourth quarter of 2022 were RMB 490 million, up 17% quarter-over-quarter. Revenue from car trading transactions was RMB 430 million, up 24.2% quarter-over-quarter, accounting for over 88% of total revenues. The whole year total revenues were RMB 1.98 billion, of which revenue from car trading transactions was RMB 1.6 billion, accounting for over 80%.

[Jiayuan Lin, CEO at Cango]

在 当 下 的 业 务 发 展 阶 段 中 ， 汽 车 金 融 服 务 已 不 是 我 们 的 业 务 重 点 ， 它 是 Cango 的 起 点 ， 也 是 我 们 转 型 汽 车 交 易 服 务 平 台 的 有 力 支 撑 。 随 着 我 们 对 汽 车 金 融 服 务 业 务 运 营 的 优 化 升 级 ， 资 产 质 量 不 断 提 升 ， 公 司 的 整 体 资 产 负 债 表 良 好 。 截 至 2022 年 十 二 月 底 ， 我 们 在 贷 余 额 从 2021 年 底 的 RMB 46.7 billion 减 少 至 RMB 25.6 billion ， 预 计 该 规 模 在 2023 年 将 进 一 步 降 低 。 不 断 降 低 的 风 险 敞 口 、 健 康 的 资 产 状 况 及 强 大 的 现 金 储 备 ， 不 仅 保 障 我 们 的 稳 固 经 营 ， 让 我 们 全 力 以 赴 向 汽 车 交 易 服 务 平 台 转 型 ， 也 让 我 们 有 信 心 把 握 后 疫 情 时 代 的 新 机 遇 ， 实 现 长 期 稳 定 的 高 效 发 展 。

[Translator]

Currently, automotive financing facilitation is not our primary focus. It was our launch pad and continues to strongly support our transformation into an automotive transaction service platform. By optimizing our automotive financing facilitation business, we have continuously improved the quality of assets, resulting in a healthy balance sheet. The total outstanding balance of financing transactions we facilitated decreased from RMB 46.7 billion as of December 31, 2021 to RMB 25.6 billion as of December 31st, 2022. We expect the number to decrease further over 2023. In addition to ensuring our stable operation, the ever-decreasing risk exposure, healthy assets, and strong cash reserves give us the confidence to fully embrace our transformation and grasp new opportunities in the post-pandemic world. I would like to take you through more details of our business developments. Let's begin with the new cars trading transactions business.

[Translator]

As of December 31st, 2022, Cango Haoche had engaged 10,112 dealers, up 58% year-on-year. During the fourth quarter, we sold a total of 3,938 cars, up 11.8% from the previous quarter. For the full year 2022, we sold a total of 16,490 cars. Conversion rate was 2.1% on par with the industry. During the full year 2022, accumulated page views and unique visitors on Cango Haoche app were over 660,000 and 57,000, respectively. For our self-earned new cars, we have established cooperation with various OEMs and car suppliers, expanding our vehicle sources while also diversifying by brand and model.

[Translator]

Specifically, we forged deep collaborations with GAC Mitsubishi, Dongfeng Motor Group, FAW-Volkswagen, and FAW-Audi in the fourth quarter. Our sales teams continue to develop vehicle sources and sales models based on the characteristics of each regional market, prompting a steady increase in the number and stickiness of channels. With respect to our transaction facilitation services, we have largely completed Cango Haoche service product matrix with the addition of several upgraded intelligent tools and products during the fourth quarter, further improving facilitation efficiency and dealer experience. Dealers can now easily access a wide range of transaction supporting services on the platform, including customer leads generation, logistics, financial services, and insurance services, among others. All of our platform service products are gaining traction and have made good progress by the end of the year. While enhancing our new car platform, we also continue to build our used car platform.

[Translator]

Following the launch of our Cango U-Car mini program in the mid-2022, we focused on acquiring new users and increasing engagement. At the same time, by leveraging our advantages such as abundant used car sources and one-on-one matching services, we've grown dealers' behavior on our platform and improved their platform stickiness. We have also established professional technician teams and car service teams across the country in the fourth quarter, providing dealers and customers with one-stop value-adding services, including car viewing, car inspection, and car loan transfer, to further improve our matching conversion rate.

