Autohome
Annual Report 2017

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 Form 20-F (Mark One)☐REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGEACT OF 1934or ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017.or ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934For the transition period from to or ☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934Date of event requiring this shell company report For the transition period from to Commission file number: 001-36222 Autohome Inc.(Exact name of Registrant as specified in its charter) N/A(Translation of Registrant’s name into English)Cayman Islands(Jurisdiction of incorporation or organization)10th Floor Tower B, CEC Plaza3 Dan Ling StreetHaidian District, Beijing 100080The People’s Republic of China(Address of principal executive offices)Jun ZouChief Financial OfficerTel: +86 (10) 5985-7001E-mail: ir@autohome.com.cnFax: +86 (10) 5985-738710th Floor Tower B, CEC Plaza3 Dan Ling StreetHaidian District, Beijing 100080The People’s Republic of China(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which RegisteredClass A ordinary shares, par value US$0.01 per share* The New York Stock Exchange *Not for trading, but only in connection with the listing on The New York Stock Exchange of the American depositary shares (“ADSs”). Currently, oneADS represents one Class A ordinary share.Securities registered or to be registered pursuant to Section 12(g) of the Act:None(Title of Class)Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:None(Title of Class) Indicate the number of outstanding shares of each of the Issuer’s classes of capital or common stock as of the close of the period covered by the annualreport. 117,140,856 Class A ordinary shares, par value US$0.01 per share, and 0 Class B ordinary shares, par value US$0.01 per share, wereoutstanding as of December 31, 2017.Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934. Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorterperiod that the registrant was required to submit and post such files). Yes ☒ No ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company.See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ☒ Accelerated filer ☐Non-accelerated filer ☐ Emerging growth company ☐If a an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant haselected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a)of the Exchange Act. ☐ †The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its AccountingStandards Codification after April 5, 2012.Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP ☒ International Financial Reporting Standards as issuedby the International Accounting Standards Board ☐ Other ☐If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected tofollow. Item 17 ☐ Item 18 ☐If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ExchangeAct). Yes ☐ No ☒(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the SecuritiesExchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐ Table of ContentsTABLE OF CONTENTS INTRODUCTION 1 FORWARD-LOOKING STATEMENTS 1 PART I. 2 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS 2 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE 2 ITEM 3. KEY INFORMATION 2 ITEM 4. INFORMATION ON THE COMPANY 37 ITEM 4A UNRESOLVED STAFF COMMENTS 65 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 65 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 84 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 97 ITEM 8. FINANCIAL INFORMATION 101 ITEM 9. THE OFFER AND LISTING 102 ITEM 10. ADDITIONAL INFORMATION 103 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 113 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 113 PART II. 115 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES 115 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS 115 ITEM 15. CONTROLS AND PROCEDURES 116 ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT 117 ITEM 16B CODE OF ETHICS 117 ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES 117 ITEM 16D EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES 118 ITEM 16E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS 118 ITEM 16F CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT 118 ITEM 16G CORPORATE GOVERNANCE 118 ITEM 16H MINE SAFETY DISCLOSURE 118 PART III. 118 ITEM 17. FINANCIAL STATEMENTS 118 ITEM 18. FINANCIAL STATEMENTS 119 ITEM 19. EXHIBITS 119 iTable of ContentsINTRODUCTIONUnless otherwise indicated and except where the context otherwise requires, references in this annual report on Form 20-F to: • “ADSs” are to our American depositary shares, each of which represents one Class A ordinary share; • “CAGR” refers to compound annual growth rate; • “China” or the “PRC” are to the People’s Republic of China, excluding, for the purpose of this annual report only, Hong Kong, Macau andTaiwan; • “shares” or “ordinary shares” are our ordinary shares, par value US$0.01 per share, before our initial public offering, or IPO, and our Class A andClass B ordinary shares, par value US$0.01 per share, after our initial public offering; • “RMB” and “Renminbi” are to the legal currency of China; • “we,” “us,” “our,” “our company” and “the Company” are to Autohome Inc., its predecessors, subsidiaries and variable interest entities, or VIEs; • “U.S. GAAP” refers to generally accepted accounting principles in the United States; and • “$,” “dollars,” “US$” or “U.S. dollars” refers to the legal currency of the United States.FORWARD-LOOKING STATEMENTSThis annual report contains forward-looking statements that reflect our current expectations and views of future events. The forward-looking statementsare contained principally in the sections entitled “Item 3. Key Information—D. Risk Factors,” “Item 4. Information on the Company—B. Business Overview”and “Item 5. Operating and Financial Review and Prospects.” These forward-looking statements are made under the “safe-harbor” provisions of the U.S.Private Securities Litigation Reform Act of 1995. Known and unknown risks, uncertainties and other factors, including those listed under “Item 3. KeyInformation—D. Risk Factors,” may cause our actual results, performance or achievements to be materially different from those expressed or implied by theforward-looking statements.You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,”“intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largelyon our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy andfinancial needs. These forward-looking statements include statements relating to: • our ability to attract and retain users and customers; • our business strategies and initiatives as well as our new business plans; • our future business development, financial condition and results of operations; • our ability to further enhance our brand recognition; • our ability to attract, retain and motivate key personnel; • competition in our industry in China; and • relevant government policies and regulations relating to our industry. 1Table of ContentsThese forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations.Other sections of this annual report include additional factors that could adversely impact our business and financial performance. Moreover, we operate inan evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors anduncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual resultsto differ materially from those contained in any forward-looking statements. You should read thoroughly this annual report and the documents that we referto with the understanding that our actual future results may be materially different from, or worse than, what we expect. We qualify all of our forward-lookingstatements by these cautionary statements.This annual report contains certain data and information that we obtained from various government and private publications. Statistical data in thesepublications also include projections based on a number of assumptions. The online automotive advertising industry may not grow at the rate projected bymarket data, or at all. The failure of this market to grow at the projected rate may have a material adverse effect on our business and the market price of ourADSs. In addition, the rapidly changing nature of the online automotive advertising industry and the online automobile transaction industry results insignificant uncertainties for any projections or estimates relating to the growth prospects or future condition of our market. Furthermore, if any one or more ofthe assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. Youshould not place undue reliance on these forward-looking statements.The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in thisannual report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of newinformation, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should readthis annual report and the documents that we refer to in this annual report and exhibits to this annual report completely and with the understanding that ouractual future results may be materially different from what we expect.PART I.ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORSNot applicable.ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLENot applicable.ITEM 3. KEY INFORMATION A.Selected Financial DataThe following tables present the selected consolidated financial information for our company. Our selected consolidated statements of operations datapresented below for the years ended December 31, 2015, 2016 and 2017 and our selected consolidated balance sheet data as of December 31, 2016 and 2017have been derived from our consolidated financial statements, which are included in this annual report beginning on page F-1. Our selected consolidatedbalance sheet data as of December 31, 2013, 2014 and 2015 and the selected consolidated statements of operations data for 2013 and 2014 presented belowhave been derived from our consolidated financial statements not included in this annual report. Our historical results for any period are not necessarilyindicative of results to be expected for any future period. You should read the following selected financial data in conjunction with the consolidatedfinancial statements and related notes and the information under “Item 5. Operating and Financial Review and Prospects” in this annual report. Our auditedconsolidated financial statements are prepared and presented in accordance with U.S. GAAP. 2Table of Contents For the Year Ended December 31, (in thousands, except for number of shares and per share data) 2013 2014 2015 2016 2017 RMB RMB RMB RMB RMB US$ Selected Consolidated Statements of Operations Data: Net revenues 1,216,548 2,132,949 3,463,975 5,961,621 6,210,181 954,487 Cost of revenues (252,236) (381,498) (669,121) (2,393,165) (1,358,685) (208,826) Gross profit 964,312 1,751,451 2,794,854 3,568,456 4,851,496 745,661 Operating expenses Sales and marketing expenses (245,228) (559,070) (1,127,484) (1,536,939) (1,647,519) (253,219) General and administrative expenses (82,529) (129,751) (193,655) (306,794) (281,951) (43,335) Product development expenses (81,651) (158,395) (273,908) (571,354) (878,773) (135,065) Operating profit 554,904 904,235 1,199,807 1,153,369 2,043,253 314,042 Interest income 11,082 34,682 63,218 88,168 220,282 33,857 Interest expense (414) — — — — — Earnings/(loss) from equity method investments — — 102 (6,638) (10,571) (1,625) Other income, net 2,884 2,544 13,064 13,953 8,577 1,318 Income before income taxes 568,456 941,461 1,276,191 1,248,852 2,261,541 347,592 Income tax expense (112,294) (192,781) (285,542) (32,629) (267,082) (41,050) Net income 456,162 748,680 990,649 1,216,223 1,994,459 306,542 Net loss attributable to noncontrolling interests — — — 11,691 7,160 1,100 Net income attributable to Autohome Inc. 456,162 748,680 990,649 1,227,914 2,001,619 307,642 Earnings per share for ordinary shares Basic 4.57 7.01 8.83 10.75 17.20 2.64 Diluted 4.37 6.64 8.57 10.58 16.95 2.61 Weighted average number of shares used to computeearnings per share(1) Ordinary shares(2): Basic 99,898,154 106,735,303 112,227,405 114,237,600 116,379,846 116,379,846 Diluted 104,329,226 112,831,585 115,646,826 116,036,327 118,058,856 118,058,856 Dividend per share(3) — — — — — — (1)Earnings per share for ordinary shares (Diluted) for each year from 2013 to 2017 were computed after taking into account the dilutive effect of theshares underlying our employees’ share-based awards.(2)Represents our ordinary shares, par value US$0.01 per share, before our IPO, and our Class A and Class B ordinary shares, par value US$0.01 per share,after our IPO. In June 2016, all of our Class B ordinary shares were converted into Class A ordinary shares when Telstra Holdings, our then largestshareholder, transferred approximately 47.4% of our total issued and outstanding shares to Yun Chen Capital Cayman. As holders of Class A andClass B ordinary shares have the same dividend right in our undistributed earnings, the basic and diluted net income per Class A ordinary share andClass B ordinary share are the same for all the periods presented during which there were two classes of ordinary shares in issue. The weighted averagenumber of shares represents the sum of the weighted average number of Class A and Class B ordinary shares. Please see “Earnings per Share” underNote 17 to our audited consolidated financial statements included in this annual report for additional information regarding the computation of the pershare amounts and the weighted average number of Class A and Class B ordinary shares.(3)Dividends distributed to our shareholders in 2013 was a one-time distribution due to special circumstances. The special cash dividends declared inNovember 2017 to the holders of our Class A ordinary shares of record as of the close of business on January 4, 2018 was paid in the amount ofUS$0.76 per share (inclusive of applicable fees payable to our depositary bank) on or about January 15, 2018. See “Item 8. Financial Information—A.Consolidated Statements and Other Financial Information—Dividend Policy.” 3Table of Contents As of December 31, 2013 2014 2015 2016 2017 RMB RMB RMB RMB RMB US$ (in thousands) Selected Consolidated Balance Sheet Data: Cash and cash equivalents, restricted cash and short-term investments 1,383,613 2,772,191 4,169,053 5,733,321 8,154,224 1,253,282 Accounts receivable, net 465,712 736,695 1,075,456 1,205,924 1,893,737 291,062 Total current assets 1,862,612 3,582,797 5,696,498 7,432,532 10,258,586 1,576,718 Total assets 3,512,950 5,278,515 7,530,076 9,392,026 12,294,975 1,889,705 Deferred revenue 213,240 438,797 872,487 1,012,143 1,409,485 216,634 Total current liabilities 789,818 1,080,657 2,156,534 2,544,040 3,889,316 597,778 Total liabilities 1,300,586 1,613,092 2,679,040 3,040,813 4,359,689 670,073 Total Autohome Inc. shareholders’ equity 2,212,364 3,665,423 4,851,036 6,360,404 7,951,637 1,222,145 Total equity 2,212,364 3,665,423 4,851,036 6,351,213 7,935,286 1,219,632 Exchange Rate InformationSubstantially all of our operations are conducted in China and substantially all of our revenues are denominated in RMB. This annual report containstranslations of RMB amounts into U.S. dollars at specific rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB toU.S. dollars and from U.S. dollars to RMB in this annual report were made at a rate of RMB6.5063 to US$1.00, the exchange rate set forth in the H.10statistical release of the Board of Governors of the Federal Reserve System as of December 29, 2017. We make no representation that any RMB or U.S. dollaramounts could have been, or could be, converted into U.S. dollars or RMB, as the case may be, at any particular rate, at the rates stated below, or at all. ThePRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange andthrough restrictions on foreign trade. On April 6, 2018, the exchange rate was RMB6.3045 to US$1.00.The following table sets forth information concerning exchange rates between the RMB and the U.S. dollar for the periods indicated. Exchange Rate Period Period End Average(1) Low High (RMB per US$1.00) 2013 6.0537 6.1412 6.2438 6.0537 2014 6.2046 6.1704 6.2591 6.0402 2015 6.4778 6.2869 6.4896 6.1870 2016 6.9430 6.6549 6.9580 6.4480 2017 6.5063 6.7350 6.9575 6.4773 October 6.6328 6.6254 6.6533 6.5712 November 6.6090 6.6200 6.6385 6.5967 December 6.5063 6.5932 6.6210 6.5063 2018 January 6.2841 6.4233 6.5263 6.2841 February 6.3280 6.3183 6.3471 6.2649 March 6.2726 6.3174 6.3565 6.2685 April (through April 6) 6.3045 6.2960 6.3045 6.2785 Source: Federal Reserve Statistical Release (1)Annual averages are calculated using the average of month-end rates of the relevant year. Monthly averages are calculated using the average of thedaily rates during the relevant period. 4Table of ContentsB.Capitalization and IndebtednessNot applicable. C.Reasons for the Offer and Use of ProceedsNot applicable. D.Risk FactorsRisks Related to Our Business and IndustryWe rely on China’s automotive industry for substantially all of our revenues and future growth, the prospects of which are subject to many uncertainties,including government regulations and policies.We rely on China’s automotive industry for substantially all of our revenues and future growth. We have greatly benefited from the growth of China’sautomotive industry during the past few years. China is one of the world’s major automotive markets. However, car ownership rate in China is still low,indicating significant room for continued growth. We cannot predict how this industry will develop in the future. Further, the growth of China’s automotiveindustry could be affected by many factors, including general economic conditions in China, the urbanization rate of China’s population, the growth ofdisposable household income, the costs of new automobiles as well as taxes and incentives related to automobile purchases. In addition, governmentalpolicies may have a considerable impact on the growth of the automotive industry in China. For example, in an effort to alleviate traffic congestion andimprove air quality, the Beijing municipal government issued a regulation in December 2010 to limit the number of new passenger vehicle plates issued inBeijing each year to 240,000 commencing in 2011, and the limitation was subsequently reduced to 150,000 starting from 2014 to 2017, and further to100,000 in 2018. There are similar policies that restrict the issuance of new passenger vehicle plates in several other major cities in China. In 2015, the PRCgovernment released high automobile emission standards and new tax benefits for electric cars. In 2014 and 2017, respectively, the PRC government releasedtwo rules allowing the purchase of new energy vehicles to be exempt from vehicle purchase tax between 2014 and 2020. Moreover, since the beginning of2018, there are various rules promulgated by the PRC government that have tightened the regulation of the entire automobile industry, such as setting higherstandards and more stringent requirements for approval of automobile loans, more stringent emission standards for light-duty vehicles starting fromJanuary 1, 2018 and progressively stricter requirements on all sales and registration of light-duty vehicles starting from July 1, 2020, and the cancellation ofthe reduction of vehicle purchase tax on light vehicles by reverting the tax rate back to 10% starting from January 1, 2018. Such regulatory developments, aswell as other uncertainties, may adversely affect the growth prospects of China’s automotive industry, and in turn reduce demand for automobiles. Ifautomakers and automobile dealers were to reduce their marketing expenditures as a result, our business, financial condition and results of operations couldbe materially and adversely affected.We face significant competition, and if we fail to compete effectively, we may lose market share and our business, prospects and results of operations maybe materially and adversely affected.The markets for our services are highly competitive. With respect to our auto media business, we face competition from China’s automotive verticalwebsites and mobile applications, such as Xcar, PCauto and BitAuto, from the automotive channels of major internet portals, such as Sina and Sohu, andfrom companies engaged in mobile social media, news, video and live-streaming applications. We may also face competition from online automobiletransaction platforms, such as maodou.com, taoche.com, 51auto, Uxin, Guazi and Renrenche, as we develop our auto e-commerce business. Our auto financebusiness faces competition from other auto finance companies, such as Yixin. In addition, we also face competition from companies engaged in social mediabusiness, such as Jinri Toutiao and Tencent. Competition with these and other websites and mobile applications is primarily centered on increasing userreach, user engagement and brand recognition, relationships with the suppliers, and attracting and retaining advertisers or customers, among other factors. 5Table of ContentsSome of our competitors or potential competitors have longer operating histories and may have greater financial, management, technological,development, sales, marketing and other resources than we do. They may use their experience and resources to compete with us in a variety of ways,including by competing more heavily for users, advertisers and dealers, investing more heavily in research and development and making acquisitions. Someof our competitors have entered or may enter into business cooperation agreements with search engines, which may impact our ability to obtain additionaluser traffic from the same sources. Our competitors may be acquired and consolidated by, or cooperate with, industry conglomerates who are able to furtherinvest with significant resources into our operating space. We cannot assure you that any such large internet business will not in the future focus on theautomotive sector. If we are unable to compete effectively and at a reasonable cost against our existing and future competitors, our business, prospects andresults of operations could be materially and adversely affected.For our media business, we also face competition from traditional advertising media, such as newspapers, magazines, yellow pages, television, radioand outdoor media. Advertisers in China generally allocate a significant portion of their marketing budgets to traditional advertising media. If we cannoteffectively compete with traditional media for the marketing budgets of our existing and potential customers, our results of operations and growth prospectscould be adversely affected. For our e-commerce business, as online automobile transaction is a relatively new business model and consumers in China mightbe accustomed to make automobile purchases offline, we cannot guarantee that the automobile consumers in China will accept such business model.If we cannot maintain customer recognition and trust in us, our results of operations and growth prospects could be adversely affected.We may not be able to manage our expansion and new business initiatives effectively.We have experienced rapid growth in our business in recent years. The number of our employees has grown rapidly from 3,292 as of December 31,2015 to 3,752 as of December 31, 2016 and further to 4,097 as of December 31, 2017. Our net revenues increased from RMB3,464.0 million in 2015 toRMB5,961.6 million in 2016 and RMB6,210.2 million (US$954.5 million) in 2017, representing a CAGR of 33.9%. We expect to continue to grow our userbase and our business operations. We have begun to implement our future strategy to integrate four key market segments in our consumer centric automotiveecosystem, namely auto-media, auto-ecommerce, auto-finance and auto-lifestyle. Our “4+1” strategy continues to drive our growth momentum and guide usin our transformation from a content-led vertical media business to an automotive eco-platform based on our advanced data and technology. Also, we arecommitted to strengthening our competitive advantage in the core media and leads generation business and have begun to benefit from executing newbusiness initiatives, including data products and auto-financing.Although we have achieved profitability in recent periods, our rapid expansion and new business initiatives may expose us to new challenges and risksand may make the prediction of our future results of operations difficult. As a growing company facing risks and uncertainties, our historical results ofoperations should not be taken as indicative of the rate of growth, if any, that can be expected in the future. In addition, we may not have sufficientexperience in executing our new business initiatives. To manage the further expansion of our business, we need to continuously expand and enhance ourinfrastructure and technology, and improve our operational and financial systems, procedures and internal controls. We also need to train, manage andmotivate our growing employee base. In addition, we need to maintain and expand our relationships with automakers, automobile dealers, advertisingagencies and other third parties. We cannot assure you that our current and planned personnel, infrastructure, systems, procedures and controls will beadequate to support our expanding operations. We may be required to further increase our research and development expenses in order to enhance ourtechnology capabilities, such as augmented reality (AR) technologies and big data technologies, to support any such expansion and our efforts may not beeffective. In the future, we may also commit our resources to develop and expand our new business initiatives. Furthermore, we need to quickly respond to themarket reaction to our new business initiatives and adjust accordingly. If we fail to manage our expansion and new business initiatives effectively orefficiently, our business and results of operations may be materially and adversely affected. 