Despite improvements in supply and demand, recovery on the demand side was too moderate for the new supply. Against this backdrop, and coupled with the withdrawal of subsidies, Wuhan started a price war as production capacity resumed amid weak consumer demand. The appropriate intervention by non-market participants exacerbated the situation. The price war disrupted market order and impacted the used car market as well. Lower price has ultimately hindered rather than help the situation. Early this year, we reduced inventory in anticipation of China’s 6b emission standards. This proved a very wise decision safeguarding us from auto market disruptions and losses. In the second half, we will maintain a low inventory level, enhance service and product functions, but refine our business management and upgrade the data experience as well as improve operational efficiency.
On your second question, in addition to revenues from car sales, our services and products mainly aim to enhance the dealer experience. We hope these services will empower dealers, attract more small and medium sized data to our platform and generate more traffic. Going forward, we will leverage Big Data and technological innovations to refine our products, to refresh our service portfolio and offer more accessible and diversified functions so as to improve the dealer experience. And we believe that these will more effectively support small and medium sized dealers across lower tier markets. Thank you
Operator: Thank you. Your next question comes from [indiscernible] from Citic Securities. Please go ahead.
Unidentified Analyst: Thank you. I’m [indiscernible], Citic Securities. I have two questions. The first question is that yes, indeed, in March and April, the car market has not been performing very well. However, in May based on data we have seen some pickups in both the traffic to the stores as well as the car purchases. So what about in a lower tier markets? Have you observed any similar demand recovery in the lower tier markets? And that’s my first question. And the second question is about the used car market. Based on what I’ve heard, I understand that the company mainly provides services to customers for used car purchases. Do I understand that in the right way? And also what about, could you give us more colors on your plans for your used car business? And what are your thoughts on the used car market? Thank you.
Jiayuan Lin: Thank you for your two questions. Let me take on the first question first. Overall economic indicators and total finance ratio led to improvement in April and May. So recovery in lower tier markets have just begun. Public data show that Tier 3 and Tier 4 city households disposable income was 17% to 18% below national average and rural households disposable income was 40% that of urban levels. According to CADA data 61% of dealers reported declining transactions and 36.5% reported flat transactions and only 12.5% reported increased transactions. Based on our frontline experience in lower tier markets, many dealers closed stores, while remaining dealers saw much lower sales volumes then expected. Our sales team interacting with the clients noted that consumers mostly postponed car purchases.
On your second question on used car market, well the reason new car price war pushed the prices to all time lows causing rare but substantial depreciation in used car values. It has also impacted the used car markets. The new car price war has led to a 5% drop in average used car prices in March and also 1.56 million used car trades nationwide in March, up 7.4% quarter-over-quarter is lower rates than in previous years. All-in-all the used car market is rapidly expanding due to favorable government policies encouraging used car businesses, and also causing the new car market increasing the supply of used cars. Despite COVID-19’s negative impact the used car market saw steady growth overall. We believe the used car market will maintain sustainable long term growth due to government policy support and also increasing supply of used cars as the new car market expands.