[Jiayuan Lin, CEO at Cango]

截 至 2022 年 12 月 31 号 ， 呃 ， 灿 谷 优 车 小 程 序 累 计 PV、UV 分 别 超 过 三 十 一 ， 四 十 一 万 和 二 点 三 万 。 一 月 ， 灿 谷 优 车 APP 正 ， 也 正 式 推 出 ， 涵 盖 车 源 、 寻 车 、 限 时 报 价 、 交 易 支 持 服 务 和 数 字 化 服 务 等 五 大 功 能 板 块 ， 充 分 满 足 车 商 多 样 业 务 需 求 ， 并 将 不 断 迭 代 优 化 。

[Translator]

As of the end of 2022, there were 4,492 registered dealers on Cango U-Car. We saw the number of transactions on the platform to pick up over time. As of December 31st, 2022, the accumulated page views and unique visitors on Cango U-Car mini program were over 410,000 and 23,000 respectively. In January 2023, we officially launched Cango U-Car that dealers evolving demands with five functional modules covering vehicle sourcing, car searching, online auctions, transaction support services and other digital services. Moving forward, we will continue to improve Cango U-Car and its related products and services.

[Jiayuan Lin, CEO at Cango]

通 过 搭 建 数 字 化 平 台 ， 灿 谷 优 车 平 台 旨 在 打 造 一 张 兼 具 广 度 和 深 度 的 二 手 车 产 业 互 联 网 ， 将 车 源 、 客 源 、 资 金 等 各 项 资 源 高 效 匹 配 ， 辅 之 以 规 范 化 、 标 准 化 的 交 易 全 链 配 套 服 务 ， 真 正 促 进 二 手 车 在 全 国 范 围 内 跨 区 域 高 效 流 通 ， 提 升 二 手 车 交 易 效 率 ， 提 高 车 商 经 营 利 润 。 接 下 来 我 们 将 继 续 投 入 平 台 数 字 化 建 ， 构 建 ， 打 造 在 线 交 易 系 统 ， 连 接 起 线 上 和 线 下 ， 将 线 下 服 务 线 上 化 、 标 准 化 。 一 方 面 使 二 手 车 这 一 非 标 产 品 标 准 化 ， 另 一 方 面 也 使 二 手 车 交 易 这 一 非 标 服 务 标 准 化 。 同 时 聚 焦 车 源 ， 通 过 灿 谷 十 一 年 来 积 累 的 渠 道 和 客 户 进 行 车 源 采 集 ， 进 一 步 提 高 车 商 粘 性 ， 提 高 平 台 交 易 活 跃 度 。

[Translator]

Through Cango U-Car digital platform, we aim to form a broad and deep network for the used car segment, efficiently connecting used car sources, customers and funds supplemented by standardized support services spanning the entire transaction chain. With these advantages, Cango can promote truly efficient cross-regional circulation of used cars across the country, streamline the used car transaction process and increase dealers' operating profits. Going forward, we will continue to advance the platform's digitalization, creating a closed loop transaction ecosystem integrating online and offline services. Through this ecosystem, we can move offline services online and further standardize them an effort to standardize the used car products and services. Meanwhile, we will redouble our efforts to improve dealer stickiness and enhance their engagement on our platform, leveraging Cango's solid channel network and customer base developed over 10 years to provide them with premium car resources.