6Table of ContentsIf we are unable to grow our new vehicle transaction business, we may not be able to achieve our expected business growth and our results of operationsmay be adversely affected.We started to develop our new vehicle transaction business in 2014 and expanded to include direct vehicle sales and platform-based servicesfacilitating transactions through our transaction platform. In June 2014, we launched Autohome Mall, which is a full-service online transaction platform forusers to review automobile-related information, purchase coupons offered by automakers for discounts and make purchases to complete the transaction. Inlate 2016, we gradually shifted the focus to becoming an asset-light vehicle e-commerce platform to facilitate transactions between consumers andautomakers or independent automobile sellers that obtain vehicles from legitimate distribution channels other than through direct authorization from anddealership arrangements with automakers. In 2017, platform-based service revenues under our new vehicle transaction business were primarily entrance feeswe collected from automakers and independent automobile sellers that participated in our transaction platform and other service fees for facilitatingtransactions. We cannot guarantee you that our change of focus will be successful to meet consumers’ expectation or demand for vehicles on our transactionplatform.We will need to react quickly to meet the changing consumer preferences and buying trends relating to our transaction business. We will also facecompetition from other websites and mobile applications engaged in the online automobile transaction business and from traditional dealerships.Furthermore, we must keep up to date with competitive technology trends, including the use of new or improved technology, creative user interfaces andother transaction marketing tools, such as paid search and mobile applications among others, which may increase our costs but may not succeed in increasingsales or attracting consumers. Developing the transaction business may require significant investment in product development, sales and marketing andworking capital, and we may not be able to get the expected return on our investment. As online automobile transaction is a relatively new business model,we cannot guarantee that the automobile consumers in China will accept our business model. Due to the limited operating history of our transaction business,we cannot predict that whether consumers, automakers or independent automobile sellers will trust our platform. Also, as we continue to develop ourtransaction business, we may need to comply with additional laws and regulations, including any evolving licensing requirements. We may fail to obtain andcontinuously maintain permits or licenses that applicable regulators may deem necessary for our operations. Our failure to successfully mitigate these risksand uncertainties might adversely affect the financial performance of our transaction business, as well as damage our reputation and brand.If we are not able to effectively attract consumers, automakers or independent sellers to complete automobile transactions on our platform, the servicefees we receive from our transaction business may be negatively affected. Finally, developing the transaction business may take up our management’s timeand allow them less time to focus on our other businesses. Our transaction business is substantially dependent on the sales level of new vehicles in China,which is sensitive to changing economic conditions.Also, the success of our transaction business depends, in part, on third parties and factors over which we have limited control. For example, we rely onindependent automobile sellers and our logistics partners to perform order fulfillments for vehicles sold on our platform. We may not have full control overthe offline order fulfillment procedures, and any dissatisfaction from the consumers might result in customer complaints. We cannot guarantee that suchcomplaints will be resolved in a satisfactory manner. As a result, our reputation could be harmed, which could adversely affect our business and financialperformance. 7Table of ContentsIf we are unable to grow our auto finance business, we may not be able to achieve our expected business growth and our results of operations may beadversely affected.In early 2017, we launched our auto finance business and started to provide services to our cooperative banks and financial institutions by displayingand marketing their financial products, including financing and financial leasing products, on our platform. We enable our cooperative banks and financialinstitutions to present their financial products to users of our websites and mobile applications and to accept users’ auto financing applications. In addition,we acquired a Chinese insurance broker, Shanghai Tianhe Insurance Brokerage Co., Ltd. in September 2017, and started to engage in offline insurancebrokerage business in November 2017. We are currently undertaking the filing process required for engaging in online insurance business, which we mayconduct in the future. Since insurance brokerage is an industry under specific regulatory system and supervision in the PRC, as our insurance brokeragebusiness grows, we may be exposed to the relevant regulatory risks in connection with our internal control or other compliance matters if we cannot satisfy allthe requirements imposed on insurance brokerage companies by the competent PRC governmental authorities. In addition, although we have an existinglarge user base, we cannot assure you that the business model of our auto finance business will be attractive to users and financial partners. Failure to providesatisfactory services on our platform or facilitate financing transactions between our users and financial product providers would cause an adverse impact onour auto finance business. As a result, we may not be able to achieve our expected business growth and our results of operations may be adversely affected.If we fail to attract and retain users and customers, our business and results of operations may be materially and adversely affected.In order to maintain and strengthen our position as the leading online destination for automobile consumers in China, we must continue to attract andretain users to our websites and mobile applications, which requires us to continue to provide quality content throughout the automobile ownership lifecycles. We must also innovate and introduce services and applications that enhance user experience. In addition, we must maintain and enhance our brandrecognition among consumers. If we fail to provide high-quality, enriched and customized content, offer a superior user experience or maintain and enhanceour brand recognition, we may not be able to attract and retain users. Also, the user experience we offer to automobile consumers may be negatively affectedby the non-automobile advertisements displayed on our websites and applications. If our user base decreases, our websites may be rendered less attractive toadvertisers and our services may become less attractive, which may have a material and adverse impact on our business, financial condition and results ofoperations. For our leads generation services, if our service delivery model doesn’t gain sufficient market acceptance, we may not be able to sustain ourrevenue growth and operating profit.We may not be able to successfully monetize and expand our mobile internet services.We plan to continue to expand our mobile internet services and explore monetization strategies for our mobile internet services. We have madesignificant efforts in recent years to optimize the mobile version of our websites and mobile applications to display our content and develop new mobileapplications to capture a greater number of users that access our services through mobile devices. For example, the number of our average daily unique userswho access our websites via mobile devices and the number of our average daily unique users of our mobile applications amounted to approximately13.7 million and 8.8 million, respectively, in the fourth quarter of 2017. We plan to devote more resources to enhance the functions and user interfaces of ourmobile applications. However, if we are unable to attract and retain a substantial number of mobile device users, or if we do not keep up with our competitorsin developing attractive services that are adapted for such mobile devices, we may fail to capture a significant share of an increasingly important portion ofthe mobile internet market for our services or lose existing users. Our limited experience in monetizing our mobile internet services makes it difficult topredict whether we will succeed in developing mobile applications that appeal to automakers and dealers. Our experience in developing browser-basedapplications may not be relevant to developing mobile applications.We believe an increasing number of sales leads were generated from our mobile applications as evidenced by the significant increase of our advertisingrevenue via our mobile platform. However, we cannot guarantee you that monetization strategies for our mobile internet services will continue to besuccessful. If our users continue to allocate more time on our mobile services instead of our traditional PC services, mobile monetization may becomeincreasingly important to our results of operations. Accordingly, if we are unable to successfully implement monetization strategies for our mobile internetusers, our results of operations may be negatively affected. 8Table of ContentsA limited number of automaker advertisers have accounted for, and are expected to continue to account for, a large portion of our media servicesrevenues. Failure to maintain or to increase revenues from these advertisers could harm our prospects.A limited number of automaker advertisers have accounted for, and are expected to continue to account for, a large portion of our media servicesrevenues. In each of 2015, 2016 and 2017, 87, 95 and 101 automakers operating in China used our media services. These automakers include independentChinese automakers, joint ventures between Chinese and international automakers and international automakers that sell cars made outside of China. In2017, our top five automaker advertisers contributed 18.9% of our media services revenues. We believe that our major future revenue growth will be focusedon deepening our existing commercial relationships with automakers to increase our share of each automaker’s advertising budget. There is no assurance thatour relationships with any of our existing automaker customers will continue in the future. If we lose one or more of our important automaker customers, or ifthey materially reduce their purchase of our services, our results of operations would be materially and adversely affected.Due to the limited number of automakers operating in China and our revenue concentration attributable to a small number of these companies, any ofthe following events, among others, may cause a material decline in our revenue and materially and adversely affect our results of operations and prospects: • contract reduction, delay or cancellation by one or more significant advertisers and our failure to identify and acquire additional or replacementadvertisers; • a substantial reduction by one or more of our significant advertisers in the price they are willing to pay for our services; and • financial difficulty of one or more of our significant advertisers who become unable to make timely payment for the advertisements placed onour websites and mobile applications.If our service offerings to dealers cannot gain sufficient market acceptance, we may not be able to sustain our revenue growth and operating profit.We had local sales and service representatives covering 206 cities across China as of December 31, 2017. We intend to increase our penetration inexisting dealer advertising and subscription services markets. We have implemented business strategies to further monetize our large dealer network byenlarging the offering of products and services on our dealer digital platform and increasing the average spending of our existing dealer subscribers andupselling our dealership packages for our leads generation services. We have been continuously integrating new technologies into our dealer digitalplatform. However, our monetization and expansion strategies, in particular our “share of wallet” approach, sales and marketing efforts designed to attractdealer advertisers and increase the average spending of our existing dealer subscribers, may be unsuccessful. We may not be able to realize the marketacceptance of our products and services as we expected and thus may fail to achieve an increase in the “share of wallet” from the paying dealers on ourplatform or maximize the pool of dealer subscription. In addition, as China is a large and diverse country and business practices and demands may varysignificantly by region and by the level of development of the cities, our experience in the markets in which we currently operate may not be applicable inevery part of China or in the lower-tier cities in China. If the service offerings catered to dealers on our platform turn out to be unattractive, we will not beable to generate sufficient revenues to cover our increased costs and expenses. As a result, our business and results of operations may be materially andadversely affected.Our business depends on strong brand recognition, and failing to maintain or enhance our brands could adversely affect our business and prospects.Maintaining and enhancing our “Autohome” and “Che168” brands is critical to our business and prospects. We believe that brand recognition willbecome increasingly important as the number of internet users in China grows and competition in our industry intensifies. A number of factors could preventus from successfully promoting our brands, including user dissatisfaction with the content offered on our websites or mobile applications, negative publicityinvolving our business and the failure of our sales and marketing activities. If we fail to maintain and enhance our brands, or if we incur excessive expenses inthis effort, our business, results of operations and financial condition will be materially and adversely affected. 9Table of ContentsIf we are unable to conduct our marketing activities cost-effectively, our results of operations and financial condition may be materially and adverselyaffected.We have incurred expenses on a variety of marketing and brand promotion efforts designed to enhance our brand recognition and increase sales of ourproducts and services. Our marketing and promotional activities may not be well received by customers and may not result in the level of sales of productsand services that we anticipate. We incurred RMB1,127.5 million, RMB1,536.9 million and RMB1,647.5 million (US$253.2 million) in sales and marketingexpenses in 2015, 2016 and 2017, respectively, representing 32.6%, 25.8% and 26.5%, respectively, of total net revenues in the corresponding years.Marketing approaches and tools in the consumer products market in China are evolving. This further requires us to enhance our marketing approaches andexperiment with new marketing methods to keep pace with industry developments and consumer preferences, which may not be as cost-effective as ourmarketing activities in the past and may lead to significantly higher marketing expenses in the future. We conducted various sales and marketing initiativesto promote our brands through websites, search engines, mobile platforms, navigation sites and traditional media channels, for example, the annual “Singles’Day” event and “AR Auto Show” event. We also conducted various offline promotional activities and cooperated with brands and dealers for promotions intarget regions. We may not be able to continue or conduct these activities efficiently, and our marketing activities may not yield satisfactory results. Failureto refine our existing marketing approaches or to introduce new effective marketing approaches in a cost-effective manner could impact our net revenues andprofitability.We may not be able to sustain our historical growth.Our historical growth rates may not be indicative of our future growth, and we may not be able to generate similar growth rates in the future. Our netrevenue increased from RMB3,464.0 million in 2015 to RMB5,961.6 million in 2016 and further increased to RMB6,210.2 million (US$954.5 million) in2017 representing a CAGR of 33.9%. Also, our net income attributable to Autohome Inc. increased from RMB990.6 million in 2015 to RMB1,227.9 millionin 2016 and RMB2,001.6 million (US$307.6 million) in 2017, representing a CAGR of 42.1%. Our revenue or profit growth may slow down, or our revenuesor profits may decline for any occurrence of possible reasons, including increasing operating expenses, increasing competition, slow growth of our businessdevelopment, emergence of alternative business models, and changes in government policies or general economic conditions. We cannot assure you that wewill grow at the same rate as we had in the past. If our growth rate declines, investors’ perceptions of our business and business prospects may be adverselyaffected and the market price of our ADSs could decline.Inaccuracy in pricing and listing information provided by dealers and independent automobile sellers on our platform may adversely affect our businessand financial performance.Our automobile listings and promotional information are provided and updated by the dealers and independent automobile sellers on our platform.Users interested in particular vehicle models can conveniently search for up-to-date information on such models without having to visit the local showroomsof relevant dealers or solicit related information from other sources. Although we have optimized our system to detect pricing inaccuracy and have leveragedour advanced technology and third-party data to improve the accuracy of price listings and promotional information on our platform, we cannot assure youthat these measures are always effective to ensure the accuracy and reliability of pricing and listing information provided to our users. If such listings andpromotional information provided by the dealers and independent automobile sellers on our platform are frequently inaccurate or not reliable, our users maylose faith in our websites and mobile applications, resulting in reduced user traffic to our websites and mobile applications and diminished value toadvertisers. We may receive more customer complaints, and we may need to allocate more resources in responding and handling such complaints. We cannotguarantee that such complaints will be resolved in satisfactory outcome. Our reputation could be harmed, which could adversely affect our business andfinancial performance. 10Table of ContentsIf we are unable to maintain our relationships with advertising agencies or if we are unable to collect accounts receivable from advertising agencies in atimely manner, our results of operations and prospects may be materially and adversely affected.Although we consider automakers and automobile dealers to be our end-customers for our media services, we sell our advertising services and solutionsprimarily to third-party advertising agencies that represent the automakers and automobile dealers, as is customary in China. We rely on a few advertisingagencies to maintain our business relationships with automakers and automobile dealers. We do not have long-term cooperation agreements or exclusivearrangements with these agencies and they may elect to direct business to other advertising service providers, including our competitors. If we fail to retainand enhance our business relationships with third-party advertising agencies, in particular the few ones we frequently transact with, we may suffer from a lossof advertisers and our business, financial condition, results of operations and prospects may be materially and adversely affected. In our agreements withcertain major advertising agencies, we undertake to provide them with most favored pricing terms. Such most favored pricing terms may hinder our ability toacquire new customers using special pricing terms.In addition, we rely on third-party advertising agencies for the collection of payment from advertisers and we rely on a few advertising agencies tocollect a significant portion of our total account receivables. As a result, the financial soundness of advertising agencies may affect our collection of accountsreceivable. We make a credit assessment of the advertising agency to evaluate the collectability of the advertising service fees before entering into anadvertising contract. However, we cannot assure you that we will be able to accurately assess the creditworthiness of each advertising agency, and any failureof advertising agencies to pay us in a timely manner may adversely affect our liquidity and cash flows.If online advertising and promotion do not continue to grow in China, our ability to increase revenue and profitability could be materially and adverselyaffected.With the continuous growth of internet usage in China, the internet has become an increasingly important marketing and advertising channel toChina’s automotive industry. Although online advertising and promotion have constituted a significant portion of the overall marketing activities of ourcurrent and potential advertisers and dealer subscribers, if the promotional effect or outcome realized through online advertising and promotion cannot meetthe expectations of advertisers and dealer subscribers or address their needs, our advertisers and dealer subscribers may decrease their spending and efforts ononline advertising and promotion and devote more marketing budgets to traditional print and broadcast media. Our ability to increase revenue andprofitability from online marketing may be adversely impacted by a number of factors, many of which are beyond our control, including: • difficulties associated with developing a larger user base with demographic characteristics attractive to advertisers; • increased competition and potential downward pressure on online advertising prices; • difficulties in acquiring and retaining advertisers or dealer subscribers; • uncertainties and changes in regards to PRC regulations on internet advertisements; • failure to develop an independent and reliable means of verifying online traffic; and • decreased use of the internet or online marketing in China.If the internet does not become more widely accepted as an effective media platform for advertising and marketing by China’s automotive industry, ourbusiness, financial condition and results of operations could be materially and adversely affected.If we are unable to grow our used automobile-related business through our che168.com website and mobile application, we may not be able to achieve ourexpected business growth and our results of operations may be adversely affected.Our che168.com website has been focusing on used automobile information and content since October 2011. We also launched che168.com mobileapplication in 2012. Through these platforms, we offer used automobile listing services to used automobile dealers and individual car owners through a userinterface that allows potential used car buyers to identify listings that meet their specific requirements and contact the seller. 11Table of ContentsWe may not be able to successfully grow our used automobile-related business through our che168.com website and our used car platform services.Although the used automobile market in China is growing due to the increased number of consumer-owned automobiles, there is still significant uncertaintyregarding the extent to which our used automobile-related business may benefit from such growth. We may not be able to source sufficient used automobilesor attract a broad user base to our che168.com website and mobile application or be successful compared to our competitors. Even if we are able to do so, wemay not be able to establish a business model that allows us to effectively monetize the user traffic. We may not be able to successfully facilitate used cartransactions and our services might not be satisfactory to the used car buyers or sellers. In such cases, we may not be able to achieve our expected businessgrowth and our results of operations may be adversely affected.Our business is subject to fluctuations, which makes our results of operations difficult to predict and may cause our quarterly results of operations to fallshort of expectations.Our quarterly revenues and other operating results have fluctuated in the past and may continue to fluctuate depending upon a number of factors, manyof which are beyond our control. Our business experiences seasonal variations in association with the demand for automobiles in China. For example, the firstquarter of each year generally contributes the lowest portion of our annual net revenues primarily due to a slowdown in business activity around and duringthe Chinese New Year holiday, which occurs during the period. Consequently, our results of operations may fluctuate from quarter to quarter. For thesereasons, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our historical results as an indicationof our future performance. As each of our business lines may have different seasonality factors and the mix of our revenue source may shift from year to year,our past performance may not be indicative of future trends.In addition, because a significant portion of our revenues arising from our media services is attributable to new model promotion campaigns, the timingof new car releases of our major automaker advertisers can have a significant impact on our results of operations. The timing of such releases, however, issubject to uncertainty due to various factors, such as automakers’ design or manufacturing issues, marketing conditions and government incentives orrestrictions. These factors may make our results of operations difficult to predict and cause our quarterly results of operations to fall short of expectations.Problems with our network infrastructure or information technology systems could impair our ability to provide services.Our ability to provide our users with a high-quality online experience depends on the continuing operation and scalability of our networkinfrastructure and information technology systems. Our systems are potentially vulnerable to damage or interruption as a result of earthquakes, floods, fires,extreme temperatures, power loss, telecommunications failures, technical error, computer viruses, hacking or similar events. We may encounter problemswhen upgrading our systems or services and undetected programming errors could adversely affect the performance of the software we use to provide ourservices. The development and implementation of software upgrades and other improvements to our internet services is a complex process, and issues notidentified during pre-launch testing of new services may only become evident when such services are made available to our entire user base.In addition, we rely on content delivery networks, data centers and other network facilities provided by third parties. Any disruption to these networkfacilities may result in service interruptions, decreases in connection speed, degradation of our services or the permanent loss of user data and uploadedcontent. If we experience frequent or persistent service disruptions, whether caused by failures of our own systems or those of third-party service providers,our reputation or relationships with our users or advertisers may be damaged and our users and advertisers may switch to our competitors, which may have amaterial adverse effect on our business, financial condition and results of operations. 