The online auto loan service platform YIXIN processed nearly a quarter more transactions year-on-year in the third quarter, rising against the backdrop of an overall weak Chinese automotive market.
<h4>Key Points:</h4>
<ul>
<li>YIXIN processed approximately 235,000 auto transactions in the third quarter, a year-on-year increase of about 23%, significantly outpacing the overall growth rate of China's auto sales during the same period.</li>
<li>With the accelerated adoption of new energy vehicles, the market expects a rapid increase in financing demand for used electric vehicles, and YIXIN is gradually shifting its business focus towards the used new energy vehicle loan market.</li>
</ul>
Liang Wuren
No matter how severe the market environment, savvy companies can always find the most profitable entry points amid fluctuations; even as the Chinese automotive market continues to slow down, and peers generally face declining revenues and shrinking profits, YIXIN Group Limited (2858.HK) seems to have successfully tapped into a favorable track.
The online auto loan service platform stated in its business report last Tuesday that it processed approximately 235,000 auto transactions in the third quarter, a year-on-year increase of about 23%. In terms of amount, the total loans facilitated by YIXIN during the period were approximately 21.2 billion yuan (about 3 billion USD), an increase of about 15% compared to the same period last year.
Although YIXIN did not disclose specific revenue figures for the third quarter, the company's overall operational performance still appears relatively bright against the backdrop of a weak Chinese automotive market and a continuously cooling macro economy.
With the long-term economic slowdown and consumers becoming cautious about purchasing high-priced items like cars, China's auto sales have struggled to grow over the past few years. The price war triggered by fierce competition and oversupply has exacerbated the situation, prompting potential buyers to delay their car purchase decisions, waiting for further price reductions.
In the third quarter of this year, total auto sales in China (including used cars) grew by about 11% year-on-year. This growth rate may seem considerable in any mature economy, but it is still far from the rapid expansion seen in the early 2000s. More importantly, the seemingly impressive growth figures mask a fact: automakers and dealers are clearing high inventories through significant discount promotions, which is hard to be seen as a sign of market health.
This does not mean that YIXIN lacks growth opportunities; the latest business report shows that the company continues to benefit from the rapid rise in demand for used electric vehicles (EVs). The central government continues to strongly support the development of new energy vehicles, consistently introducing policies to stimulate sales, and now new energy vehicles account for half of China's new car sales.
As a large number of new energy vehicles flood the market, the prices of well-maintained used electric vehicles have quickly fallen, providing more attractive options for cost-conscious consumers and further driving the related financing demand.
<h4>Used Car Financing Becomes Growth Engine</h4>
YIXIN's financing for used cars grew by over 50% year-on-year in the third quarter, accounting for more than half of the total financing facilitated during the period. Among these, the proportion of used electric vehicle loans in the used car financing business increased from about 13% in the third quarter of 2024 to about 23% in the third quarter of this year. The company stated that this rapid shift is a deliberate strategic layout.
YIXIN stated in its announcement: &#34;This growth reflects our active strategy of implementing more precise risk pricing and introducing profitable used car products, which is continuously proving effective.&#34;
However, whether the growth in trading volume can be effectively converted into a corresponding increase in revenue or profit for YIXIN still depends on several other factors.
First, the selling price of used cars is generally lower than that of new cars, and the corresponding loan amounts are usually smaller. This explains why the increase in financing amounts for YIXIN in the third quarter was lower than the growth in the number of transactions. In other words, compared to new car loans, each used car loan may bring in lower revenue for YIXIN, resulting in the company's revenue growth lagging behind the growth in transaction volume.
This means that YIXIN's actual revenue growth in the third quarter is likely to be significantly slower than the over 20% increase in transaction volume during the period.
On a more positive note, YIXIN provides a higher proportion of payment guarantee services for customers in the used car loan business compared to the new car business, and the expansion of related services helps generate more guarantee service fee income. However, the growth in this sector also comes with certain risks, as the company needs to make provisions for impairment or losses on guaranteed loans that ultimately result in bad debts, and these related costs will directly erode its profit performance.
YIXIN's interim performance report released in August showed that the company's revenue in the first half of the year grew by 22% year-on-year to 5.4 billion yuan. However, its credit impairment losses surged by 59%, eroding gross profit performance. Nevertheless, the company still managed to increase its net profit for the period by 34% year-on-year to 549 million yuan. This achievement is particularly remarkable given that most companies in the automotive industry are facing declines in both revenue and profit.
<h4>Diversified Layout</h4>
Given that the loan matching business itself involves risks, YIXIN is actively promoting business diversification. One of the key areas of focus is its financial technology (SaaS) platform, which connects automobile manufacturers, financial institutions, and consumers. With the introduction of two new financial institution partners during the period, the financing amount facilitated through this platform in the third quarter has more than doubled year-on-year. The application of artificial intelligence (AI) is crucial for YIXIN, which is also a common trend among many digital enterprises today. For YIXIN, the relevant technology helps simplify the loan approval process, improve operational efficiency, and reduce operating costs.
In fact, SaaS services have become YIXIN's largest single source of income in the first half of the year, with related revenue soaring by 124% year-on-year, accounting for more than one-third of the company's total revenue.
However, the overall weakening of the Chinese economy and the sluggish automotive market will continue to weigh on YIXIN in the foreseeable future. New car sales in China have declined for the second consecutive month in November, although industry insiders point out that part of the reason is that last year's data was artificially high due to government subsidy policies, which are now gradually being phased out.
Investors seem to have temporarily overlooked the overall adverse factors in the automotive industry, instead rewarding YIXIN for its impressive performance in adversity. Since the release of the latest business report, the company's stock price has continued to rise, with a current price-to-earnings (P/E) ratio of about 16 times, significantly higher than that of two peers in the retail loan matching platform sector that do not focus on automotive financing—Xinye Technology (FFINV.US) at about 3.6 times, and Qifu Technology (QFIN.US; 3660.HK) listed in Hong Kong at about 2.8 times

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Against the backdrop of a slowdown in the Chinese automotive market, YIXIN processed approximately 235,000 vehicle transactions in the third quarter, a year-on-year increase of about 23%, with a total loan amount of approximately 21.2 billion yuan, growing by about 15%. The company is gradually shifting its business focus towards the used new energy vehicle loan market, benefiting from the rapid rise in demand for used electric vehicles. Despite the sluggish growth in China's automobile sales, YIXIN still achieved growth against the trend

China's auto market slows down, but YIXIN enters the fast lane of growth