[Jiayuan Lin, CEO at Cango]

平 台 转 型 过 程 中 ， 数 字 化 新 基 建 是 最 重 要 的 一 环 。2022 年 我 们 也 加 大 了 研 发 力 度 ， 旨 在 整 体 构 建 数 字 化 业 务 能 力 ， 自 主 搭 建 信 息 数 字 化 中 心 ， 形 成 信 息 化 、 数 字 化 和 智 能 化 于 一 体 的 科 技 体 系 ， 为 平 台 的 搭 建 保 驾 护 航 。 目 前 我 们 的 新 车 加 二 手 车 交 易 平 台 体 系 架 构 已 初 具 雏形 。 随 着 各 个 端 口 的 基 础 能 力 不 断 夯 实 ， 平 台 效 能 和 运 营 能 力 正 在 大 幅 度 提 升 。

[Translator]

New digital infrastructure is an essential part of our transformation. In 2022, we continue to enhance our R&D efforts to holistically improve our digital business capabilities by building a proprietary information and digital center that integrates information, digital and intelligent technologies. Cango has created a unique competitive advantage to propel the sustainable development of our automotive transaction service platform. Cango's dual platform framework has taken shape, and we expect to steadily increase our operation capacity and efficiency as we improve each function.

[Jiayuan Lin, CEO at Cango]

走 出 一 条 新 路 从 来 不 是 一 件 易 事 。 从 头 部 车 金 融 服 务 提 供 商 向 综 合 性 车 交 易 服 务 平 台 转 型 ， 我 们 的 业 务 内 容 和 模 式 发 生 了 变 化 ， 但 有 一 点 从 未 改 变 ， 那 就 是 坚 定 地 陪 伴 下 沉 市 场 中 小 汽 车 经 销 商 ， 提 供 他 们 所 需 要 的 产 品 和 服 务 ， 助 力 他 们 实 现 业 务 跃 升 。

[Translator]

Forging a new path through uncharted territory is never easy. As we transform from a leading auto financing service provider to an integrated automotive transaction service platform, both the scope of our offerings and our business model have undergone a sea change. However, one thing never wavers: our determination to accompany small and medium-sized dealers in lower tier markets on their journey to success and empower them to achieve their goals by providing them with the products and services they need.

[Jiayuan Lin, CEO at Cango]

公 司 成 立 之 初 ， 灿 谷 敏 锐 地 捕 捉 到 了 面 积 广 大 、 人 口 众 多 的 下 沉 市 场 巨 大 的 消 费 潜 力 和 供 需 失 衡 。 以 汽 车 金 融 服 务 为 切 入 点 ， 搭 建 起 覆 盖 全 国 近 五 万 家 汽 车 经 销 商 ， 汽 车 经 销 商 的 渠 道 网 络 ， 并 基 于 此 为 消 费 者 带 去 了 品 质 化 的 汽 车 金 融 服 务 。 十 年 光 阴 ， 我 们 陪 伴 着 一 路 走 来 的 中 小 车 商 ， 不 少 已 经 成 长 为 具 备 多 重 服 务 场 景 、 多 样 业 务 需 求 的 综 合 型 车 商 。 这 一 路 ， 我 们 不 断 拓 宽 业 务 边 界 ， 与 车 商 伙 伴 共 同 直 面 车 源 、 客 源 、 资 金 等 方 面 业 务 痛 点 ， 希 望 通 过 提 供 一 站 式 服 务 ， 降 低 车 商 经 营 成 本 ， 提 升 效 率 ， 让 卖 车 不 再 艰 难 ， 让 购 车 简 单 愉 悦 。

[Translator]

When we established Cango 12 years ago, we homed in on a huge consumption potential, an imbalance between the supply and demand in the lower tier markets. Taking automotive financing facilitation services as our launch pad, Cango gradually built a solid network covering nearly 50,000 dealers nationwide, and we have worked closely with our dealers to provide premium financing facilitation services to our customers ever since. A decade later, many of the small and medium dealers we partner with have grown into larger and more diversified business, multiple services and diverse needs. We have been with them every step of the way, continuously pushing our business boundaries to offer effective solutions to address their unmet needs, as well as one-stop services to let that help our dealers lower their operating costs and refine their business efficiency.

[Translator]

As always, our ultimate goal is to make car purchases easy, simple, and enjoyable. The macroeconomy and the overall auto industry are undergoing profound and lasting changes. Although we still see challenges ahead in 2023, we have high expectations for the future and great confidence in the long-term development of China's auto industry. Cango will continue to focus on our vision and mission while further improving our standardized automotive transaction service ecosystem. Together with our dealer partners, we remain dedicated to promoting the recovery and development of the overall industry. I will turn the call over to Michael Zhang, our CFO, who will take you through the company's financial performance.