12Table of ContentsComputer viruses and “hacking” may cause delays or interruptions on our systems and may reduce use of our services and damage our reputation andbrand.Computer viruses and “hacking” may cause delays or other service interruptions on our systems. “Hacking” involves efforts to gain unauthorizedaccess to information or systems or to cause intentional malfunctions, loss or corruption of data, including user identity data, software, hardware or othercomputer equipment. In addition, the inadvertent transmission of computer viruses could result in significant damage to our hardware and software systemsand databases, disruptions to our business activities, including our e-mail and other communications systems, breaches of security and inadvertent disclosureof confidential or sensitive information, interruptions in access to our website through the use of “denial of service” or similar attacks and other materialadverse effects on our operations. We have experienced hacking attacks in the past, and although such attacks in the past have not had a material adverseeffect on our operations, there is no assurance that there will be no serious computer viruses or hacking attacks in the future. We may incur significant costs toprotect our systems and equipment against the threat of, and to repair any damage caused by, computer viruses and hacking. Moreover, if a computer virus orhacking affects our systems and is highly publicized, our reputation and brand could be materially damaged and use of our services may decrease.Failure to ensure and protect the confidentiality of personal data of customers could subject us to penalties, negatively impact our reputation and brandand deter customers from using our platform.Ensuring secured transmission of confidential information through public networks is essential to maintaining the confidence of our customers andusers. Our existing security measures may not be adequate to protect such confidential information. In addition, computer and network systems aresusceptible to breaches by computer hackers. Security breaches could expose us to litigation and potential liability for failing to secure confidential customerinformation and could harm our reputation and reduce our ability to attract customers and users. Future security breaches, if any, may result in a materialadverse effect on our business, financial condition and results of operations.Practices regarding the collection, use, storage, transmission and security of personal information by companies operating over the internet and mobileplatforms have recently come under increased public scrutiny. As China’s internet industry continues to evolve, we believe that it is likely that the PRCgovernment will strengthen the supervision and regulation on data privacy on the internet. We may become subject to new laws and regulations applying tothe solicitation, collection, processing or use of personal or consumer information that could affect how we store, process and share data with our customers.We generally comply with industry standards and are subject to the terms of our own privacy policies. Compliance with any additional laws could beexpensive and may place restrictions on the conduct of our business and the manner in which we interact with our customers. Any failure to comply withapplicable regulations could also result in regulatory enforcement actions against us, subject us to significant penalties and negative publicity, require us tochange our business practices, increase our operating costs and ultimately cause an adverse effect on our business.Pursuant to the General Rules of the Civil Law of the PRC which was promulgated in March 2017 and came into effect in October 2017 and the CyberSecurity Law of the PRC, which was promulgated in November 2016 and became effective in June 2017, any organizations and individuals who requirepersonal information of others should not illegally collect, use or disclose it. Furthermore, network operators are not allowed to collect personal informationwhich is irrelevant to the services they provide or to collect or use personal information in violation of laws, regulations and mutual agreements. See “Item 4.Information on the Company—B. Business Overview—PRC Regulation—Regulations on Internet Privacy.”Significant capital and other resources may be required to protect against information security breaches or to alleviate problems caused by suchbreaches or to comply with our privacy policies or privacy-related legal obligations. The resources required may increase over time as the methods used byhackers and others engaged in online criminal activities are increasingly sophisticated, well-funded and constantly evolving. Any failure or perceived failureby us to prevent information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise of security thatresults in the unauthorized release or transfer of personally identifiable information or other customer data, could cause our customers to lose trust in us andcould expose us to legal claims. Any perception by the public that online transactions or the privacy of user information is becoming increasingly unsafe orvulnerable to attacks could inhibit the growth of online retail and other online services generally, which may reduce the number of orders we receive. 13Table of ContentsThe continuing and collaborative efforts of our senior management, key employees and highly skilled personnel are crucial to our success, and ourbusiness may be harmed if we were to lose their services.Our success depends on the continuous efforts and services of our senior management team and other key personnel. If one or more of our executiveofficers or other key personnel are unable or unwilling to continue to provide us with their services, we might not be able to replace them within a shortperiod of time or at all. Our business could be severely disrupted, our financial condition and results of operations could be materially and adversely affected,and we might incur additional expenses to recruit, train and retain personnel. Our senior management team is crucial to executing our business strategies.Failure to retain our key management and personnel may create considerable uncertainty on the direction of our future development. If any of our executiveofficers joins a competitor or forms a competing company, we may lose customers, know-how and key professionals and staff members. Each of our executiveofficers has entered into an employment agreement with us, which contains non-competition provisions. However, if any dispute arises between us and ourexecutive officers, we may have to incur substantial costs and expenses in order to enforce these agreements in China.Our performance and future success also depend on our ability to identify, hire, develop, motivate and retain skilled personnel for all areas of ourorganization. Competition in the automotive and internet advertising industries and the online automobile transaction industry for qualified employees isintense, and if competition in these industries further intensifies, it may be more difficult for us to hire, motivate and retain highly skilled personnel. If we donot succeed in attracting additional highly skilled personnel or retaining or motivating our existing personnel, we may be unable to grow effectively or at all.If we fail to protect our intellectual property rights, our brand and business may suffer.We rely on a combination of trademark, patent, copyright and trade secret protection laws in the PRC and other jurisdictions, as well as throughconfidentiality agreements and other measures, to protect our intellectual property rights. Our major brand names and logos are registered trademarks inChina. Most of our original generated content and professionally generated content available on our websites and mobile applications and proprietarysoftware are protected by copyright laws. Despite our precautions, third parties may obtain and use our intellectual property without our authorization.Historically, the legal system and courts of the PRC have not protected intellectual property rights to the same extent as the legal system and courts of theUnited States, and companies operating in the PRC continue to face an increased risk of intellectual property infringement. Furthermore, the validity,application, enforceability and scope of protection of intellectual property rights for many internet-related activities, such as internet commercial methodspatents, are uncertain and still evolving in China and abroad, which may make it more difficult for us to protect our intellectual property. From time to time,other websites may use our articles, photos or other content without our proper authorization. Although such use has not in the past caused any materialdamage to our business, it is possible that there may be misappropriation on a much larger scale with a material adverse impact to our business. If we areunable to adequately protect our intellectual property rights in the future, our brand and business may suffer.We may be vulnerable to intellectual property infringement claims brought against us by others.Internet, technology and media companies are frequently involved in litigation based on allegations of infringement of intellectual property rights,unfair competition, invasion of privacy, defamation and other violation of other parties’ rights. We have not experienced any material claims on these issuesagainst us in the past, but as we face increasing competition and as litigation becomes more common in China in resolving commercial disputes, we face ahigher risk of being the subject of intellectual property infringement claims. We may be subject to legal proceedings and claims from time to time relating tothe intellectual property of others in the ordinary course of our business. We could also be subject to claims based upon the content that is displayed on ourwebsites, our mobile platforms or accessible from our websites through links to other websites or information on our websites and mobile applicationssupplied by third parties. Intellectual property claims and litigation are expensive and time-consuming to investigate and defend and may divert resourcesand management attention from the operation of our websites and mobile applications. Such claims, even if they do not result in liability, may harm ourreputation. Any resulting liability or expenses, or changes required to our websites and mobile applications to reduce the risk of future liability, may have amaterial adverse effect on our business, financial condition and results of operations. 14Table of ContentsWe may be subject to liability for advertisements and other content placed on our websites and mobile applications.The PRC government has adopted regulations governing advertising content as well as internet access and the distribution of information over theinternet. Under PRC advertising laws and regulations, we are obligated to monitor the advertising content shown on our websites and mobile applications toensure that such content is true and accurate and in full compliance with applicable laws and regulations. See “Item 4. Information on the Company—B.Business Overview—PRC Regulation—Regulations on Advertisements.” Under the internet information regulations, internet content providers and internetpublishers are prohibited from posting or displaying over the internet content that, among other things, compromises national security, harms the dignity orinterests of the state, incites ethnic hatred or racial discrimination, undermines the PRC’s religious policy, disturbs social order, disseminates obscenity orpornography, encourages gambling, violence, murder or fear, incites the commission of a crime, infringes upon the lawful rights and interests of a third party,or is otherwise prohibited by law or administrative regulations. Internet service providers are required to conduct verification of identity information of users.If information disseminated by internet users on their internet accounts or internet chat groups contains information prohibited by laws and regulations, theservice providers are obliged to take measures including issuing warnings to the relevant users, suspending their publication of the inappropriate informationor closing their accounts or chat groups. See “Item 4. Information on the Company—B. Business Overview—PRC Regulation—Regulations on InternetContent Services.” Under the regulations on online live-streaming services, online live-streaming service providers shall establish platforms for reviewinglive-streaming content. Online live-streaming service providers and online live-streaming publishers that provide internet news information services withoutpermits, or exceeding the scope of their permits, are subject to punishment. See “Item 4. Information on the Company—B. Business Overview—Regulationson Online Performances and Online Live-streaming Services.”We display both automotive and non-automotive advertisements on our websites and mobile applications. In addition, we allow users to uploadwritten materials, images, pictures and other content on our websites, mobile applications, including user forums, and also allow users to share and link tocontent from other websites through our websites, mobile applications, including user forums. Moreover, we have also added online live-streaming featureson our websites and mobile applications. Failure to identify and prevent illegal or inappropriate content from being displayed on or through our websites andmobile applications may subject us to liability. We cannot assure you that all of the advertisements and content shown or posted on our websites and mobileapplications adhere to the advertising and internet content laws and regulations, especially given the uncertainty in the interpretation of these PRC laws andregulations.If PRC regulatory authorities determine that any advertisements or content displayed on our websites and mobile applications do not adhere toapplicable laws and regulations, they may require us to limit or eliminate the dissemination or availability of such advertisements and other content on ourwebsites and mobile applications in the form of take-down orders or otherwise. Such regulatory authorities may also impose penalties on us, including fines,confiscation of advertising income or, in circumstances involving more serious violations by us, the termination of our advertising or internet contentlicenses, any of which would materially and adversely affect our business and results of operations.In addition, we may be subject to claims by consumers asserting that the information on our websites and mobile applications is misleading, and wemay not be able to recover our losses from advertisers. As a result, our business, financial condition and results of operations could be materially andadversely affected.We may undertake acquisitions, investments, joint ventures or other alliances, which could prove difficult to integrate, disrupt our business or otherwisenegatively impact our results of operations.As part of our business strategy, we regularly evaluate potential acquisitions, investments and alliances, including joint ventures and minority equityinvestments. These transactions involve numerous risks, including: • the failure to achieve the expected benefits of the acquisition, investment or alliance; • difficulties in, and the cost of, integrating operations, technologies, services and personnel; 15Table of Contents • write-offs of investments or acquired assets; • non-performance by, or conflicts of interest with, the parties with whom we enter into investments or alliances; • limited ability to monitor or control the actions of other parties with whom we enter into investments or alliances; • misuse of proprietary information shared in connection with an acquisition, investment or alliance; and • depending on the nature of the acquisition, investment or alliance, exposure to new regulatory risks.The realization of any of these risks could materially and adversely affect our business. To the extent any of our directors or officers also invests in acapacity other than as our director or officer, his or her interest may not be aligned with ours.In addition, if we finance acquisitions by issuing equity or convertible debt securities, our existing shareholders may be diluted, which could affect themarket price of our ADSs.Furthermore, we may fail to identify or secure suitable acquisition, investment and other strategic opportunities, or our competitors may capitalize onsuch opportunities before we do, which could impair our ability to compete with our competitors and adversely affect our growth prospects and results ofoperations.Any financial or economic crisis, or perceived threat of such a crisis, including a significant decrease in consumer confidence, may materially andadversely affect our business, financial condition and results of operations.The global financial markets experienced significant disruptions in 2008 and the United States, European and other economies went into recession.The recovery from the lows of 2008 and 2009 was uneven and the global financial markets are facing new challenges, including the escalation of theEuropean sovereign debt crisis since 2011, the hostilities in the Ukraine, the end of quantitative easing by the U.S. Federal Reserve and the economicslowdown in the Eurozone in 2014. It is unclear whether these challenges will continue to exist and what effects they each may have. There is considerableuncertainty over the long-term effects of the expansionary monetary and fiscal policies that have been adopted by the central banks and financial authoritiesof some of the world’s leading economies, including China’s. Economic conditions in China are sensitive to global economic conditions. Any prolongedslowdown in China’s economic development might lead to tighter credit markets, increased market volatility, sudden drops in business and consumerconfidence and dramatic changes in business and consumer behaviors. In response to their perceived uncertainty in economic conditions, consumers mightdelay, reduce or cancel purchases of automobiles, and our advertisers may also defer, reduce or cancel purchasing our services. To the extent any fluctuationsin the Chinese economy significantly affect automakers’ and dealers’ demand for our services or change their spending habits, our results of operations maybe materially and adversely affected.Our third-party vendors may raise prices and as a result, increase our operating expenses.We rely on third parties for certain essential services, such as internet services and we may not have any control over the costs of the services theyprovide. The third-party service providers may raise their prices, which might not be commercially reasonable to us. If we are forced to seek other providers,there is no assurance that we will be able to find alternative providers willing or able to provide comparable high-quality services and there is no assurancethat such providers will not charge us higher prices for their services. If the prices that we are required to pay third-party service providers rise significantly,our results of operations could be adversely affected.We are a “controlled company” within the meaning of the NYSE corporate governance requirements, which may result in public investors not having asmuch protection as they would if we were not a controlled company.As of March 31, 2018, Yun Chen Capital Cayman, or Yun Chen, a wholly owned subsidiary of Ping An Insurance (Group) Company of China, Ltd., orPing An Group, owned 52.7% of the total voting rights in our company, and we are a “controlled company” under Section 303A of the New York StockExchange Listed Company Manual. As a controlled company, we rely on certain exemptions that are available to controlled companies from the NYSEcorporate governance requirements, including the requirements that: 16Table of Contents • a majority of our board of directors consists of independent directors; • our compensation committee be composed entirely of independent directors; and • our corporate governance and nominating committee be composed entirely of independent directors.We are not required to and will not voluntarily meet these requirements. As a result of our use of the “controlled company” exemption, our investorswill not have the same protection as they would if we were not a controlled company.In addition, because Ping An Group beneficially owns over 50% of the voting rights in our company, it has decisive influence in determining theoutcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations and the sale of all orsubstantially all of our assets, election of directors and other significant corporate actions. Without the consent of Ping An Group, we may be prevented fromentering into transactions that could be beneficial to us. The interests of Ping An Group may differ from the interests of our other shareholders. Furthermore,Ping An Group’s business activities, although not related to our operations, may adversely impact reputation. As Ping An Group is a public company listedon the Hong Kong Stock Exchange and beneficially controls a majority of our voting rights, Ping An Group may be required to disclose information on usfrom time to time, which may subject us to additional costs and efforts in making such disclosures.If we fail to maintain an effective system of internal control over financial reporting, our ability to accurately and timely report our financial results orprevent fraud may be adversely affected, and investor confidence and the market price of our ADSs may be adversely impacted.The Securities and Exchange Commission, or the SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring everypublic company to include a management report on the company’s internal control over financial reporting in its annual report, which containsmanagement’s assessment of the effectiveness of the company’s internal control over financial reporting. Our management has concluded that our internalcontrol over financial reporting was effective as of December 31, 2017. See “Item 15. Controls and Procedures—Management’s Annual Report on InternalControl over Financial Reporting.” Our independent registered public accounting firm has issued an attestation report, which has concluded that our internalcontrol over financial reporting was effective in all material aspects as of December 31, 2017. However, if we fail to maintain effective internal control overfinancial reporting in the future, our management and our independent registered public accounting firm may not be able to conclude that we have effectiveinternal control over financial reporting at a reasonable assurance level. This could in turn result in loss of investor confidence in the reliability of ourfinancial statements and negatively impact the trading price of our ADSs. Furthermore, we have incurred and anticipate that we will continue to incurconsiderable costs, management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act.We have limited business insurance coverage.Insurance companies in China currently do not offer as extensive an array of insurance products as insurance companies do in more developedeconomies. We do not have any business liability or disruption insurance to cover our operations. We have determined that the costs of insuring for theserisks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. Anyuninsured occurrence of business disruption may result in our incurring substantial costs and the diversion of resources, which could have an adverse effecton our results of operations and financial condition.We face risks related to health epidemics and natural disasters.We are vulnerable to health epidemics, natural disasters, and other calamities. Any of such occurrences could cause severe disruption to our dailyoperations, and may even require a temporary closure of our offices, which may disrupt our business operations and adversely affect our results of operations.In addition, our results of operations could be adversely affected to the extent that any of these catastrophic events harms the Chinese economy in general. 