A Field Visit to Youxin Super Market

At the end of last month, I visited Uxin's used car warehouse superstore in Xi'an. Driving down from the ring expressway, the 150,000-square-meter orange structure stood out in the twilight of the northwestern plains—3,000 vehicles neatly parked, with a supporting smart re-manufacturing plant capable of producing 40,000 units annually embedded behind the store. This starkly contrasted with my ingrained impression of the used car industry as a dirty, chaotic farmers' market.

Coincidentally, less than two weeks after the research concluded on July 3rd, the "15th Five-Year Plan for Circular Economy Development" was officially issued, listing the standardization of second-hand goods circulation and trade as a key task to expand reuse scale. This marks the first time in 23 years that used cars have entered a national strategic-level plan. The supporting targets are also clear: by 2027, national used car transaction volume should exceed 25 million vehicles, cultivating over 20 used car markets with annual transaction values exceeding 10 billion yuan and 100 digital circulation demonstration enterprises.

China's used car transaction volume in 2025 was 20.108 million vehicles, still achieving about 2% growth from January to May. Relevant departments confirmed on June 23rd: the new car/used car transaction ratio exceeded 1:1 for the first time, with the cross-provincial transfer rate reaching 31.1%. Against the backdrop of subsidy phase-outs and the discontinuation of full new energy vehicle purchase tax exemptions, domestic passenger car sales from January to May fell by about 20%, while used cars demonstrated significant counter-cyclical resilience.

The policy tailwind has arrived. Whether it can be harnessed ultimately depends on the company's own fundamentals. The Xi'an store is Uxin's first pilot store. Its operational data determines whether this model can be successfully replicated nationwide.

The Xi'an store commenced operations in December 2022. After 36 months of operation, it currently achieves monthly retail sales of about 2,600 units, with a local market share of about 20% and inventory turnover days of 28 days. The in-store customer conversion rate exceeds 40%, with walk-in customers accounting for 40%, and an NPS score of 67—placing it in the top tier of the retail industry.

What surprised me more was the efficiency of the store's reconditioning process: the time from reconditioning to listing is less than 3 days, with costs controlled within 1,000 yuan per unit, more than 50% cheaper than traditional dealers. During the Investor Day, institutional representatives toured this standardized system encompassing procurement, inspection, reconditioning, sales, and delivery. A system selling used cars as standard consumer goods is quietly operating in Xi'an.

With Xi'an proven successful, the next question is: can this data be replicated in other cities?

The Hefei store achieved monthly sales of 1,800 units and a 19% market share after 27 months of operation; the Wuhan store opened in March 2025, reaching monthly sales of 1,700 units and a 10% market share in just 9 months, becoming the first rapidly replicated store after the model was finalized. The ramp-up speed of new stores is significantly faster than in the early stages, confirming the cumulative effects of SOP standardization and brand momentum. In a highly fragmented landscape where there are over 500,000 used car dealers nationwide, 99% have inventory of less than 30 units, and 95% of transactions are completed by small dealers, whoever first turns non-standard products into standard retail will reap the Matthew effect.

Beyond the business model, another issue that shouldn't be overlooked is the industry's own ceiling.

China's car parc in 2025 is about 370 million units, expected to reach 450 million units by 2030, corresponding to an annual transaction space of over 60 million units and a market exceeding 4 trillion yuan. However, the current used car de-registration rate of 5.5% is only half of the 10%-15% levels seen in the US, Japan, and Germany—the gap represents the potential.

Uxin's store opening projections: today, over 30 cities in China have a car parc exceeding 3 million units, capable of supporting a 5,000-unit scale store; over 70 cities have a car parc exceeding 1 million units, capable of supporting a 2,000-unit scale store; over 100 cities have a car parc exceeding 500,000 units, capable of supporting a 1,000-unit scale store. In the long term, there are over 200 cities where operations can be expanded, sufficient to support an annual retail space of over 3 million units.

As of March 2026, Uxin has 6 operating stores (Xi'an, Hefei, Wuhan, Zhengzhou, Jinan, Tianjin) and has reached strategic cooperation agreements with Chongqing, Shijiazhuang, and Guangzhou. The five-year target is to reach 50 stores and over 1 million units by 2030; the 2035 vision is for 200 factory stores, annual sales of over 5 million units, and revenue exceeding 50 billion USD.

The market is large enough, and the model is proven. The next question is whether the performance matches the valuation.

In FY2026 Q1, Uxin's total revenue was 1.074 billion yuan, a year-on-year increase of 112.9%; retail transaction volume was 16,530 units, a year-on-year increase of 119.1%, marking the 8th consecutive quarter of year-on-year growth exceeding 110%. The company expects full-year retail sales for 2026 to exceed 100% year-on-year growth, having already achieved the annual target in phases.

International comparisons make the gap clear: Carvana sold only 1,000 units in its first year of operation (2013), reaching 597,000 units in 2025; Uxin sold 4,000 units in its first self-operated year (2021), over 50,000 units in 2025, and 17,000 units in Q1 2026 alone. Extrapolating based on the same development stage, Uxin's current market cap of about 700 million USD is only 1% of Carvana's 70 billion USD market cap, corresponding to a growth potential of 2-3 orders of magnitude.

Short-term pressures shouldn't be avoided either. Used fuel car prices fell 10%-15% within two months, and gross margins will remain under pressure in Q2 2026. However, the company clarified: as old inventory clears and gross margins on newly acquired vehicles recover, gross margins are expected to rebound significantly in Q3.

It was nearly dusk when I left Xi'an. The 150,000-square-meter store was brightly lit. Every car, every workstation, and every data dashboard was confirming the same thing: The qualitative transformation of the used car industry from scalper business to a key node in national resource circulation is happening, and standardization, scale, and digitization are precisely the tickets emerging from this transformation.

Source: Lonely Goose Investment

$Uxin(UXIN.US)