[Michael Zhang, CFO at Cango]

Thanks, Jiayuan. Hello, everyone, welcome to our fourth quarter and full year 2022 earnings call. Before I started to review our financials, please note that unless otherwise stated, all numbers are in RMB terms and all percentage comparisons are on the year-over-year basis. Our fourth quarter performance once again illustrate the strength and the resilience of our strategy and business model. Fourth quarter total revenues were RMB 487.1 million. Car trading transaction business delivered revenues of RMB 431.1 million, continuing to play an essential role in our platform. Let's move on to our costs and expenses during the quarter.

[Michael Zhang, CFO at Cango]

Total operating costs and expenses in the fourth quarter of 2022 was RMB 698.7 million, compared with RMB 1,207.6 million in the same period, 2021. Cost of revenue in the fourth quarter of 2022 decreased to RMB 481.7 million from RMB 880.7 million in the same period, 2021. As a percentage of total revenue, cost of revenue in the fourth quarter of 2022 was 98.9% compared with 83.8% in the same period, 2021. The change was primarily due to a higher contribution from our car trading transaction to total revenues. Car trading transaction normally presents higher cost revenue ratio, thus pushing up the overall ratio.

[Michael Zhang, CFO at Cango]

Sales and marketing expenses in the fourth quarter of 2022 decreased to RMB 19.2 million from RMB 73.8 million in the same period, 2021. As a percentage of total revenues, sales and marketing expenses in the fourth quarter of 2022 was 4% compared with 7% in the same period, 2021. General and administrative expenses in the fourth quarter of 2022 decreased to RMB 66.2 million from RMB 86.1 million in the same period of 2021. As a percentage of total revenues, general and administrative expenses in the fourth quarter of 2022 was 13.6% compared with 8.2% in the same period, 2021.

[Michael Zhang, CFO at Cango]

Research and development expenses in the fourth quarter of 2022 decreased to RMB 8.4 million from RMB 23.6 million in the same period of 2021. As a percentage of total revenues, research and development expenses in the fourth quarter of 2022 was 1.7% compared with 2.2% in the same period, 2021. Net loss on risk assurance liability in the fourth quarter of 2022 was RMB 62.8 million compared with RMB 84.6 million in the same period, 2021. We recorded loss from operations of RMB 211.6 million in the fourth quarter of 2022 compared with RMB 157 million in the same period, 2021.

[Michael Zhang, CFO at Cango]

Net loss in the fourth quarter of 2022 was RMB 558.9 million. Non-GAAP adjusted net loss in the fourth quarter of 2022 was RMB 539.9 million. On a per share basis, diluted net loss per ADS in the first quarter of 2022 was $4.13, and diluted non-GAAP adjusted net loss per ADS in the same period was $3.99. For the full year of 2022, our total net revenues were RMB 2 billion. Total operating costs and expenses were RMB 2.9 billion.

[Michael Zhang, CFO at Cango]

Net loss was RMB 1,111.2 million. Non-GAAP adjusted net loss was RMB 952.7 million. Diluted net loss per ADS was RMB 8.11. Diluted non-GAAP adjusted net loss per ADS was RMB 6.95. Moving on to our balance sheet. As of December 31st, 2022, we had cash and cash equivalents of RMB 378.9 million, compared with RMB 745 million as of September 30, 2022. As of December 31st, 2022, the company had short-term investment of RMB 1.9 billion, compared with RMB 2.7 billion as of September 30, 2022.

[Michael Zhang, CFO at Cango]

Looking ahead to the first quarter of 2023, we now predicting our total revenues to be between RMB 550 million and RMB 500 million. Please note that this forecast reflects our current preliminary view on the market and operational conditions, which are subject to change. This concludes our prepared remarks. Operator, we are now ready to take questions.

[Operator]

Thank you. If you wish to ask the question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Shelley Wang from Morgan Stanley. Please go ahead.