17Table of ContentsRisks Related to Our Corporate StructureIf the PRC government finds that the agreements that establish the structure for operating our services in China do not comply with PRC governmentalrestrictions on foreign investment in internet businesses, or if these regulations or the interpretation of existing regulations change in the future, we couldbe subject to severe penalties or be forced to relinquish our interests in those operations.Current PRC laws and regulations place certain restrictions on foreign ownership of companies that provide internet content services in China.Specifically, foreign ownership of internet service providers or other value-added telecommunication service providers may not exceed 50%. In addition,according to the Several Opinions on the Introduction of Foreign Investment in the Cultural Industry promulgated by the Ministry of Culture, the StateAdministration of Radio, Film and Television, or the SARFT, the General Administration of Press and Publication, or the GAPP, the National Developmentand Reform Commission, or the NDRC, and the Ministry of Commerce in June 2005, foreign investors are prohibited from investing in or operating “internetcultural activities.” We are a Cayman Islands company and foreign legal person under PRC laws. Accordingly, neither we nor our wholly foreign-investedPRC subsidiaries are currently eligible to apply for the required licenses for providing internet content services in China.As such, we conduct our business related to internet content services by entering into a series of contractual arrangements with two of our VIEs inChina, namely Beijing Autohome Information Technology Co., Ltd., or Autohome Information, Beijing Shengtuo Hongyuan Information Technology Co.,Ltd., or Shengtuo Hongyuan. In particular, Autohome Information currently holds an ICP license, a Surveying and Mapping Qualification Certificate forInternet Mapping, an Operating License for the Production and Dissemination of Radio and Television Programs, an internet Audio/Video ProgramTransmission License, and an Internet Culture Business Permit. In addition, Autohome Information is the sole shareholder of Shanghai Tianhe InsuranceBrokerage Co., Ltd. which holds the license for engaging in insurance brokerage business. Shengtuo Hongyuan currently holds an ICP license, a Surveyingand Mapping Qualification Certificate for Internet Mapping, an Operating License for the Production and Dissemination of Radio and Television Programsand is operating the che168.com website and automobile application-related business.These two VIEs are currently owned by individual shareholders who are PRC citizens and hold the requisite licenses or permits to operate internetbusiness in China. We do not have any equity interest in these two VIEs but substantially control their operations and receive the economic benefits throughcontractual arrangements. We have been and are expected to continue to be dependent upon these two VIEs and their respective subsidiaries for the abovementioned business operations. For more information regarding these contractual arrangements, see “Item 7. Major Shareholders and Related PartyTransactions—B. Related Party Transactions— Contractual Agreements with our Variable Interest Entities.”In consideration of the previous restrictions imposed on the shareholders of foreign-invested companies engaging in advertising business, we onceconducted advertising business by entering into a series of contractual arrangements with the other two VIEs in China, namely Guangzhou You Che You JiaAdvertising Co., Ltd., or Guangzhou Advertising, and Shanghai You Che You Jia Advertising Co., Ltd., or Shanghai Advertising. Since the relevantregulatory environment developed, such restrictions were lifted in 2015. Therefore, in 2015, we completed the migration of our advertising business fromGuangzhou Advertising, Shanghai Advertising and other PRC entities to the PRC subsidiaries of Autohome Media, a Hong Kong company. GuangzhouAdvertising and Shanghai Advertising currently are not conducting any business and are in the process of liquidation and dissolution, which are expected tobe completed by the end of 2018.Based on the advice of our PRC legal counsel, Commerce & Finance Law Offices, the corporate structure of our VIEs and our subsidiaries in China arein compliance with all existing PRC laws and regulations. However, as there are substantial uncertainties regarding the interpretation and application of PRClaws and regulations, we cannot assure you that the PRC government would agree that our corporate structure or any of the above contractual arrangementscomply with PRC licensing, registration or other regulatory requirements, with existing policies or with requirements or policies that may be adopted in thefuture. PRC laws and regulations governing the validity of these contractual arrangements are uncertain and the relevant government authorities have broaddiscretion in interpreting these laws and regulations. 18Table of ContentsIf we or any of our current or future VIEs or subsidiaries are found to be in violation of any existing or future PRC laws or regulations, or fail to obtainor maintain any of the required permits or approvals, the relevant PRC regulatory authorities, including the Ministry of Industry and InformationTechnology, or the MIIT, which regulates internet information services companies, the China Insurance Regulatory Commission, or CIRC, and the ChinaSecurities Regulatory Commission, or the CSRC, would have broad discretion in dealing with such violations, including levying fines, confiscating ourincome or the income of Autohome WFOE, Beijing Chezhiying Technology Co., Ltd., or Chezhiying WFOE and the VIEs, revoking the business licenses oroperating licenses of Autohome WFOE, Chezhiying WFOE and the VIEs, shutting down our servers or blocking our websites and mobile applications,discontinuing or placing restrictions or onerous conditions on our operations, requiring us to undergo a costly and disruptive restructuring, or taking otherenforcement actions that could be harmful to our business.Any of these actions could cause significant disruption to our business operations and severely damage our reputation, which would in turn materiallyand adversely affect our business and results of operations. In addition, if the imposition of any of these penalties causes us to lose the rights to direct theactivities of the VIEs or our right to receive their economic benefits, we would no longer be able to consolidate the VIEs.Our contractual arrangements with our VIEs may not be as effective in providing operational control as direct ownership.We have relied and expect to continue to rely on (i) contractual arrangements with Autohome Information and two of its subsidiaries, AutohomeAdvertising and Chengshi Advertising, and shareholders of Autohome Information and (ii) contractual arrangements with Shengtuo Hongyuan and its twosubsidiaries and shareholders to operate our business. For a description of these contractual arrangements, see “Item 7. Major Shareholders and Related PartyTransactions—B. Related Party Transactions—Contractual Agreements with our Variable Interest Entities.” These contractual arrangements may not be aseffective in providing us with control over our VIEs as direct ownership. If we had direct ownership of these entities, we would be able to exercise our rightsas a shareholder to effect changes in the board of directors, which in turn could effect changes, subject to any applicable fiduciary obligations, at themanagement level. However, under the current contractual arrangements, we rely on the performance by these entities and their shareholders of theircontractual obligations to exercise control over our VIEs. Therefore, our contractual arrangements with our VIEs may not be as effective in ensuring ourcontrol over their operations as direct ownership would be.The shareholders of our VIEs may breach, or cause our VIEs to breach, or refuse to renew, the existing contractual arrangements we have with them andour VIEs. Any failure by our VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a materialadverse effect on our business and financial condition.The shareholders of our VIEs may breach, or cause our VIEs to breach, or refuse to renew, the existing contractual arrangements we have with them andour VIEs. If our VIEs or their shareholders fail to perform their obligations under the contractual arrangements, we may have to incur substantial costs andexpend resources to enforce our rights under the contracts. We may have to rely on legal remedies under PRC law, including seeking specific performance orinjunctive relief and claiming damages, which may not be effective. For example, if the shareholders of Autohome Information and Shengtuo Hongyuan wereto refuse to transfer their equity interests in those companies to us or our designee when we exercise the call option pursuant to these contractualarrangements, if they transfer the equity interests to other persons against our interests, or if they were otherwise to act in bad faith toward us, then we mayhave to take legal actions to compel them to perform their contractual obligations.All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC. Accordingly,these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legalsystem in the PRC is not as developed as in other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit ourability to enforce these contractual arrangements. Under PRC law, rulings by arbitrators are final, parties cannot appeal the arbitration results in courts, andthe prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, which would incuradditional expenses and delay. In the event we are unable to enforce these contractual arrangements, we may not be able to exert effective control over ourVIEs, and our ability to conduct our business may be negatively affected. 19Table of ContentsContractual arrangements our subsidiaries have entered into with our VIEs may be subject to scrutiny by the PRC tax authorities and a finding that we orour VIEs owe additional taxes could substantially reduce our consolidated net income and the value of your investment.Under PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authoritieswithin ten years after the taxable year when the transactions are conducted. We could face material and adverse tax consequences if the PRC tax authoritiesdetermine that the contractual arrangements among Autohome WFOE, Chezhiying WFOE, our VIEs and the shareholders of our VIEs do not representarm’s-length prices and consequently adjust Autohome WFOE and Chezhiying WFOE’s or our VIEs’ income in the form of a transfer pricing adjustment. Atransfer pricing adjustment could, among other things, result in a reduction, for PRC tax purposes, of expense deductions recorded by our VIEs, which couldin turn increase their tax liabilities. In addition, the PRC tax authorities may impose late payment fees and other penalties on Autohome WFOE, ChezhiyingWFOE or our VIEs for any unpaid taxes. Our consolidated net income may be materially and adversely affected if Autohome WFOE and Chezhiying WFOEor our VIEs’ tax liabilities increase or if they are subject to late payment fees or other penalties.The interests of the individual nominee shareholders of our VIEs may be different from our interests, which may materially and adversely affect ourbusiness.The individual nominee shareholders of Guangzhou Advertising, Shanghai Advertising, Autohome Information and Shengtuo Hongyuan are Min Lu,chairman of our board of directors and our chief executive officer, and Haiyun Lei, an employee of the affiliate of Yun Chen and has been with Ping AnGroup and its affiliates for more than 20 years. They each hold 50% of the equity interests in Guangzhou Advertising, Shanghai Advertising, AutohomeInformation and Shengtuo Hongyuan. Each of these two individuals is a PRC citizen. The interests of the individual nominee shareholders of our VIEs maybe different to our interest. For example, the individual nominee shareholders of our consolidated affiliated entities do not have a significant equity stake inour company. These shareholders may breach, or cause our VIEs to breach, or refuse to renew, the existing contractual arrangements we have with them andour VIEs, which would have a material and adverse effect on our ability to effectively control our VIEs and receive substantially all the economic benefitsfrom them. For example, the shareholders may be able to cause our agreements with our VIEs to be performed in a manner adverse to us by, among otherthings, failing to remit payments due under the contractual arrangements to us on a timely basis. We cannot assure you that when a conflict of interest arises,any or all of these shareholders will act in the best interests of our company or such conflict will be resolved in our favor.Currently, we do not have any arrangements to address potential difference of interests between these individual nominee shareholders and ourcompany. We rely on these individuals to comply with the laws of China, which protect contracts, provide that directors and executive officers owe a duty ofloyalty and a duty of diligence to our company and require them to avoid conflicts of interest and not to take advantage of their positions for personal gain.We also rely on Mr. Min Lu, our chairman of the board of directors and our chief executive officer, to abide by the laws of the Cayman Islands, which providethat directors owe a duty of care to our company. However, the legal frameworks of China and the Cayman Islands do not provide guidance on resolvingconflicts in the event of a conflict with another corporate governance regime. If we cannot resolve any difference of interests or dispute between us and theshareholders of our VIEs, we would have to rely on legal proceedings, which could result in disruption of our business and subject us to substantialuncertainty as to the outcome of any such legal proceedings.We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have. Anylimitation on the ability of our PRC subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business.We are a holding company, and we may rely on dividends and other distributions on equity to be paid by our wholly owned PRC subsidiaries for ourcash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt wemay incur. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividendsor make other distributions to us. 20Table of ContentsUnder PRC laws and regulations, our PRC subsidiaries, as wholly foreign-owned enterprises in the PRC, may pay dividends only out of theiraccumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, wholly foreign-owned enterprises are requiredto set aside at least 10% of their accumulated after-tax profits, if any, each year to fund certain statutory reserve funds, until the aggregate amount of suchfunds reach 50% of their registered capital. These statutory reserve funds are not distributable as cash dividends.Any limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit ourability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.PRC regulation of loans to, and direct investment in, PRC entities by offshore holding companies and governmental control of currency conversion mayrestrict or prevent us from using the proceeds of our equity offerings to make loans to our PRC subsidiaries and VIEs or to make additional capitalcontributions to our PRC subsidiaries, which may materially and adversely affect our liquidity and our ability to fund and expand our business.We are an offshore holding company conducting our operations in China through our PRC subsidiaries and VIEs. We may make loans to our PRCsubsidiaries and VIEs, or we may make additional capital contributions to our PRC subsidiaries. Any loans by us to our PRC subsidiaries, which are treated asforeign-invested enterprises under PRC law, are subject to PRC regulations and foreign exchange loan registrations. For example, loans by us to our PRCsubsidiaries to finance its activities cannot exceed statutory limits and must be registered with the competent local counterpart of the State Administration ofForeign Exchange, or SAFE. We may also decide to finance our PRC subsidiaries by means of capital contributions. These capital contributions must be filedwith the PRC Ministry of Commerce or its local counterpart. Due to the restrictions imposed on loans in foreign currencies extended to any PRC domesticcompanies, we are not likely to make such loans to our VIEs, which are PRC domestic companies. Further, we are not likely to finance the activities of ourVIEs by means of capital contributions due to regulatory restrictions relating to foreign investment in PRC domestic enterprises engaged in internet contentservices.Pursuant to both of SAFE Circular 19 and SAFE Circular 16 promulgated in March 2015 and June 2016, respectively, foreign-invested enterprises mayeither continue to follow the current payment-based foreign currency settlement system or choose to follow the “conversion-at-will” system for foreigncurrency settlement. SAFE Circular 19 and SAFE Circular 16, therefore, have substantially lifted the restrictions on the usage by a foreign-invested enterpriseof its Renminbi registered capital, foreign debt and repatriated funds raised through overseas listing converted from foreign currencies. According to SAFECircular 19 and SAFE Circular 16, such Renminbi capital, foreign debt and repatriated funds raised through overseas listing may be used at the discretion ofthe foreign-invested enterprise and SAFE will eliminate the prior approval requirement and only examine the authenticity of the declared usage afterwards.Nevertheless, it is still not clear whether foreign-invested enterprises like our PRC subsidiaries are allowed to extend intercompany loans to our VIEs. Inaddition, as SAFE Circular 19 and SAFE Circular 16 were promulgated recently, there remain substantial uncertainties with respect to the interpretation andimplementation of these circulars by relevant authorities. See “Item 4. Information on the Company—B. Business Overview—PRC Regulation—Regulationson Foreign Exchange.”In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, wecannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, ifat all, with respect to future loans by us to our PRC subsidiaries or with respect to future capital contributions by us to our PRC subsidiaries. If we fail tocomplete such registrations or obtain such approvals, our ability to use the proceeds we received from our equity offerings and to capitalize or otherwise fundour PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business. 21Table of ContentsIf our PRC subsidiaries or VIEs become the subject of a bankruptcy or liquidation proceeding, we may lose the ability to use and enjoy some of our keyassets, which could reduce the size of our operations and materially and adversely affect our business, our ability to generate revenues and the marketprice of our ADSs.As our two VIEs, namely Guangzhou Advertising and Shanghai Advertising, have no longer operated any business since 2017, we are currentlyundertaking the relevant PRC governmental procedures to liquidate, dissolve and de-register these non-operating VIEs. As of the date of this annual report,we conduct our business mostly through our PRC subsidiaries and the other two operating VIEs, namely, Autohome Information and Shengtuo Hongyuan,which hold operating permits and licenses and some of the key assets that are important to the operation of our business. We expect to continue to bedependent on these operating VIEs to operate our business related to internet content services in China. If the above-mentioned operating VIEs go bankruptand all or part of their assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business activities,which would materially and adversely affect our business, financial condition and results of operations. If such VIEs undergo a voluntary or involuntaryliquidation proceeding, their equity holders or unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our ability tooperate our business, which would materially and adversely affect our business, our ability to generate revenues and the market price of our ADSs.Risks Related to Doing Business in ChinaChanges in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations.The majority of our assets and operations are located in China. Accordingly, our business, financial condition, results of operations and prospects maybe influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as awhole.The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement, levelof development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures since thelate 1970s emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment ofimproved corporate governance in business enterprises, a substantial portion of productive assets in China are still owned by the Chinese government. Inaddition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinesegovernment also exercises significant control over China’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.While the Chinese economy has experienced significant growth over the past decades, the growth has been uneven, both geographically and amongvarious sectors of the economy, and the rate of growth has been slowing. The Chinese government has implemented various measures to encourage economicgrowth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. Forexample, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in taxregulations. In addition, in the past the Chinese government has implemented certain measures, including interest rate increases, to control the pace ofeconomic growth. These measures may cause decreased economic activity in China, which may adversely affect our business and operating results.Uncertainties with respect to the PRC legal system could adversely affect us.We conduct our business primarily through our PRC subsidiaries and VIEs in China. Our operations in China are governed by PRC laws andregulations. Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us. In1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effectof legislation over the past several decades has significantly enhanced the protections afforded to various forms of foreign investments in China. However,China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economicactivities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and theirnonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties. Since PRC administrative and court authoritieshave significant discretion in interpreting and implementing statutory and contractual terms, it may be difficult to evaluate the outcome of administrativeand court proceedings and the level of legal protection we enjoy. Furthermore, the PRC legal system is based in part on government policies and internalrules, some of which are not published on a timely basis or at all, which may have a retroactive effect. As a result, we may not be aware of our violation ofthese policies and rules until sometime after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting insubstantial costs and diversion of resources and management attention. 