A：The new car market in China has been under pressure since the beginning of the year, with sales of new passenger cars down nearly 40% in the second quarter. However, the used car market has shown greater resilience, with transactions declining by only about 5% year over year. The rapid decline in new car prices, particularly for ice cars, continued to affect the used car market.

A：Yushun outperformed the broader market in the second quarter, with retail transaction volume reaching 19,610 units, up significantly from the same period a year prior. The Net Promoter Score (NPS) remained high, ranking among the industry's best.

A：Price volatility during the second quarter had a temporary impact on Yushun's growth margin. The company proactively accelerated inventory adjustments and sales group actions, which have since recovered, and they expect the overall growth margin to recover to above 6%.

A：Yushun has been advancing the digitalization of its business while systematically upgrading operations. As they accumulate more transaction data, their pricing system has improved significantly in terms of pricing accuracy, coverage, and response time, enabling them to respond to the market more quickly and accurately.

A：Yushun believes that 2026 could mark the beginning of a new phase in the evolution of China's used car industry, with a shift from fragmented and non-standardized models to more standardized and digitalized retail models. They see the next two to three years as a critical period for reshaping the used car market and believe they will maintain their leading position by continuing to develop their superstore model and core operating capabilities.

A：Yushun's outlook for the third quarter indicates that inventory turnover and profitability have returned to healthy levels. They expect a significant year-over-year growth in retail transaction volume of nearly 60% with a range between 19,000 and 21,000 units. The company expects to achieve a growth margin above 6% and improved profitability.

A：Yushun has been able to achieve rapid inventory turnover by maintaining strict cost management despite business expansion. By the beginning of the third quarter, the company had completed earlier inventory adjustments, resulting in a more stable and efficient balance between procurement and sales, leading to a significant recovery in per unit profitability.

A：The reduction in inventory turnover has been attributed to the application of AI across operations and upgrades in technology capabilities in pricing, price adjustments, and risk alerts. These improvements have enhanced the accuracy, coverage, and response speed of pricing capabilities, leading to a meaningful improvement in inventory turnover efficiency.

A：The integration of end-to-end systems and technology upgrades have improved the assessment of car conditions, market demand, and customer needs, as well as streamlined the inspection, reconditioning, inventory management, and customer relationship management processes.

A：The automotive market has experienced a significant adjustment, with nationwide passenger vehicle retail sales down approximately 40%. Used car transactions declined by 6% year over year in July and by 11% in August. New car prices, especially for IC cars, have declined rapidly, impacting used car prices. The market remains under pressure but has not seen the sharp monthly declines seen in the second quarter. Industry consolidation is ongoing, with many brick and mortar used car dealerships exiting the market.

A：The company is positioned to gain market share, maintaining a prudent approach to inventory procurement in the third quarter with a shortened inventory turnover to around 20 days. It expects retail transaction volume to grow by nearly 50% year over year. For the fourth quarter, the company plans to adjust inventory levels based on market conditions, potentially accelerating inventory procurement if prices stabilize, and continuing to turn inventory to drive sales growth.

A：The CEO has decided to purchase additional company shares using personal funds as a demonstration of confidence in the company's long-term value. A Rule 10B5-1 trading plan was established on June 30 for the purchase of shares following a required cooling-off period, with purchases beginning on September 1. The timing and amount of purchases will adhere to the pre-established trading plan and comply with applicable securities trading rules. The CEO is confident in the company's long-term development and hopes to align personal interests with the long-term interests of the company and shareholders.