[Shelley Wang, VP of Equity Research at Morgan Stanley]

Morgan Stanley, Shelly.

[Translator]

Thank you. Good morning. I have two questions. The first question is, as Cango has optimized its automotive financing facilitation business, we have also observed a significant decrease in the company's risky assets. How does this positively impact the company's transformation? The second question is, based on the data disclosed by Cango, appears that the company has made substantial progress in transformation towards a car trading transaction service platform. What are your advantages compared with your industry peers like other platforms? What are your advantages compared with dealers in this industry?

[Translator]

I will take your two questions. Thank you, Shelley, for your two questions. The first, to answer your first question, our automotive financing facilitation business generated assets on a larger scale that significantly affected the company's cash flow and could even directly impact on our viability. The total outstanding balance of financing transactions we facilitated decreased from RMB 46.7 billion as of December 31st, 2021, to RMB 25.6 billion as of December 31st, 2022. We expect the number to decrease further over 2023, and we plan to invest the freed up cash flow in our expansion of self-owned vehicle inventory. On your second question. Currently, both our new car and used car platforms have taken shape and are generating transactions and, with a lot of data for us to refer to.

[Translator]

In addition to validating the logic behind our transformation, the data shows that we possess the capabilities and processes and capacity required to support our car trading transaction business. Once this new model fully running and smoothly, our next steps will be to holistically scale up the business operations and improve profitability. Thank you. That's all from me.

[Operator]

Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from John Lin from Goldman Sachs. Please go ahead.

[John Lin, Equity Research Associate at Goldman Sachs]

对 ， 谢 谢 管 理 层 给 我 这 次 那 个 提 问 的 机 会 ， 我 是 高 盛 的 John。 然 后 我 今 天 有 两 个 问 题 想 请 教 一 下 ， 其 实 第 一 个 是 管 理 层 对 二 零 二 三 年 中 国 汽 车 市 场 的 预 期 是 怎 么 样 的 ？ 对 我 们 这 个 汽 车 交 易 平 台 在 二 零 二 三 年 的 展 望 如 何 ？ 我 第 二 个 问 题 就 是 管 理 层 能 否 详 细 分 享 一 下 ， 就 是 目 前 啊 ， 这 个 二 手 车 业 务 的 进 展 ， 谢 谢 。

[Translator]

Thank you, thank you for giving me this opportunity to ask questions to the management. I have two questions. The first question is what is your outlook for China's auto market in 2023? Specifically, what is your outlook for your automotive transaction service platform in 2023? The second question is, could you give us more colors on the development of the current used car business in detail? Thank you.

[Jiayuan Lin, CEO at Cango]

呃 ， 谢 总 ， 我 来 回 答 你 刚 才 提 的 两 个 问 题 ， 一 个 是 ， 呃 ， 从 ， 关 于 第 一 个 问 题 ， 从 需 求 端 来 看 ， 疫 情 三 年 消 费 者 的 消 费 需 求 是 被 抑 制 了 的 ， 所 以 我 们 认 为 这 部 分 积 压 的 购 车 需 求 会 逐 渐 地 被 释 放 出 来 ， 同 时 也 要 取 决 于 经 济 复 苏 程 度 及 ， 以 及 政 策 的 支 持 。

[Translator]

Thank you, John. I will take your two questions. On first question, on the demand side, three years of pandemic policies actually have created a backlog of consumer demand, and we believe this pent-up demand for car purchases will gradually be released. Of course, this is subject to the overall level of economic recovery and policy support.

[Jiayuan Lin, CEO at Cango]

从 供 给 端 来 看 ， 各 大 传 统 汽 车 品 牌 在 年 初 推 出 了 很 多 新 的 车 型 ， 而 新 能 源 汽 车 也 因 为 锂 电 池 供 给 价 格 下 降 而 降 低 了 生 产 成 本 ， 其 车 辆 购 置 税 也 将 继 续 免 除 。

[Translator]

On the supply side, traditional car brands launched many new models at the beginning of the year, and NEV, new energy vehicle production costs have also decreased as lithium battery supply prices have fallen. Furthermore, NEVs will continue to enjoy an exemption from vehicle purchase taxes.