22Table of ContentsSubstantial uncertainties exist with respect to the enactment timetable, final content, interpretation and implementation of draft PRC Foreign InvestmentLaw published for public comments and how it may impact the viability of our current corporate structure, corporate governance and business operations.The Ministry of Commerce published a discussion draft of the proposed Foreign Investment Law in January 2015 aiming to, upon its enactment,replace the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreignCooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillaryregulations. The draft Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in linewith prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. TheMinistry of Commerce solicited comments on this draft in 2015, but no new draft has been published since then. As such, substantial uncertainties exist withrespect to its enactment timetable, final content, interpretation and implementation. The draft Foreign Investment Law, if enacted as proposed, may materiallyimpact the viability of our current corporate structure, corporate governance and business operations in many aspects.Among other things, the draft Foreign Investment Law expands the definition of foreign investment and introduces the principle of “actual control” indetermining whether a company is considered a foreign-invested enterprise, or an FIE. The draft Foreign Investment Law specifically provides that entitiesestablished in China but “controlled” by foreign investors will be treated as FIEs, whereas an entity set up in a foreign jurisdiction would nonetheless be,upon market entry clearance by the Ministry of Commerce, treated as a PRC domestic investor provided that the entity is “controlled” by PRC entities and/orcitizens. In this connection, “control” is broadly defined in the draft law to cover the following summarized categories: (i) holding 50% of more of the votingrights of the subject entity; (ii) holding less than 50% of the voting rights of the subject entity but having the power to secure at least 50% of the seats on theboard or other equivalent decision making bodies, or having the voting power to exert material influence on the board, the shareholders’ meeting or otherequivalent decision making bodies; or (iii) having the power to exert decisive influence, via contractual or trust arrangements, over the subject entity’soperations, financial matters or other key aspects of business operations. Once an entity is determined to be an FIE, it will be subject to the foreign investmentrestrictions or prohibitions set forth in a “negative list,” to be separately issued by the State Council later. Unless the underlying business of the FIE fallswithin the negative list, which calls for market entry clearance by the Ministry of Commerce, prior approval from the government authorities as mandated bythe existing foreign investment legal regime would no longer be required for establishment of the FIE.The VIE structure has been adopted by many PRC-based companies, including us, to obtain necessary licenses and permits in the industries that arecurrently subject to foreign investment restrictions in China. See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions— Contractual Agreements with our Variable Interest Entities” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—Ifthe PRC government finds that the agreements that establish the structure for operating our services in China do not comply with PRC governmentalrestrictions on foreign investment in internet businesses, or if these regulations or the interpretation of existing regulations change in the future, we could besubject to severe penalties or be forced to relinquish our interests in those operations”. Under the draft Foreign Investment Law, VIEs that are controlled viacontractual arrangement would also be deemed as FIEs, if they are ultimately “controlled” by foreign investors. Therefore, for any company with a VIEstructure in an industry category that is on the “negative list,” the VIE structure may be deemed legitimate only if the ultimate controlling person(s) is/are ofPRC nationality (either PRC companies or PRC citizens). Conversely, if the actual controlling person(s) is/are of foreign nationalities, the VIEs will betreated as FIEs and any operation in the industry category on the “negative list” without market entry clearance may be considered as illegal. 23Table of ContentsThe draft Foreign Investment Law has not taken a position on what actions will be taken with respect to existing companies with a VIE structure,whether or not these companies are controlled by Chinese parties, while it is soliciting comments from the public on this point. The provision of internetcontent services, which we conduct through our VIEs, is subject to foreign investment restrictions set forth in the Catalogue for the Guidance of ForeignInvestment Industries, or the Catalogue, issued by the NDRC and the Ministry of Commerce in March 2015 and revised in June 2017. It is unclear whetherthe new “negative list” will be different from the Catalogue. If the enacted version of the Foreign Investment Law and the final “negative list” mandatefurther actions, such as Ministry of Commerce market entry clearance or certain restructuring of our corporate structure and operations, to be completed bycompanies with existing VIE structure like us, we face substantial uncertainties as to whether these actions can be timely completed, or at all, and ourbusiness and financial condition may be materially and adversely affected.The draft Foreign Investment Law, if enacted as proposed, may also materially impact our corporate governance practice and increase our compliancecosts. For instance, the draft Foreign Investment Law imposes stringent ad hoc and periodic information reporting requirements on foreign investors and theapplicable FIEs. Aside from the investment implementation report and investment amendment report that are required at each investment and alteration ofinvestment specifics, an annual report is mandatory, and large foreign investors meeting certain criteria are required to report on a quarterly basis. Anycompany found to be non-compliant with these information reporting obligations may potentially be subject to fines and/or administrative or criminalliabilities, and the persons directly responsible may be subject to criminal liabilities.We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet business and companies.The PRC government extensively regulates the internet industry, including foreign ownership of, and the licensing and permit requirements pertainingto, companies in the internet industry. These internet-related laws and regulations are relatively new and evolving, and their interpretation and enforcementinvolve significant uncertainties. As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to beviolations of applicable laws and regulations. Issues, risks and uncertainties relating to the PRC government regulation of the internet industry include, butare not limited to, the following: • We only have contractual control over our websites and mobile applications. We do not own the websites or the mobile applications due to therestriction on foreign investment in businesses providing value-added telecommunication services in China, which include internet contentprovision services. • There are uncertainties relating to the regulation of the internet industry in China, including evolving licensing requirements. This means thatpermits, licenses or operations at some of our subsidiaries and VIEs may be subject to challenge, or we may fail to obtain permits or licenses thatapplicable regulators may deem necessary for our operations, or we may not be able to obtain or renew permits or licenses. For example, bothAutohome Information and Shengtuo Hongyuan may be required to obtain additional licenses, including internet publishing licenses andinternet news information service licenses, if the release of articles and information on the mobile applications and the websitesautohome.com.cn and che168.com is deemed by the PRC regulatory authorities as being provision of internet publishing service, internet newsinformation service. See “Item 4. Information on the Company—B. Business Overview—PRC Regulation—Regulations on Internet Publishing”and “Item 4. Information on the Company—B. Business Overview—PRC Regulation—Regulations on Internet News Information Service” foradditional details. • The evolving PRC regulatory system for the internet industry may lead to the establishment of new regulatory agencies. For example, theCyberspace Administration of China was established in 2014, as the central Internet censorship, oversight and control agency for the PRC. • New laws and regulations may be promulgated to regulate internet activities, including online advertising businesses and online auto financebusinesses. As such, additional licenses may be required for our operations. If our operations do not comply with these new regulations at thetime they become effective, or if we fail to obtain any licenses required under these new laws and regulations, we could be subject to penalties. 24Table of Contents • New government policies and internal rules relating to the regulations on internet activities may negatively affect our user traffic growth. Forexample, the Interim Measures for the Administration of Internet Advertising, which came into effect on September 1, 2016, require that aninternet advertisement shall be identifiable and clearly identified as an “advertisement” so that users will tell it is an advertisement. See “Item 4.Information on the Company—B. Business Overview—PRC Regulation—Regulations on advertisements.” The Administrative Provisions onInternet Forum and Community Services and the Administrative Provisions on Internet Follow-up Comment Services, both of which becameeffective on October 1, 2017, require internet service providers to verify the authenticity of identity information of registered users. Internetservice providers are prohibited from providing internet services to users who fail to provide verifiable identity information. See “Item 4.Information on the Company—B. Business Overview—PRC Regulation—Regulations on Internet Content Services.” Complying with suchrequirement has begun to negatively affect the growth rate of user traffic on our websites and mobile applications. The promulgation of laws andregulations relating to the internet activities may further impair our user traffic growth.On July 13, 2006, the MIIT, the predecessor of which was the Ministry of Information Industry, issued the Notice of the Ministry of InformationIndustry on Intensifying the Administration of Foreign Investment in Value-added Telecommunications Services. This notice prohibits domestictelecommunication service providers from leasing, transferring or selling telecommunications business operating licenses to any foreign investor in any form,or providing any resources, sites or facilities to any foreign investor for their illegal operation of a telecommunications business in China. According to thisnotice, either the holder of a value-added telecommunication services operation permit or its shareholders must directly own the domain names andtrademarks used by such license holders in their provision of value-added telecommunication services. The notice also requires each license holder to havethe necessary facilities, including servers, for its approved business operations and to maintain such facilities in the regions covered by its license. Currently,Autohome Information and Shengtuo Hongyuan, two of our VIEs, own the related domain names and trademarks and hold the internet content providerlicenses, or ICP licenses, necessary to conduct our operations for websites and mobile applications in China.The interpretation and application of existing PRC laws, regulations and policies and possible new laws, regulations or policies relating to the internetindustry have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of,internet businesses in China, including our business. We cannot assure you that we will be able to maintain our existing licenses or obtain any new licenses ifrequired by any new laws or regulations. There are also risks that we may be found to violate existing or future laws and regulations given the uncertainty andcomplexity of China’s regulation of the internet industry. If we or our VIEs fail to obtain or maintain any of the required assets, licenses or approvals, ourcontinued business operations in the internet industry may subject us to various penalties, including the confiscation of illegal net revenues, fines and thediscontinuation or restriction of our operations, any of which would materially and adversely affect our business and results of operations.There are substantial uncertainties with respect to the interpretation and implementation of the Cyber Security Law and how it may impact our businessoperations.On July 1, 2015, the Standing Committee of the National People’s Congress of China issued the National Security Law, which came into effect on thesame day. The National Security Law provides that the state shall safeguard sovereignty, security and development interests of cyberspace in the state, andthe state shall establish a national security review and supervision system to review foreign investment, key technologies, internet and informationtechnology products and services and other important activities that are likely to impact the national security of China. 25Table of ContentsThe Cyber Security Law, which was issued by the Standing Committee of the National People’s Congress of China and became effective on June 1,2017, is the first Chinese law that focuses exclusively on cyber security. The Cyber Security Law sets high requirements for the operational security offacilities deemed to be part of PRC’s “key information infrastructure facilities,” and includes the integration of national security examinations under certaincircumstances. Pursuant to the Cyber Security Law, the State shall, based on the classified protection system for cyber security, focus on protecting both thekey information infrastructure used for public communications and information service, energy, transport, water conservancy, finance, public services,e-government affairs and other important industries and fields and other key information infrastructure that will result in serious damage to the nationalsecurity, national economy and people’s livelihood and public interests once destroyed. The Cyber Security Law provides that key information infrastructurefacilities operators must set up specialized internal security management divisions and assign appropriate person(s) responsible for security management.Additionally, these operators must conduct background checks on the person(s) responsible for security management and on personnel in critical positions. Itfurther provides that when operators of key information infrastructure facilities purchase network products or services that may affect or involve nationalsecurity, the operator must pass a security examination jointly arranged by the national network and information authority and the relevant governmentdepartments and the national security examination process under the National Security Law will be triggered. The operators of key information infrastructurefacilities must store important data collected and generated, including citizens’ personal information, exclusively within the territory of the People’sRepublic of China. The Cyber Security Law also sets increasingly more stringent requirements for network operators. The Cyber Security Law establishescensorship duties for network operators, including digital information distribution service providers and application software download service providers.When these operators notice a prohibited publication, or the transmission of illicit information, they must promptly stop transmitting the information andtake measures necessary to prevent the spread of that information. Operators must maintain a record of these incidents when they occur and report them to thecompetent authorities. The Cyber Security Law provides relevant subjects with solid legal authorities who are empowered to take measures to cut off anytransmission(s) of prohibited information on communication networks. Upon finding prohibited information, those authorities will require that the networkoperators stop the transmission and take the necessary measures to remove any prohibited content. Where the above prohibited information comes fromoutside the territory of China, these authorities may request that all related institutions to take necessary measures to stop the flow of prohibited information.The implementation of the Cyber Security Law may cause us to incur substantial costs or require us to change our business practices in a mannermaterially adverse to our business.Fluctuations in exchange rates may have a material adverse effect on your investment.Substantially all of our revenues and costs are denominated in RMB. The conversion of RMB into foreign currencies, including U.S. dollars, is basedon rates set by the People’s Bank of China. In July 2005, the PRC government changed its decades-old policy of pegging the value of the RMB to the U.S.dollar, and the RMB appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciationhalted and the exchange rate between the RMB and the U.S. dollar remained within a narrow band. Since June 2010, the RMB has fluctuated against the U.S.dollar, at times significantly and unpredictably. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange ratebetween the RMB and the U.S. dollar in the future. On November 30, 2015, the Executive Board of the International Monetary Fund (IMF) completed theregular five-year review of the basket of currencies that make up the Special Drawing Right, or the SDR, and decided that with effect from October 1, 2016,RMB is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the Euro, the Japaneseyen and the British pound. In the fourth quarter of 2016, the RMB has depreciated significantly in the backdrop of a surging U.S. dollar and persistent capitaloutflows of China. With the development of the foreign exchange market and progress towards interest rate liberalization and RMB internationalization, thePRC government may in the future announce further changes to the exchange rate system, and we cannot assure you that the RMB will not appreciate ordepreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impactthe exchange rate between the RMB and the U.S. dollar in the future.Significant revaluation of the RMB may have a material and adverse effect on your investment. To the extent that we need to convert U.S. dollars intoRMB for capital expenditures and working capital and other business purposes, appreciation of the RMB against the U.S. dollar would have an adverse effecton the RMB amount we would receive from the conversion. Conversely, if we decide to convert RMB into U.S. dollars for the purpose of making paymentsfor dividends on our ordinary shares or ADSs, strategic acquisitions or investments or other business purposes, appreciation of the U.S. dollar against theRMB would have a negative effect on the U.S. dollar amount available to us. In addition, a significant depreciation of the RMB against the U.S. dollar maysignificantly reduce the U.S. dollar equivalent of our earnings, which in turn could adversely affect the price of our ADSs. 26Table of ContentsVery limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into anyhedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in thefuture, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or to hedge our exposureat all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreigncurrency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment.Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out ofChina. We receive substantially all of our revenues in RMB. Under existing PRC foreign exchange regulations, payments of current account items, includingprofit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFEapproval by complying with certain procedural requirements. Therefore, our PRC subsidiaries are able to pay dividends in foreign currencies to us withoutprior approval from SAFE. However, approval from or registration with appropriate government authorities is required where RMB is to be converted intoforeign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC governmentmay also at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents usfrom obtaining sufficient foreign currency to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to ourshareholders, including holders of our ADSs.Certain regulations in the PRC may make it more difficult for us to pursue growth through acquisitions.Among other things, certain regulations and rules concerning mergers and acquisitions established additional procedures and requirements that couldmake merger and acquisition activities by foreign investors more time-consuming and complex. For example, these regulations require that the Ministry ofCommerce be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise or a foreigncompany with substantial PRC operations, if certain thresholds under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings,issued by the State Council on August 3, 2008, are triggered. According to the Implementing Rules Concerning Security Review on Mergers andAcquisitions by Foreign Investors of Domestic Enterprises issued by the Ministry of Commerce in August 2011, mergers and acquisitions by foreigninvestors involved in an industry related to national security are subject to strict review by the Ministry of Commerce. These rules also prohibit anytransactions attempting to bypass such security review, including by controlling entities through contractual arrangements. We believe that our business isnot in an industry related to national security. However, we cannot preclude the possibility that the Ministry of Commerce or other government agencies maypublish interpretations contrary to our understanding or broaden the scope of such security review in the future. We may elect to grow our business in thefuture in part by directly acquiring, or investing in, complementary businesses in China. Complying with the requirements of these regulations to completesuch transactions could be time-consuming, and any required approval processes, including obtaining approval from the Ministry of Commerce, may delayor inhibit our ability to complete such transactions. 27Table of ContentsFailure to comply with PRC regulations regarding the registration requirements for employee share ownership plans or share option plans may subject thePRC plan participants or us to fines and other legal or administrative sanctions.In December 2006, the People’s Bank of China, or PBOC, promulgated the Administrative Measures of Foreign Exchange Matters for Individuals,which sets forth the respective requirements for foreign exchange transactions by individuals (both PRC and non-PRC citizens) under either the currentaccount or the capital account. In January 2007, SAFE issued relevant implementing rules which was further revised by SAFE Circular 13 in 2016, thatspecified approval requirements for certain capital account transactions such as a PRC citizen’s participation in the employee stock incentive plans or shareoption plans of an overseas publicly listed company. In February 2012, SAFE promulgated the Notice on the Administration of Foreign Exchange Matters forDomestic Individuals Participating in the Stock Incentive Plans of Overseas Listed Companies, or the Stock Option Notice. The Stock Option Noticesupersedes the requirements and procedures for the registration of PRC resident individuals’ participation in stock incentive plans set forth by certain rulespromulgated by SAFE in March 2007. Under these measures, PRC resident individuals who participate in an employee stock incentive plan or a share optionplan in an overseas publicly listed company are required to register with SAFE and complete certain other procedures. A PRC domestic qualified agentappointed through the PRC subsidiaries of such overseas listed company must file applications on behalf of such PRC resident individuals with SAFE or itslocal counterpart to obtain approval for an annual allowance with respect to the foreign exchange in connection with stock holding or share option exercises.With the approval from SAFE or its local counterpart, the PRC domestic qualified agent must open a special foreign exchange account at a PRC domesticbank to hold the funds required in connection with the stock purchase or option exercise, payment received upon sales of shares, dividends issued on thestock and any other income or expenditures approved by SAFE or its local counterpart. We and our PRC resident employees who participate in our shareincentive plans are subject to these regulations as we are an overseas listed company. We have made registration with the local counterparts of SAFE for ourPRC resident employees who participate in our share incentive plans as required under the Stock Option notice and relevant rules. If we or our PRC optioneesfail to comply with these regulations, we or our PRC optionees may be subject to fines and other legal or administrative sanctions. See “Item 4. Informationon the Company—B. Business Overview—PRC Regulation—Regulations on Employee Stock Options Plans.”We face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.On February 3, 2015, the State Administration of Taxation, or the SAT, issued SAT Notice 7, which was amended in December 2017, to supersede theexisting tax rules in relation to the indirect transfer of assets by non-PRC resident enterprises. SAT Notice 7 introduces a more sophisticated anti-avoidanceguidance. SAT Notice 7 extends its tax jurisdiction to capture not only indirect transfer as set forth under SAT Circular 698 but also transactions involvingtransfer of movable and immovable property in China of a foreign company through the offshore transfer of a foreign intermediate holding company.According to SAT Notice 7, if a non-resident enterprise indirectly transfers PRC taxable properties through an arrangement without reasonable commercialpurpose but to avoid PRC Corporate Income Tax, the indirect transfer shall be re-characterized and treated as a direct transfer of PRC taxable properties. SATNotice 7 also interprets the term “transfer of the equity interests in a foreign intermediate holding company” broadly. In addition, SAT Notice 7 providesclearer criteria on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to the public trading of shares in a listedcompany holding taxable PRC assets and indirect transfers resulting from a corporate restructuring.Further, SAT Notice 7 replaces the compulsory reporting requirement in SAT Circular 698 with a voluntary reporting regime and the criteria set forth inCircular 698 for indirect transfer reporting have been abolished. Both the foreign transferor and the transferee, and the PRC tax resident enterprise whoseequity interests being transferred may voluntarily report the transfer by submitting the documents required in SAT Notice 7. In addition to the voluntaryreporting, SAT Notice 7 empowers the Chinese tax authorities to require various documents from the parties involved. Although SAT Notice 7 providesclarities in many important areas such as reasonable commercial purpose and reporting requirements, it brings challenges to both the foreign transferor