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Beijing / Shanghai – August 15, 2025 – Uxin Ltd. (UXIN.US), one of China’s largest used-car retailers, saw its gross margin fall into negative territory in the second quarter as a brutal price war among new-car sellers spilled into the used-car segment. The company posted a gross margin of -0.7%, a sharp reversal from the positive 7% it recorded in the first quarter.
Revenue rose 75% year-over-year to RMB 1.15 billion (USD 172 million), while transaction volume climbed 88.7% to 21,899 vehicles. But the surge was driven by a deliberate inventory clearance strategy. As used-car prices for gasoline-powered models dropped 10%–15% in just two months, Uxin rushed to sell off stock before values fell further. Founder and Chairman Dai Kun said the move was necessary to realign inventory with the new pricing environment, despite the near-term profitability hit.
“We moved quickly to sell through inventory affected by decreasing prices,” Dai said in the earnings release. “While this put significant pressure on near-term profitability, it allowed us to realign our inventory more quickly with the new pricing environment.”
Why prices are falling
China’s passenger vehicle market has been in a state of turbulence. New-vehicle sales dropped roughly 20% year-on-year in the first five months of 2025, a decline rooted in cautious consumer spending and a prolonged oversupply problem. Automakers and dealers responded by slashing prices to clear inventory, a tactic that quickly cascaded into the secondhand market.
Uxin’s CFO Lin Feng insists the volatility is easing and expects gross margin to “return to positive territory at 6% or higher” in the third quarter, in line with the first-quarter level. However, the market remains skeptical. The company’s stock has lost nearly two-thirds of its value in 2025, with most of the decline occurring over the past six months.
Still, Uxin trades at a price-to-book (P/B) ratio of 6.4, roughly four times higher than U.S. used-car giant CarMax (KMX.US) at 1.32. That gap suggests some investors are betting on a turnaround, even as the company has never recorded a full-year profit.
Superstore model under pressure
Uxin’s strategy mirrors CarMax: operate large superstores that offer inspected vehicles, transparent pricing, and aftersales support. The model is still young in China, and Uxin has been scaling rapidly. It opened its latest superstore in Shaoxing, Zhejiang province, in July, its second new location this year after a Tianjin store in April. Two more are planned in Yinchuan and Jiangyin, with a goal of four to six new stores in 2025.
The long-term ambition is aggressive. Uxin identifies more than 200 Chinese cities as viable markets for its superstore model and targets more than 50 stores with annual retail transaction volume exceeding 1 million units by 2030. For context, the company is on pace to sell roughly 80,000 vehicles at retail this year, based on second-quarter retail sales of 19,610 cars.
The expansion plan, however, is capital-intensive. Self-operated stores require significant upfront investment, and Uxin has been burning cash. Operating cash outflow reached RMB 64 million in the second quarter, while non-GAAP EBITDA loss widened to RMB 120 million, up sharply from RMB 16.5 million a year earlier. At the end of June, the company held just RMB 82.6 million in cash, and current liabilities exceeded current assets by about RMB 200 million.
Backers and believers
Uxin still has a lifeline from a few steady supporters. Most notably, Nio’s venture capital arm has provided repeated funding rounds, and management says the company has sufficient capital to cover its obligations for the next 12 months. In June, representatives from asset managers including CICC, China Merchants Securities, Deutsche Bank, and Invesco Great Wall Fund Management attended Uxin’s investor day, indicating some institutional interest.
That support, however, coexists with a harsh reality: China’s used-car market is still maturing. Used-car transactions hit 20.1 million units in 2024, about 60% of the 34.4 million new vehicles sold that year. In most developed markets, used-car sales typically outnumber new-car sales by a factor of 1.5 to 2. The headroom is real, but so is the competition and the pricing pressure.
One industry analyst, who asked not to be named, told [Outlet]: “Uxin’s core problem is timing. The secondhand market in China is expected to grow, but the current glut in new cars is forcing everyone to discount. A company with Uxin’s thin margins cannot afford another quarter of negative gross margin. It needs the market to stabilize soon.”
A bumpy road ahead
For now, Uxin is playing defense. It has cut costs, accelerated inventory turnover, and shifted new-store openings to lower-rent cities. The management team remains publicly confident, pointing to a stabilizing market and a proven business model. Yet the current downturn could last one to two years, or longer, and there is no guarantee Uxin will have enough cash to wait it out.
The company has survived previous cycles, but never with such a thin financial buffer. Its future may hinge on whether China’s used-car sector can mature as quickly as Uxin’s expansion plan suggests. If the price war cools and consumer confidence returns, Uxin’s superstore model could yet find a profitable groove. Until then, the stock is likely to remain under pressure — and the next two quarters will be critical tests of the company’s staying power.