[Jiayuan Lin, CEO at Cango]

相 比 2022 年 ， 我 们 认 为 2023 年 的 汽 车 市 场 将 会 是 交 易 更 频 繁 的 一 年 。

[Translator]

In 2023, we expect to see more auto market transactions compared with 2022.

[Jiayuan Lin, CEO at Cango]

呃 ， 第 二 个 问 题 关 于 二 手 车 业 务 。 呃 ， 我 们 的 二 手 车 APP 灿 谷 优 车 已 经 上 线 。 目 前 在 APP 中 我 们 已 经 实 现 包 括 历 史 车 况 查 询 、 车 辆 评 估 、 拍 卖 、 在 线 寻 车 、 车 源 发 布 等 功 能 。 截 至 二 零 二 二 年 末 ， 灿 谷 优 车 平 台 注 册 车 商 数 量 四 千 四 百 九 十 二 家 。 截 止 到 二 零 二 二 ， 呃 ， 到 二 二 年 的 十 二 月 三 十 一 号 ， 灿 谷 优 车 小 程 序 累 计 PV、UV 分 别 超 过 十 一 万 和 二 点 三 万 。 我 们 预 计 二 手 车 的 交 易 数 据 会 随 着 平 台 的 扩 大 逐 步 走 高 。

[Translator]

On your second question on our used car business, we launched Cango U-Car App at the start of 2023, including an exceptional range of functions covering historical vehicle condition reports, vehicle evaluation, online auctions, online car searching, used car listing and other digital services. As of the end of 2022, there were 4,492 registered users on Cango U-Car. As of December 31st, 2022, the accumulated page views and unique visitors on Cango U-Car mini program were over 410,000 and 23,000 respectively. We expect the number of transactions on the platform to pick up over time.

[Jiayuan Lin, CEO at Cango]

呃 ， 同 时 ， 基 于 灿 谷 的 历 史 业 务 ， 我 们 ， 我 们 打 造 具 有 优 势 ， 具 有 优 势 的 处 置 车 源 、C 端 车 源 和 自 营 车 源 ， 呃 ， 一 对 一 等 撮 合 服 务 ， 培 养 车 商 的 平 台 使 用 习 惯 ， 提 高 车 商 的 平 台 粘 性 。 第 四 季 度 ， 我 们 还 组 建 了 遍 布 全 国 的 专 业 检 测 师 和 车 务 团 队 ， 为 车 商 及 C 端 客 户 提 供 代 看 车 、 车 辆 检 测 、 车 辆 过 户 抵 押 等 一 站 式 二 手 车 增 值 服 务 。

[Translator]

At the same time by leveraging our advantages such as abundant used car sources. Give you some examples, some of these used cars come from, you know, come from those sold by the consumers and also those repossessed cars. Of course, we also have our own cars. By taking advantage of these abundant used car sources and one-on-one matching services, we have successfully groomed the dealers platform usage behavior and improved their platform stickiness. We have also established professional technician teams and car service teams across the country in the fourth quarter, providing dealers and customers with one-stop value-adding services such as car viewing, car inspection, car loan transfers, etc.

[Jiayuan Lin, CEO at Cango]

嗯 ， 谢 谢 。 这 是 我 对 两 个 问 题 的 回 答 。

[Translator]

Thank you. That's my answer to these two questions.

[John Lin, Equity Research Associate at Goldman Sachs]

好, 谢谢.

[Jiayuan Lin, CEO at Cango]

è°¢ è°¢.

[Translator]

Thank you.

[Operator]

Thank you. Your next question comes from Brent Li from Bamboo Works. Please go ahead.

[Brent Li, Deputy Editor-in-Chief at Bamboo Works]

Hello, 这 是 Brent from Bamboo Works. I just ask question directly in Chinese. 车 源 是 我 们, 我 们 的 新 车 跟 二 手 车 平 台 的 一 项 重 要 优 势. 想 问 一 下 未 来 我 们 公 司 将 怎 么 样 去 发 挥 和 巩 固 这 个 优 势 呢?