andtransferee of the indirect transfer as they are required to make a self-assessment on whether the transaction should be subject to PRC tax and to file orwithhold the PRC tax accordingly.On October 17, 2017, the State Administration of Taxation issued the Announcement of the State Administration of Taxation on Matters ConcerningWithholding of Income Tax of Non-Resident Enterprises at Source, or SAT Circular 37, which became effective on December 1, 2017, to supersede the Noticeon Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular 698. The SAT Circular 37applies the principle of withholding of income tax of non-resident enterprises at source. The SAT Circular 37 stipulates that the taxable income from equitytransfers refers to the balance of deducting the net value of equity transferred from the total income from the applicable equity transfer. Pursuant to SATCircular 37, the payer, namely the principal, the designator, or the warrantee or the guaranteed party, should assume the obligation of withholding income taxin the circumstances where the payer entrusts an agent or designates a third party to make payments on its behalf, or the payments should be made by a third-party warrantor or guarantor as provided in the applicable guarantee contracts or applicable laws. 28Table of ContentsSAT Notice 7 became effective on February 3, 2015, but it also applies to indirect transfers which occurred before its issuance but have not receivedassessments from the tax authorities. SAT Circular 37 and SAT Notice 7 may be determined by the tax authorities to be applicable to our corporaterestructuring where non-resident investors were involved, if any of such transactions were determined by the tax authorities to lack reasonable commercialpurpose. As a result, we and our non-resident investors in such transactions may become at risk of being taxed under SAT Circular 37 and SAT Notice 7 andwe may be required to expend valuable resources to comply with SAT Circular 37 and SAT Notice 7 or to establish that we should not be taxed under thegeneral anti-avoidance rule of the amended PRC Enterprise Income Tax Law, which may have a material adverse effect on our financial condition and resultsof operations or such non-resident investors’ investments in us.Discontinuation of any of the preferential tax treatments or imposition of any additional taxes could adversely affect our financial condition and results ofoperations.The amended Enterprise Income Tax Law and its implementation rules permit certain “high and new technology enterprises strongly supported by thestate” which hold independent ownership of core intellectual property to enjoy a preferential enterprise income tax rate of 15% subject to certainqualification criteria. Autohome WFOE was recognized jointly by the Beijing Municipal Science and Technology Commission and other authorities as a“high and new technology enterprise,” or HNTE, in September 2010 and was eligible for the preferential 15% enterprise income tax rate through 2018 uponits filing with the relevant tax authority. Beijing Autohome Technologies Co., Ltd., or Beijing Autohome Technologies, was recognized as an HNTE in July2015 and therefore was eligible for the preferential 15% enterprise income tax rate from 2015 to 2017 upon its filing with the relevant tax authority. BeijingPrbrownies Software Co., Ltd., or Beijing Prbrownies, was recognized as an HNTE in February 2016, qualifying it for the preferential 15% enterprise incometax rate from 2015 to 2017 upon its filing with the relevant tax authority. The qualification as an HNTE is subject to annual evaluation and a three-yearreview by the relevant authorities in China. Beijing Prbrownies was accredited as a software enterprise under the relevant PRC laws and regulations and isexempt from income tax for the tax years of 2015 and 2016, followed by a 50% reduction in the statutory income tax rate of 25% for the next three yearsprovided that it continues to be qualified as a software enterprise during such period. However, Autohome WFOE and Beijing Autohome Technologies willno longer enjoy the 15% preferential tax rate should they lose the HTNE qualification. If Beijing Prbrownies fails to pass the review by and filing with therelevant tax authorities, it will no longer enjoy the preferential tax rate described above, and the applicable enterprise income tax rate may increase to up to15% if it still maintains the HNTE qualification, or up to 25% if it loses the HNTE qualification.Our global income and the dividends that we may receive from our PRC subsidiaries, dividends distributed to our non-PRC shareholders and ADS holders,and gains recognized by such shareholders or ADS holders, may be subject to PRC taxes under the Enterprise Income Tax Law, which would have amaterial adverse effect on our results of operations.Under the Enterprise Income Tax Law, which became effective on January 1, 2008 and was amended on February 24, 2017, and its implementationrules, which became effective on January 1, 2008, an enterprise established outside of the PRC with “de facto management bodies” within the PRC isconsidered a resident enterprise and will be subject to the enterprise income tax at the rate of 25% on its global income. The SAT issued the Notice Regardingthe Determination of Chinese-Controlled Offshore Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies,or SAT Circular 82, on April 22, 2009, which was amended in 2013 and 2017 respectively. SAT Circular 82 provides certain specific criteria for determiningwhether the “de facto management body” of a Chinese-controlled offshore-incorporated enterprise is located in China. Although we do not believe that ourlegal entities organized outside of the PRC constitute PRC resident enterprises, it is possible that the PRC tax authorities could reach a different conclusion.In such case, we may be considered a PRC resident enterprise and may therefore be subject to enterprise income tax at a rate of 25% on our global income. Ifwe are considered a PRC resident enterprise and earn income other than dividends from our PRC subsidiaries, a 25% enterprise income tax on our globalincome could significantly increase our tax burden and materially and adversely affect our cash flow and profitability. 29Table of ContentsPursuant to the amended Enterprise Income Tax Law and its implementation rules, dividends generated after January 1, 2008 and payable by a foreign-invested enterprise in China to its foreign investors, which are non-PRC tax resident enterprises without an establishment in China, or whose income has noconnection with their institutions and establishments inside China, are subject to withholding tax at a rate of 10%, unless any such foreign investor’sjurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. We are a Cayman Islands holding companyand we conduct our business through our wholly-owned subsidiaries and VIEs in the PRC, of which Autohome WFOE and Chezhiying WFOE are the primarybeneficiaries of our VIEs. Autohome WFOE is 100% owned by Cheerbright, our wholly owned subsidiary located in the British Virgin Islands. The BritishVirgin Islands currently does not have any tax treaty with China with respect to withholding tax. As long as Cheerbright is considered a non-PRC residententerprise, dividends that it receives from Autohome WFOE may be subject to withholding tax at a rate of 10%. As to our subsidiaries located in Hong Kong,such as Autohome Media, the shareholder of our PRC subsidiaries currently engaging in advertising business, and Autohome Link Hong Kong Limited, theshareholder of Chezhiying WFOE, under the Arrangement between the PRC and the Hong Kong Special Administrative Region on the Avoidance of DoubleTaxation and Prevention of Fiscal Evasion, effective on January 1, 2007, as long as each of our Hong Kong subsidiaries is considered a non-PRC residententerprise and directly holds at least 25% of the equity interests of its respective PRC subsidiaries, dividends that it receives from its PRC subsidiaries may besubject to withholding tax at a preferential rate of 5%, if it is the beneficial owner of the dividends, upon receiving the approval from the local tax authority.In August 2015, the State Administration of Taxation promulgated the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatments under TaxTreaties, or SAT Circular 60, which became effective on November 1, 2015. SAT Circular 60 provides that non-resident enterprises are not required to obtainpre-approval from the relevant tax authority in order to enjoy the reduced withholding tax rate. Instead, non-resident enterprises and their withholding agentsmay, by self-assessment and upon their confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reducedwithholding tax rate, and file necessary forms and supporting documents when performing tax filings, which will be subject to post-filing examinations bythe relevant tax authorities.As uncertainties remain regarding the interpretation and implementation of the amended Enterprise Income Tax Law and its implementation rules, wecannot assure you that if we are regarded as a PRC resident enterprise, any dividends to be distributed by us to our non-PRC enterprise shareholders and ADSholders would not be subject to any PRC withholding tax at a rate of 10% and to non-PRC individual shareholders and ADS holders would not be subject toPRC individual income tax at a rate of 20%. Similarly, any gain recognized by such non-PRC shareholders or ADS holders on the sale of shares or ADSs, asapplicable, may also be subject to PRC tax. If our dividends payable to our non-PRC enterprise shareholders, non-PRC individual shareholders and ADSholders, or on gains recognized by such non-PRC shareholders or ADS holders are required under the Enterprise Income Tax Law and the Individual IncomeTax Law to be subject to PRC tax, such investors’ investment in our Class A ordinary shares or ADSs may be materially and adversely affected.Increases in labor costs and enforcement of stricter labor-related laws and regulations may adversely affect our business and our results of operations.China’s overall economy and the average wage in China have increased in recent years and are expected to continue to grow. The average wage levelfor our employees has also increased in recent years. We expect that our labor costs, including wages and employee benefits, will continue to increase. Unlesswe are able to pass on these increased labor costs to our users and customers by increasing prices for our services, our profitability and results of operationsmay be materially and adversely affected. 30Table of ContentsIn addition, we have been subject to stricter regulatory requirements in terms of entering labor contracts with our employees and paying variousstatutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance and childbearinginsurance to designated government agencies for the benefit of our employees. Pursuant to the PRC Labor Contract Law, or the Labor Contract law, whichbecame effective in January 2008, as amended in December 2012 and effective as of July 1, 2013, and its implementation rules that became effective inSeptember 2008, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining theterm of employees’ probation and unilaterally terminating labor contracts. In the event that we decide to terminate some of our employment contracts orotherwise change our employment or labor practices, the Labor Contract Law and its implementation rules may limit our ability to effect those changes in adesirable or cost-effective manner, which could adversely affect our business and results of operations. In October 2010, the Standing Committee of theNational People’s Congress promulgated the PRC Social Insurance Law, or the Social Insurance Law, which became effective on July 1, 2011. According tothe Social Insurance Law, employees must participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance andmaternity insurance and the employers must, together with their employees or separately, pay the social insurance premiums for such employees.As the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that our employment practicedo not and will not violate labor-related laws and regulations in China, which may subject us to labor disputes or government investigations. If we aredeemed to have violated relevant labor-related laws and regulations, we could be required to provide additional compensation to our employees and ourbusiness, financial condition and results of operations may be materially and adversely affected.The Public Company Accounting Oversight Board is not permitted to inspect independent registered public accounting firms operating in China,including our auditor, and as such, investors may be deprived of the benefits of such inspection.Our independent registered public accounting firm, as an auditor of companies that are traded publicly in the United States and a firm registered withthe Public Company Accounting Oversight Board (United States), or PCAOB, is required by the laws of the United States to undergo regular inspections byPCAOB to assess its compliance with the laws of the United States and professional standards. Because our independent registered public accounting firm islocated in China, a jurisdiction where PCAOB is currently unable to conduct inspections without receiving the required approval from the PRC authorities,our independent registered public accounting firm, like other independent registered public accounting firms operating in China, is currently not inspectedby PCAOB. Inspections of other firms that PCAOB has conducted outside of China have identified deficiencies in those firms’ audit procedures and qualitycontrol procedures, which may be addressed as part of the inspection process to improve future audit quality. Since PCAOB cannot conduct inspections ofindependent registered public accounting firms operating in China without receiving the required approval from the PRC authorities, it is more difficult toevaluate the effectiveness of our independent registered public accounting firm’s audit or quality control procedures. As a result, investors may be deprivedof the benefits of PCAOB inspections.Proceedings instituted by the SEC against certain PRC-based accounting firms, including our independent registered public accounting firm, could resultin financial statements being determined to be not in compliance with the requirements of the Exchange Act.In December 2012, the SEC brought administrative proceedings against five accounting firms in China, including our independent registered publicaccounting firm, alleging that they had refused to produce audit work papers and other documents related to certain other China-based companies underinvestigation by the SEC. On January 22, 2014, an initial administrative law decision was issued, censuring these accounting firms and suspending four ofthese firms from practicing before the SEC for a period of six months. The decision is neither final nor legally effective unless and until reviewed andapproved by the SEC. On February 12, 2014, four of these PRC-based accounting firms appealed to the SEC against this decision. In February 2015, each ofthe four PRC-based accounting firms agreed to a censure and to pay a fine to the SEC to settle the dispute and avoid suspension of their ability to practicebefore the SEC. The firms’ ability to continue to serve all their respective clients is not affected by the settlement. The settlement requires the firms to followdetailed procedures to seek to provide the SEC with access to Chinese firms’ audit documents via the CSRC. If the firms do not follow these procedures, theSEC could impose penalties such as suspensions, or it could restart the administrative proceedings. The settlement did not require the firms to admit to anyviolation of law and preserves the firms’ legal defenses in the event the administrative proceeding is restarted. 31Table of ContentsIn the event that the SEC restarts the administrative proceedings, depending upon the final outcome, listed companies in the United States with majorPRC operations may find it difficult or impossible to retain auditors in respect of their operations in the PRC, which could result in financial statements beingdetermined to not be in compliance with the requirements of the Exchange Act, including possible delisting. Moreover, any negative news about theproceedings against these audit firms may cause investor uncertainty regarding China-based, United States-listed companies and the market price of ourADSs may be adversely affected.If our independent registered public accounting firm was denied, even temporarily, the ability to practice before the SEC and we were unable to timelyfind another registered public accounting firm to audit and issue an opinion on our financial statements, our financial statements could be determined not tobe in compliance with the requirements of the Exchange Act. Such a determination could ultimately lead to the delay or abandonment of this offering,delisting of our ordinary shares from the NYSE or deregistration from the SEC, or both, which would substantially reduce or effectively terminate the tradingof our ADSs in the United States.Risks Related to our ADSsThe market price for our ADSs has fluctuated and may be volatile.The daily closing trading prices for our ADSs ranged from US$25.51 to US$67.05 in 2017. The trading price for our ADSs may continue to fluctuate inresponse to factors including, without limitation, the following: • regulatory developments in our target markets affecting us, our customers or our competitors; • announcements of studies and reports relating to the quality of our services or those of our competitors; • changes in the economic performance or market valuations of other companies that provide online automotive advertising services; • actual or anticipated fluctuations in our quarterly results of operations and changes or revisions to our expected results; • changes in financial estimates by securities research analysts; • conditions in the entire automotive ecosystem; • conditions in the online retail industry; • announcements by us or our competitors of new solutions, acquisitions, strategic relationships, joint ventures or capital commitments; • additions to or departures of our senior management; • fluctuations of exchange rates between the RMB and the U.S. dollar; • release or expiry of lock-up or other transfer restrictions on our outstanding Class A ordinary shares or ADSs; • sales or perceived potential sales of additional Class A ordinary shares or ADSs; • obtaining or revocation of any operating license or permit in relation to our business; and • pending or potential litigation or administrative investigation.In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operatingperformance of any particular company. These market fluctuations may also have a material adverse effect on the market price of our ADSs. 32Table of ContentsIf securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price for our ADSsand trading volume could decline.The trading market for our ADSs will depend in part on the research and reports that securities or industry analysts publish about us or our business. Ifwe do not establish and maintain adequate research coverage or if one or more of the analysts who covers us downgrades our ADSs or publishes inaccurate orunfavorable research about our business, the market price for our ADSs would likely decline. If one or more of these analysts ceases coverage of our companyor fails to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume forour ADSs to decline.Because we may not continue to pay dividends in the foreseeable future, you may need to rely on price appreciation of our ADSs as the sole source forreturn on your investment.Although we declared special cash dividends to holders of our ordinary shares in November 2017, we may not continue to do so regularly, or at all.Therefore, you may need to rely on price appreciation of our ADSs as the sole source for return on your investment.Subject to certain exceptions, our board of directors has complete discretion as to whether to distribute dividends. Even if our board of directorsdecides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results ofoperations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financialcondition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the future return on your investment in our ADSswill likely depend upon any future price appreciation of our ADSs. There is no guarantee that our ADSs will appreciate in value or even maintain the price atwhich you purchased the ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs.Substantial future sales or perceived potential sales of our ADSs in the public market could cause the price of our ADSs to decline.Sales of our ADSs in the public market, or the perception that these sales could occur, could cause the market price of our ADSs to decline. All ADSssold in our equity offerings will be freely transferable without restriction or additional registration under the Securities Act. In addition, certain holders of ourordinary shares have the right to cause us to register under the Securities Act the sale of their shares. Registration of these shares under the Securities Actwould result in ADSs representing these shares becoming freely tradable without restriction under the Securities Act. Sales of these registered shares, in theform of ADSs, in the public market could cause the price of our ADSs to decline. Such sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate. In addition, if we pay for our future acquisitions in whole or in part withadditionally issued ordinary shares, your ownership interests in our company would be diluted and this, in turn, could have a material and adverse effect onthe price of our ADSs.You may not have the same voting rights as the holders of our Class A ordinary shares and may not receive voting materials in time to be able to exerciseyour right to vote.Except as described in this annual report and in the deposit agreement, holders of our ADSs will not be able to exercise voting rights attaching to theClass A ordinary shares represented by our ADSs on an individual basis. Holders of our ADSs will appoint the depositary or its nominee as theirrepresentative to exercise the voting rights attaching to the Class A ordinary shares represented by the ADSs. Upon receipt of your voting instructions, thedepositary will vote the underlying ordinary shares in accordance with these instructions.Pursuant to our fourth amended and restated memorandum and articles of association, we may convene a shareholders’ meeting upon ten calendardays’ notice. If we give timely notice to the depositary under the terms of the deposit agreement (30 business days’ notice), the depositary will notify you ofthe upcoming vote and arrange to deliver our voting materials to you. We cannot assure you that you will receive the voting materials in time to instruct thedepositary to vote the Class A ordinary shares underlying your ADSs, and it is possible that you, or persons who hold their ADSs through brokers, dealers orother third parties, will not have the opportunity to exercise a right to vote. In addition, the depositary and its agents are not responsible for failing to carryout voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote and there maybe nothing you can do if the Class A ordinary shares underlying your ADSs are not voted as you requested. In addition, although you may directly exerciseyour right to vote by withdrawing the Class A ordinary shares underlying your ADSs, you may not receive sufficient advance notice of an upcomingshareholders’ meeting to withdraw the Class A ordinary shares underlying your ADSs to allow you to vote with respect to any specific matter. 33Table of ContentsYour right to participate in any future rights offerings may be limited, which may cause dilution to your holdings, and you may not receive cash dividendsif it is illegal or impractical to make them available to you.We may from time to time distribute rights to our shareholders, including rights to acquire our securities. However, we cannot make rights available toyou in the United States unless we register both the rights and the securities to which the rights relate under the Securities Act or an exemption from theregistration requirements is available. Under the deposit agreement, the depositary will not make rights available to you unless both the rights and theunderlying securities to be distributed to ADS holders are either registered under the Securities Act or exempt from registration under the Securities Act. Weare under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to bedeclared effective and we may not be able to establish a necessary exemption from registration under the Securities Act. Accordingly, you may be unable toparticipate in our rights offerings and may experience dilution in your holdings.The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on Class A ordinary shares orother deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of Class A ordinary sharesyour ADSs represent. However, the depositary is not responsible if it decides that it is inequitable or impractical to make a distribution available to anyholders of ADSs. For example, the depositary may determine that it is not feasible to distribute certain property through the mail. Additionally, the value ofcertain distributions may be less than the cost of mailing them. In those cases, the depositary may determine not to distribute such property. We have noobligation to register under U.S. securities laws any ADSs, ordinary shares, rights or other securities received through such distributions. We also have noobligation to take any other action to permit the distribution of ADSs, ordinary shares, rights or anything else to holders of ADSs. This means that you maynot receive the distribution we make on our Class A ordinary shares or any value for them if it is illegal or impractical for us to make them available to you.These restrictions may have a material adverse effect on the value of your ADSs.You may be subject to limitations on the transfer of your ADSs.Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time whenit deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSsgenerally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of anyrequirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason in accordance withthe terms of the deposit agreement.You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited because we areincorporated under Cayman Islands law, we conduct substantially all of our operations in China and substantially all of our directors and officers resideoutside the United States.We are incorporated in the Cayman Islands and conduct substantially all of our operations in China through our PRC subsidiaries and VIEs. Most ofour directors and officers reside outside the United States and a substantial portion of the assets of such directors and officers are located outside of the UnitedStates. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the Cayman Islands or in China in theevent that you believe that your rights have been infringed under the securities laws or otherwise. Even if you are successful in bringing an action of thiskind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers.There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will generallyrecognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. 34Table of ContentsOur corporate affairs are governed by our memorandum and articles of association, as amended and restated from time to time, and by the CompaniesLaw and common law of the Cayman Islands. The rights of shareholders to take legal action against us and our directors, actions by minority shareholdersand the fiduciary responsibilities of our directors are to a large extent governed by the common law of the Cayman Islands. The common law of the CaymanIslands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which providespersuasive, but not binding, authority. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not asclearly established as they would be under statutes or judicial precedents in the United States. In particular, the Cayman Islands has a less developed body ofsecurities laws than the United States and provides significantly less protection to investors. In addition, Cayman Islands companies may not have standingto initiate a shareholder derivative action in U.S. federal courts.As a result, our public shareholders may have more difficulty in protecting their interests through actions against us, our management, our directors orour major shareholders than shareholders of a corporation incorporated in a jurisdiction in the United States.Our memorandum and articles of association contain anti-takeover provisions that could adversely affect the rights of holders of our Class A ordinaryshares and ADSs.Our fourth amended and restated memorandum and articles of association contain certain provisions that could limit the ability of others to acquirecontrol of our company, including a provision that grants authority to our board of directors to establish from time to time one or more series of preferredshares without action by our shareholders and to determine, with respect to any series of preferred shares, the terms and rights of that series. Preferred sharescould be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If ourboard of directors decides to issue preferred shares, the price of our ADSs may fall and the voting and other rights of the holders of our Class A ordinary sharesand ADSs may be materially and adversely affected. These provisions could have the effect of depriving our shareholders of the opportunity to sell theirshares at a premium over the prevailing market price by discouraging third parties from seeking to obtain control of our company in a tender offer or similartransaction.We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable toU.S. domestic public companies.Because we qualify as a foreign private issuer under the Securities Exchange Act of 1934, as amended, or the Exchange Act, we are exempt from certainprovisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: • the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; • the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under theExchange Act; • the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiderswho profit from trades made in a short period of time; and • the selective disclosure rules by issuers of material nonpublic information under Regulation FD.We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. We intend to publish our results on a quarterlybasis as press releases, distributed pursuant to the rules and regulations of the NYSE. Press releases relating to financial results and material events will also befurnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less frequentcompared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information, whichwould be made available to you, were you investing in a United States domestic issuer. 35Table of ContentsWe may be classified as a passive foreign investment company for United States federal income tax purposes, which could subject United States investorsin the ADSs or Class A ordinary shares to significant adverse tax consequences.Under United States federal income tax law, we will be classified as a passive foreign investment company (“PFIC”) for any taxable year if either (i) atleast 75% of our gross income for the taxable year is passive income or (ii) at least 50% of the value of our assets (based on the average quarterly value of ourassets during the taxable year) is attributable to assets that produce or are held for the production of passive income (the “asset test”). Although the law in thisregard is not entirely clear, we treat our VIEs as being owned by us for United States federal income tax purposes because we control their managementdecisions and are entitled to substantially all of the economic benefits associated with such entities, and, as a result, we consolidate their results of operationsin our consolidated U.S. GAAP financial statements. Assuming we are the owner of our VIEs for U.S. federal income tax purposes and based on our currentincome and assets, including goodwill and unbooked intangibles, we do not believe that we were a PFIC for the taxable year ended December 31, 2017 anddo not anticipate becoming a PFIC in future taxable years.While we do not believe that we were a PFIC for the taxable year ended December 31, 2017 and do not anticipate becoming a PFIC in the foreseeablefuture, no assurance can be given in this regard because the determination of whether we will be or become a PFIC is a fact-intensive inquiry made on anannual basis that depends, in part, on the composition of our income and assets. Fluctuations in the market price of our ADSs may cause us to become a PFICfor the current or subsequent taxable years because the value of assets for the purpose of the asset test may be determined by reference to the market price ofour ADSs from time to time (which may be volatile). The composition of our income and assets may also be affected by how, and how quickly, we use ourliquid assets. Under circumstances where our revenue from activities that produce passive income significantly increase relative to our revenue from activitiesthat produce non-passive income, or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming classified as aPFIC may substantially increase. In addition, because there are uncertainties in the application of the relevant rules, it is possible that the Internal RevenueService may challenge our classification of certain income and assets as non-passive or our valuation of our tangible and intangible assets, each of which mayresult in us becoming a PFIC for the current or subsequent taxable years.If we were to be or become a PFIC, a U.S. Holder (as defined in “Item 10. Additional Information—E. Taxation—United States Federal Income TaxConsiderations—General”) may incur significantly increased United States income tax on gains recognized on the sale or other disposition of the ADSs orClass A ordinary shares and on the receipt of distributions on the ADSs or Class A ordinary shares to the extent such gain or distribution is treated as an“excess distribution” under United States federal income tax rules. Further, if we were a PFIC for any year during which a U.S. Holder held our ADSs orClass A ordinary shares, we generally would continue to be treated as a PFIC as to such U.S. Holder for all succeeding years during which such U.S. Holderheld our ADSs or Class A ordinary shares. Alternatively, U.S. Holders of PFIC shares can sometimes avoid the rules described above by making certainelections, including a “mark-to-market” election or electing to treat a PFIC as a “qualified electing fund.” However, U.S. Holders will not be able to make anelection to treat us as a “qualified electing fund” because, even if we were to be or become a PFIC, we do not intend to comply with the requirementsnecessary to permit U.S. Holders to make such election. Each U.S. Holder is urged to consult its tax advisor concerning the United States federal income taxconsequences of owning and disposing of ADSs or Class A ordinary shares if we were to be or become a PFIC. For more information, see “Item 10. AdditionalInformation—E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Rules.”We incur increased costs as a result of being a public company.As a public company, we incur significant accounting, legal and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act,including Section 404 therein relating to internal control over financial reporting, as well as rules subsequently implemented by the SEC and the NYSE, havedetailed requirements concerning corporate governance practices of public companies. We expect these rules and regulations applicable to public companiesto increase our accounting, legal and financial compliance costs and to make certain corporate activities more time-consuming and costly. Our managementis required to devote substantial time and attention to our public company reporting obligations and other compliance matters. We evaluate and monitordevelopments with respect to these rules and regulations, and we cannot predict or estimate the amount of additional costs we may incur or the timing of suchcosts. Our reporting and other compliance obligations as a public company may place a significant strain on our management, operational and financialresources and systems for the foreseeable future. 36Table of ContentsIn the past, shareholders of a public company often brought securities class action suits against the company following periods of instability in themarket price of that company’s securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention andother resources from our business and operations, which could harm our results of operations and require us to incur significant expenses to defend the suit.Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim issuccessfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition andresults of operations.ITEM 4. INFORMATION ON THE COMPANY A.History and Development of the CompanyAutohome Inc. was incorporated under the laws of the Cayman Islands under its former name, Sequel Limited, in June 2008 and adopted its currentname in October 2011. Shortly after its inception, in June 2008, Autohome Inc. acquired all of the equity interests of the following entities: • Cheerbright International Holdings Limited, or Cheerbright, a British Virgin Islands company that operates autohome.com.cn, which waslaunched in 2005; • Norstar Advertising Media Holdings Limited, or Norstar, a Cayman Islands Company that, among other businesses, operated che168.com, whichwas launched in 2004; and • China Topside Limited, or China Topside, a British Virgin Islands company.To sharpen our business focus on the automotive industry, we completed a corporate reorganization in 2011 by spinning off our then subsidiaries thatwere not involved in our core business. In March 2011, we transferred the che168.com business from Norstar to Cheerbright. In June 2011, in connection withour strategy to focus on serving the automotive industry in China, we contributed our entire equity interests in Norstar and China Topside, which serve theinformation technology industry, to Sequel Media, our subsidiary in the Cayman Islands, and then immediately distributed the shares of Sequel Media to ourshareholders. Since the spin-off, we have been focusing on serving the automotive industry in China through our autohome.com.cn and che168.com websites.In October 2013, we acquired Autohome Media Limited, or Autohome Media, which is a Hong Kong advertising and marketing company previouslynamed as Prbrownies Marketing Limited, through one of our wholly-owned subsidiary in Hong Kong. Autohome Media had engaged in the advertisingbusiness outside the PRC for more than three years at the time, and was therefore qualified to directly invest in a PRC company providing advertisingservices in accordance with PRC law. Autohome Media has established subsidiaries in Beijing, Shanghai, Guangzhou, Tianjin, Chengdu and Huai’an. Wecompleted the migration of our advertising business from Guangzhou Advertising, Shanghai Advertising, Beijing Shengtuo Autohome Advertising Co., Ltd.,or Autohome Advertising, Beijing Shengtuo Chengshi Advertising Co., Ltd., or Chengshi Advertising, to the subsidiaries of Autohome Media in 2015.In December 2013, we completed our initial public offering of 8,993,000 ADSs, representing 8,993,000 Class A ordinary shares, and our ADSs arelisted on the NYSE under the symbol “ATHM.” In November 2014, we completed a public offering, or the 2014 Offering, in which we offered and sold2,424,801 ADSs, representing 2,424,801 Class A ordinary shares, and our then shareholders sold 7,220,858 ADSs, representing 7,220,858 Class A ordinaryshares. 37Table of ContentsIn June 2015, we established a strategic joint venture with HappiGo Home Shopping Co, a leading TV shopping business in China, to build a full-service auto sales platform. We invested RMB49 million (US$7.5 million) into the joint venture, accounting for 49% of the shareholding.In September 2015, we established a joint venture, the Financing JV, with three companies unaffiliated with us. We invested a full payment ofRMB75 million (US$11.5 million) into the Financing JV for 25% equity interests of the Financing JV. The Financing JV provides auto financing to carbuyers and facilitates the transaction process. We entered into a definitive agreement to transfer all equity interest we held in the Financing JV to a companyunaffiliated to us in September 2017. As of the date of this annual report, the transaction has not been consummated and is subject to a set of regulatory andcustomary closing conditions to be satisfied. In December 2015, we established a wholly owned subsidiary, Beijing Chezhiying Software Co., Ltd. inBeijing, China, to do used automobile-related business.In April 2016, we established a joint venture, Beijing Haochezhijia E-commerce Co., Ltd., with Beijing Haoduohaoche Information Technology Co.,Ltd., a company unaffiliated with us and is engaged in automobile transaction-related business. We own 75% equity interests in Beijing HaochezhijiaE-Commerce Co., Ltd. In September 2016, we established Chengdu Prbrownies Software Co., Ltd. and Huai’an Prbrownies Software Co., Ltd., both of whichprincipally provide dealer subscription services.On June 22, 2016, Telstra Holdings, or Telstra, our then largest shareholder and a wholly owned subsidiary of Telstra Corporation Limited, completedthe sale of approximately 47.4% of our total issued and outstanding shares to Yun Chen for a consideration of US$1.6 billion. On February 22, 2017, YunChen further acquired from Telstra Holdings 6.5% equity interests in us. As of March 31, 2018, Yun Chen owned 52.7% of our total issued and outstandingshares. Since June 22, 2016, our largest shareholder has been Yun Chen, a wholly owned subsidiary of Ping An Group, a financial services group with threecore businesses of insurance, banking and investment and whose ordinary shares are listed on the Hong Kong Stock Exchange and the Shanghai StockExchange.In July 2017, we acquired 10% interest in Visionstar Information Technology (Shanghai) Co., Ltd., which primarily engages in the development andapplication of AR technologies and related operations in the PRC, with a total cash consideration of RMB30 million (US$4.6 million).In September 2017, we acquired 100% equity interest of Shanghai Tianhe Insurance Brokerage Co., Ltd., a company licensed by the CIRC to engage ininsurance brokerage business in the PRC, through Autohome Information, with a total cash consideration of RMB21.1 million (US$3.2 million).Our principal executive offices are located at 10th Floor Tower B, CEC Plaza, 3 Dan Ling Street, Haidian District, Beijing 100080, the People’sRepublic of China. Our telephone number at this address is +86 (10) 5985 7001. Our registered office in the Cayman Islands is located at 2nd Floor HarbourCenter 42 North Church Street George Town, Grand Cayman, Cayman Islands. Our agent for service of process in the United States is Law DebentureCorporate Services Inc., 400 Madison Avenue, 4th Floor, New York, New York 10017.See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Capital Expenditures” for a discussion of ourcapital expenditures and divestitures. B.Business OverviewOverviewWe are the leading online destination for automobile consumers in China. Through our two websites, autohome.com.cn and che168.com, accessiblethrough PCs and mobile devices and our mobile applications, we deliver comprehensive, independent and interactive content to automobile buyers andowners. We have developed a strong and well-recognized brand. Our “汽车之家” (“Autohome”) brand has been the most searched automotive-relatedkeyword during substantially the entire period since July 2011 on Baidu.com, the leading Chinese language internet search engine. We have begun andcontinue to implement four key market segments, namely auto-media, auto-ecommerce, auto-finance and auto-lifestyle, into our consumer-centricautomotive ecosystem, and transform us from a content-led vertical media business to an automotive eco-platform based on advanced data and technology. 38Table of ContentsSince our inception, the media business has been our core competency. Our ability to reach a large and engaged user base of automobile consumers hasmade us a preferred platform for automakers and automobile brands’ regional offices to conduct their advertising and marketing campaigns. We provideautomakers with a broad range of advertising solutions and tools on our websites and mobile applications to enhance their brand recognition, new modelreleases and sales promotions. We have a high penetration rate in the automaker market, and we provided our media services to 87, 95 and 101 automakersoperating in China in 2015, 2016 and 2017, respectively. We believe that the large user base, together with our nationwide advertising platform, targetedadvertising solutions and value-added services, has led to our rapid growth and has laid the foundation for our continuing success.In addition, we provide subscription services to dealers which allow them to market their inventory and services through our websites and mobileapplications, extending the reach of their physical showrooms to potentially millions of internet users in China and generating sales leads for them. We alsooffer advertising services and other value-added services to individual dealers to complement our leads generation services. Our dealer customers utilize ouradvertising services and leverage our large user base to support their sales and marketing activities.Our online transaction platform, Autohome Mall, is a full-service online transaction platform for users to review automotive-related information,purchase coupons offered by automakers for discounts and make purchases to complete the transaction. Leveraging our strength in user traffic and ourconsumer data analytic capabilities, we provide platform-based services facilitating transactions through our transaction platform. Our online automotivemedia and transaction platform captures critical stages of the sales funnel. Through our platform, we also aim to address the under-served auto financingmarket in China by providing comprehensive online-based financial services for the complete consumer automobile ownership life cycles. Our online auto-financing platform serves as a bridge to match users that have auto financing needs with our cooperative financial institutions that offer a variety of productscovering loans, leases and insurance services for consumers and independent automobile sellers on our platform.We have experienced continuous revenue growth while maintaining profitability. Our net revenues increased from RMB3,464.0 million in 2015 toRMB5,961.6 million in 2016 and RMB6,210.2 million (US$954.5 million) in 2017, representing a CAGR of 33.9%.Our Business ModelWe are the leading online destination for automobile consumers in China. Over the past several years, we have developed the largest and most activeonline community of automobile consumers in China. We serve three distinct groups: our large and engaged user base of our websites and mobileapplications, automobile consumers on our transaction platform and customers that include automakers, dealers, financial institutions, other auto-relatedproduct and service providers. Our business model and technology platforms seek to effectively link each stage of our users’ automobile ownership lifecycles with the corresponding stage of our customers’ sales cycle. Since 2016, we have begun to initiate the four key market segments, namely auto-media,auto-ecommerce, auto-finance and auto-lifestyle, into our consumer-centric automotive ecosystem and transform us from a content-led vertical mediabusiness to an automotive eco-platform based on advanced data and technology. Our “4+1” strategy will continue to further enhance our core foundation andaccelerate our growth momentum generated by our new business initiatives.We have built an online automotive media platform that captures critical stages of the sales funnel, starting from product awareness to purchase desireinitiation and to sales leads generation. To initiate product awareness and purchase desire, we utilize our comprehensive, independent and interactive contentthrough our websites that are accessible through PCs and mobile devices and on our mobile applications to create strong user traffic and user engagement andstickiness. As our user traffic grows, we focus on generating sales leads through engaging our users with differentiated and customized promotional activities,personally tailored recommendations and enriched professionally generated contents. We generate revenues from our media services, which mainly includeautomaker advertising services and regional marketing campaigns conducted by certain automobile brands’ regional offices, and our leads generationservices, which include our dealer subscription services, advertising services sold to individual dealer advertisers and other value-added services. 