[Translator]

My question is, owning abundant car sources is one of the company's strongest advantages. How will the company leverage and consolidate this advantage in the future?

[Jiayuan Lin, CEO at Cango]

那 个 谢 谢 ， 谢 谢 ， 谢 谢 你 。 我 来 回 答 你 的 问 题 。 第 一 ， 同 意 你 的 观 点 ， 就 是 车 源 是 二 手 车 ， 新 车 和 二 手 车 的 一 个 重 要 因 素 ， 所 以 我 们 做 汽 车 交 易 ， 就 是 希 望 能 够 为 购 车 客 户 和 车 商 带 来 更 极 致 的 服 务 体 验 ， 更 丰 富 多 样 的 车 源 ， 能 够 为 下 沉 市 场 客 户 个 性 化 的 需 求 提 供 保 证 。 所 以 我 们 希 望 利 用 车 源 优 势 ， 跟 客 户 增 加 更 高 的 粘 性 ， 让 客 户 愿 意 选 择 我 们 平 台 的 其 他 服 务 。

[Translator]

Thank you Li for your question. I feel you are absolutely right that car sources is one of our strongest advantages in our new car and used car service platform. Our goal is to provide a better service experience to car buyers and car dealers through our car trading transaction business. With a more diversified vehicle supply, we can better meet the individual needs of customers in the lower tier markets. We hope to leverage our advantages in car sources to increase customer stickiness and encourage customers to use other services on our platform.

[Jiayuan Lin, CEO at Cango]

在 新 车 方 面 ， 我 们 更 会 增 加 更 多 的 主 机 厂 合 作 ， 我 们 会 努 力 至 于 这 方 面 的 开 拓 和 开 发 。 四 季 度 ， 我 们 与 GAC Mitsubishi Motors 、 Dongfeng Motor Group 、 FAW-Volkswagen 和 FAW-Audi 都 建 立 了 深 度 合 作 ， 并 且 成 为 像 新 款 Outlander ， 一 个 比 较 重 要 的 销 售 平 台 。

[Translator]

On the new car sources, well we will step up our efforts to explore and develop further our collaborations and partnerships with OEMs. In the fourth quarter, we built deep collaborations with GAC Mitsubishi, Dongfeng Motor, FAW Volkswagen, and FAW Audi. We also became the most important sales platform for GAC Mitsubishi's new Outlander model.

[Jiayuan Lin, CEO at Cango]

在 二 手 车 方 面 ， 基 于 我 们 的 历 史 禀 赋 ， 我 们 在 那 个 储 值 ， 就 ， 处 置 车 方 面 目 前 是 我 们 的 优 势 ， 我 们 将 以 此 为 起 点 ， 不 断 地 拓 宽 我 们 的 二 手 车 车 源 。

[Translator]

On used car sources, well historically we have this advantage of having access to a lot of repossessed cars. In the future we will use this as a leverage to further grow and scale up our used car business.

[Jiayuan Lin, CEO at Cango]

谢 谢 ， 这 是 我 的 回 答 。

[Translator]

Thank you.

[Brent Li, Deputy Editor-in-Chief at Bamboo Works]

Thanks. Got it.

[Operator]

Thank you. We have no further questions at this time. I will hand the call back to management for closing remarks.

[Jiayuan Lin, CEO at Cango]

结 束.

[Jiayuan Lin, CEO at Cango]

好 ， 好 ， 谢 谢 。 今 天 的 那 个 ， 呃 ， 季 报 会 结 束 。

[Translator]

Thank you all for joining us. That closes today's call. Thank you.

Participants

Executives

• Jiayuan Lin, CEO
• Michael Zhang, CFO

Analysts

• Brent Li, Deputy Editor-in-Chief at Bamboo Works
• John Lin, Equity Research Associate at Goldman Sachs
• Shelley Wang, VP of Equity Research at Morgan Stanley
• Translator