39Table of ContentsWe also provide a transaction platform for automobile buyers to purchase new vehicles or used vehicles from sellers on our platform. In June 2014, welaunched Autohome Mall, an online transaction platform. Autohome Mall is a full-service online transaction platform for users to review automotive-relatedinformation, purchase coupons offered by automakers for discounts and make purchases to complete the transaction. We have also built a used automobilelisting platform based on our dedicated used car website che168.com, and mobile application, which targets the automobile replacement stage by allowingboth used automobile dealers and individuals to list their used automobiles on our websites and mobile applications. We have completed or facilitatedvehicle transactions on our platform through various sales initiatives and other promotional campaigns. In addition, we have been leveraging ourcomprehensive platform to capture additional revenue opportunities in connection with the remaining stages of the automobile ownership life cycles, such asauto-finance and auto-lifestyle.In 2017, we continued to progress on our auto-financing business by providing an expanded variety of products covering loans, leasing and insuranceservices to our users and automobile sellers, which better facilitated transactions on our platform. We have also launched data product suites towards the endof 2017 and expect the advanced data will reinforce our entire ecosystem by providing highly differentiated value to our customers. We aim to furtherdevelop synergies between our media and leads generations service, transaction business and data product and our auto-financing initiatives to realizegreater growth potential of our platform.Our PlatformOur service offerings for users mainly include our high-performance platform, which is comprised of our websites and mobile applications, our original,professionally and user-generated content and our interactive online community. Our platform is powered by our big data capability. Our extensive user dataoriginates from our expanding large user base, our automotive ecosystem partners and third-party data providers. Through our comprehensive platform, wehave access to valuable data of customers’ behaviors and patterns in their automotive ownership life cycles, which allows us to accurately and effectivelycustomize content and commercial offerings. Our accurate and comprehensive user profiling enables us to continuously enhance user experience andimprove our ability to attract and retain customers.Our WebsitesOur user-centric approach has successfully attracted one of the largest user base of automobile consumers in China to our websites. We believe we arewell-positioned to capture the fast growth of the internet penetration in China. Our autohome.com.cn website targets a wide spectrum of automobileconsumers with a focus on new automobiles. To capitalize on the growing used automobile market in China, we redesigned our che168.com website, whichin the past had features and user base similar to our autohome.com.cn website, to focus on used automobiles. The re-designed che168.com website waslaunched in October 2011.Most of the content on our websites is tagged by vehicle models to facilitate easy user access. We have developed and are continuing to improve ouruser intelligence engine to analyze user browsing behavior and preferences and prioritize the content that the user is likely to find relevant and interesting. Auser who searches for or navigates to a page for a specific vehicle model will be provided with links to relevant content such as vehicle specifications, photosand video clips, reviews, competing vehicle models, and listing and promotional information from local dealers. Users can easily compare competing vehiclemodels and brands for price and specifications to make informed purchase decisions. In addition, these user behavior data are summarized and analyzed on aregular basis to improve user experience and provide consumer intelligence to our advertisers.To provide a superior experience to our users, we label sponsored content as advertisement to maintain objectivity. 40Table of ContentsOur Mobile Websites and ApplicationsFor mobile users, our content can be accessed on our websites and on our mobile applications. We have made significant efforts in recent years tooptimize the mobile version of our websites to display our content and develop and enhance our mobile applications to capture a greater number of users thataccess our services through mobile devices. For example, the number of average daily unique users who access our websites via mobile devices amounted to13.7 million in the fourth quarter of 2017. We were among the earliest in our industry in China to introduce both iOS- and Android-based applications toallow users to easily access our content. As of December 31, 2017, we had thirteen iOS-based applications and ten Android-based applications. Our mobileapplications have generated significant user interest and the number of average daily unique users of our mobile applications amounted to approximately8.8 million in the fourth quarter of 2017. The combined number of average daily unique visitors for our mobile websites and mobile applications in thefourth quarter of 2017 grew about 25% year-over-year. Users can conveniently enjoy features available on our websites and mobile applications from theirmobile devices, such as reading articles, checking vehicle prices and model parameters, viewing pictures, viewing dealer’s information, visiting ourAutohome Mall and participating in forum discussions. In addition, through our location-based services, our users are able to obtain vehicle pricinginformation directly from their nearby dealers in approximately 330 cities in China.Our ContentThe foundation of our websites and mobile applications is a large amount of original generated content, professionally generated content and usergenerated content, as well as a comprehensive automobile library and extensive automobile listing and promotional information organized around ourautomotive information database.Original Generated ContentOur original generated content is created by our dedicated editorial team and includes automobile-related articles and reviews, pricing trends invarious local markets, photographs, video clips and live streaming. This content covers topics throughout the automobile ownership life cycle, fromautomobile research, selection and purchase to ownership and maintenance and to eventual replacement. Our review writers obtain first-hand experiences bytest-driving many newly released vehicle models provided by various automakers. Our editorial team at our Beijing headquarters and sales offices located in78 cities throughout China work closely with automakers, dealers and other industry participants to create automobile related articles. Although automakersmay provide us with sample vehicles to test drive, we review all new automobiles independently, based upon our teams’ experience and from our users’perspective.We follow well-developed guidelines in creating and publishing content with attention to details, such as the angles of photos, image sizes and thetime between industry events and the relevant article publication. These practices enable us to streamline our editorial process and quickly and efficientlymake national and local content available to our users, while ensuring that we maintain high-quality standards and a consistent user experience.Professionally Generated ContentIn 2016, we launched an open content platform to invite the key opinion leaders and influential bloggers or writers in the automotive field tocontribute their high-quality professional review, analysis and insights on automotive-related topics, including vehicle reviews, industry trend, autophotography, maintenance and others. Our diversified professionally generated contents complement our auto-media and auto-lifestyle business strategy andbring our users enriched and customized content consisting of high-quality articles, photographs, video clips and live streaming. 41Table of ContentsUser Generated Content and User ForumOur platform hosts an open and vibrant community of automobile consumers, from first-time buyers to sophisticated automobile enthusiasts. Our usercommunity centers around our discussion forums, which are organized based on vehicle models, cities and regions, and provides users an easy and intuitiveway to access various topics of interest. Registered users utilize our discussion forums to share a wide range of automotive experiences such as drivingexperiences and usage and maintenance tips. Users also frequently provide reviews of automobiles or automotive products and services, post questions andreceive answers from fellow forum members. We continued to enhance user engagement and participation in the content generation and delivery process. Forexample, we expanded our user review platform by allowing users to add or modify their views and insights on a continuous basis. We strive to ensure thecredibility, appeal and usefulness of our forums by identifying verified automobile owners and empowering selected registered users as forum moderators.Our verified automobile owners are registered users whose vehicle ownership has been confirmed through various channels. Our forum moderators aregenerally active registered users with significant forum post counts whom we have identified as being reputable automobile enthusiasts within our onlinecommunity.Our registered users increased by more than 28.1 million in 2017 and as of December 31, 2017, we had over 58.6 million registered users. As our userbase has grown and our user engagement and forum activity has increased, our database of user generated content has expanded, which in turn has attractedmore users. Furthermore, this positive effect on our growing user base has also enhanced the effectiveness of our advertisements and therefore the value of ouradvertising services, allowing us to attract more advertisers and increase revenues from existing advertisers.Automobile Library and ListingWe have one of the most comprehensive automobile libraries within our industry in China with over 35,100 vehicle model configurations as ofDecember 31, 2017. We believe our automobile library covers the substantial majority of passenger vehicle models released in China since 2005. It includesa broad range of specifications covering performance levels, dimensions, powertrains, vehicle bodies, interiors, safety, entertainment systems and otherunique features, as well as automakers’ suggested retail prices. The scale of content in our automobile library, which we believe would require significanttime, expertise and expense to replicate, makes it a valuable tool for our users in researching both new and used automobiles. Our database also includes alarge amount of new and used automobile listings and promotional information. With the comprehensive and continuously updated listing information, userscan conveniently search for up-to-date information of vehicle models without having to visit each individual dealer at their local showrooms. In addition, ourautomotive information database includes a significant amount of user generated content originating from our user forums. Leveraging our innovative ARand virtual reality (VR) related technologies, we utilize three-dimension technology to restore the actual appearances of vehicles and present stereoscopic720-degree review of automobiles on our platform. Compared to the traditional two-dimensional picture-based display of automobile appearances, the AR-and VR-based vehicle review functionality on our platform enables users to have a real perception of the specific vehicles they are interested in buying andhas greatly enhanced user experience.Our ServicesOur Media ServicesLeveraging our large and rapidly growing user base and utilizing the user intelligence data we have collected, we provide our advertisers with a broadrange of advertising solutions and tools. Our advertisers under media services are comprised primarily of automakers and automobile brands’ regional offices.As millions of consumers visit our websites and mobile applications for automotive information, we have become an increasingly important medium forautomakers and automobile brands’ regional offices to conduct their advertising and marketing campaigns.Automakers typically utilize our advertising services for brand promotion, new model releases and sales promotions. We believe we are well-positioned to provide solutions to meet all of these needs. Our large and growing automobile purchase- and ownership-oriented user base provides a broadreach for automakers’ marketing messages. Our automotive content delivery and advertisement management platform allows us to segment our user base in anumber of different dimensions, including by users’ geographical locations and specific automotive interests, and enables us to place advertisements withtargeted audiences likely to be receptive to particular advertising messages. 42Table of ContentsLeveraging our large user base and extensive forum posting data, we provide automakers with more reliable and timely business insights thantraditional customer surveys or other post-sales feedback channels. For instance, we analyze user posts in our forums to evaluate consumer behavioral andpreference response. In addition, we organize various types of offline national or local events for our automaker customers through our online marketingcampaigns and user forum activities to complement our advertising services. For example, we help automakers increase their brand awareness and executesales promotions by organizing large-scale test driving activities and for specific vehicle models in multiple cities across China. Users can convenientlyparticipate and interact with automaker representatives through our forums.In each of 2015, 2016 and 2017, 87, 95 and 101 automakers in China, which include independent Chinese automakers, joint ventures between Chineseand international automakers and international automakers that sell their cars made outside of China, purchased media services from us. As is customary inChina, we sell our advertising services and solutions primarily through third-party advertising agencies that represent the automakers and automobile brands’regional offices. We typically enter into individual advertising agreements with the third-party advertising agencies. Although we sell our advertisingservices and solutions to third-party advertising agencies, we consider the automakers and automobile brands’ regional offices, who are the main decisionmakers as to whether to place advertisements on our websites and mobile applications, to be our end-customers. As a result, our sales efforts focus primarilyon automakers and automobile brands’ regional offices. However, through direct contact between our sales team, advertisers and advertising agencies, we areable to maintain good relationships with existing advertisers and their advertising agencies.Our Leads Generation ServicesOur Dealer Subscription ServicesWe provide subscription services to dealers which allow them to market their inventory and services through our websites and mobile applications,extending the reach of their physical showrooms to potentially millions of internet users in China and generating sales leads for them. Our dealer subscriptionservices are delivered through our dealership information system mainly on a fixed-fee basis, typically for a period of one year. Through the web-basedinterface of our dealership information system, dealers can create online showrooms hosted on our websites and mobile applications and upload and managetheir automobile inventories, pricing and promotional information. Potential automobile purchasers can interact with our dealer subscribers online or throughphone numbers presented on the platform to inquire for more detailed information and schedule test drives. Our dealer subscribers can track all theinteractions with their customers originating from our websites and mobile applications, analyze the number of sales leads and assess the effectiveness oftheir marketing activities.We continue to develop our dealer subscription services and have begun to implement additional services, which we believe will allow us to expandsales leads based on consumer behaviors and preferences and enhance leads conversion and personalized marketing, and further to reach additional dealersby enabling us to offer basic and premium subscriptions at different price levels.Our Advertising Services for Individual Dealers and Other Value-added ServicesWe also offer advertising services and other value-added services for individual dealers to complement our leads generation services. Our dealercustomers utilize our advertising services and leverage our large user base to support their sales and marketing activities. In addition to larger brandpromotion advertising campaigns organized by the automakers or the group dealers, individual dealers utilize our advertising services to further enhancetheir visibility in local community, address local market conditions and promote local events. We also provide other value-added services to dealers. Wefacilitate the process and connect our users from online to offline to generate sales leads and transaction for our dealer customers. 43Table of ContentsOur Transaction BusinessE-commerce platform for new vehiclesIn June 2014, we launched Autohome Mall, an online transaction platform. Autohome Mall is a full-service online transaction platform for users toreview automotive-related information, purchase coupons offered by automakers for discounts and make purchases to complete the transaction. In 2015, webegan to provide direct vehicle sales and commission-based services facilitating transactions through our transaction platform. We completed new vehicletransactions on our platform through various sales initiatives and other promotional campaigns. We conducted several online marketing events on AutohomeMall and offline promotion campaigns with our partners for our transaction business. We also partnered with automakers to sell customized or exclusivemodels of selected vehicles on our platform. In the fourth quarter of 2016, we began to shift our focus to become an asset-light vehicle e-commerce platformand as of December 31, 2017, we have cleared all direct sales vehicle inventories. We expanded the offering of services on our platform in 2017 and aim toaddress the under-served auto financing market in China by providing comprehensive online-based financial services for the complete consumer automobileownership life cycle. Based on users’ preferences and our big data analysis, we recommend a broad range of loans, leases and insurance products offered byour cooperative financial institutions to our users that have auto financing needs and match them to facilitate transactions. We plan to make our platform as aprofessional auto financing platform, through which our users having auto financing needs can be able to easily access various high-quality loans andinsurance products and our cooperative financial partners can effectively increase the volume of their financing transactions. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—If we are unable to grow our new vehicle transaction business, we may not be able to achieveour expected business growth and our results of operations may be adversely affected.”Used automobile listing & other platform-based servicesWe launched our used automobile listing platform in late 2009. Our used automobile listing services allow dealers and individuals to market their usedautomobiles for sale on our websites and mobile applications. Our used automobile listing database has been expanding rapidly. We had approximately11.5 million used automobile listings in our database as of December 31, 2017.In an effort to capitalize on the used automobile market as it matures, in October 2011, we redesigned our che168.com website as a platform dedicatedto used automobiles. The redesigned website features content, listings and interactive functionality similar to our autohome.com.cn website, but focusesprimarily on used automobiles. We also developed a mobile application for our used automobile services. Since 2014, we continued to develop and enhanceour used automobile sales platform and began to provide advertising services, dealer subscription services and other platform-based services in selectedcities.The used automobile market still remains at a nascent stage of development and the revenue generated from our used automobile listing and otherservices, which was included in revenue line for leads generation services, had achieved fast growth in the year ended December 31, 2017. We plan tocontinue to make efforts in developing our used automobile-related business and explore new business models and opportunities.Technology and Product DevelopmentOur technologies and infrastructure are critical to our success. We follow a user-centric strategy for our system architecture and have developed robustand scalable technology platforms with sufficient flexibility to support our rapid growth.A key component of our user-centric strategy is our user intelligence engine which we have developed and are continually enhancing. Our userintelligence engine allows us to rapidly gather user intelligence by analyzing large amounts of data from many sources throughout our content productionsystem. We are able to monitor and analyze user behaviors and preferences through their browsing record on our platforms. We can utilize such userintelligence data to personalize user interfaces, associate and understand the relationship of information from different sources and facilitate interactionsamong users and various elements on our websites and mobile applications. It also helps us recommend suitable products, services and user connections toour users. Through our user intelligence engine, we can engage our users more closely by providing them with relevant content throughout their automotivelife cycles. We are also able to provide precision and targeted marketing services to our automakers, dealers and other automotive-related customers so thatthey can accurately deliver relevant advertisements to targeted users who are more receptive to such marketing information. 44Table of ContentsWe provide automobile consumers trend analysis services for our automaker and dealer customers that help them analyze data in specific geographicmarkets such as consumer purchasing behavior characteristics and their brand strength in comparison to that of their competitors. We believe the consumerintelligence gathered from our large user base reflects the current automotive market trends in China and provides excellent market insight to our automakerand dealer customers.We invested heavily in mobile technologies and were among the earliest in our industry in China to introduce a mobile version of our websites andboth Apple iOS- and Android-based applications to allow our users to easily access our content. We have built up a team of research and developmentpersonnel to focus exclusively on the development and enhancement of our mobile websites and applications and to explore new business models andopportunities through mobile technology. We plan to continue to leverage our mobile technology to enhance the functions and user interfaces of our mobileapplications for Apple iOS and Android platforms focusing on convenience, real-time interaction and location based services.Leveraging AR and VR related technologies, we realized significant technology upgrade in 2017 and launched AR automobile showroom and ARauto show during the year, all of which had enabled us to provide our users with an innovative and superior automobile review experience and thus enhancedour user stickiness. In addition, these technology improvements had strengthened our ability to obtain additional user traffic and expanded our user base. Weplan to continue to make further upgrades and develop new technology to provide more diversified platforms for our users, and to expand the use of AR andVR related technologies throughout our eco-platform in order to offer automakers and dealers with more innovative and effective branding and marketingtools and greater exposure to highly targeted potential consumers throughout China.We had an experienced product development team of 1,659 engineers as of December 31, 2017. Our past innovation has focused on helping usersresearch, select and purchase suitable vehicles through our websites. We plan to develop additional products and services for our mobile applications andmedia-related technology and enhance our big data analysis capabilities and AR and VR related technologies.Sales and MarketingOur nationwide in-house team of sales representatives sells our services to automakers and dealers. As of December 31, 2017, we had 1,824 sales andmarketing representatives operating our physical sales office network spanning 78 cities across China and visiting customers in an additional 128 satellitecities. We have a prudent expansion plan and we typically only open new physical sales offices in a city after we have already established a sufficientcustomer base in the area. In cities where we do not yet have a customer base, we provide sales coverage by telephone. Our Beijing-based telephone salesteam provided sales coverage to the cities in which we did not have physical sales offices. Our sales team also provides ongoing customer support toadvertisers and dealer subscribers. In the past years, we have successfully expanded our market presence in the first- and second-tier cities in China. We planto continue to expand our sales and marketing efforts into third- and fourth-tier cities to further capture the opportunities for automobile sales growth in thosemarkets.Our sales team is equipped with specialized automotive industry knowledge and expertise, understands our customers’ needs and is trained to helpthem develop their advertising strategies. Salespeople work directly with our advertisers and advertising agencies that represent advertisers. Our sales teamalso maintains close relationships with our dealer customers by, among other things, providing continuing training, support and ongoing customer service forour dealer subscriptions services and other value-added services. Our sales team for transaction business is in charge of customer services and maintains ourrelationships with automakers, our dealership partners, and business development personnel. 45Table of ContentsCompensation for our salespeople includes a base salary and incentives based on the sales revenues they generate. We provide regular in-house andexternal education and training to our salespeople to help them provide current and prospective customers with information on, and the advantages of using,our services. We believe that our performance-linked compensation structure and career-oriented training help to retain and motivate our salespeople.We believe brand recognition is important to our ability to attract users. We focus our sales and marketing efforts through search engines, navigationwebsites and mobile platforms to retain and strengthen our leading position in terms of user reach. For example, we cooperate with application stores andmobile browsers to promote our mobile applications and our websites. We also conduct online marketing events on Autohome Mall and other traditional andsocial media channels as well as offline promotion campaigns with our partners, including the annual “Singles’ Day” campaign which generated quality salesleads for our dealer customers or our transaction business.Intellectual PropertyOur intellectual property includes trademarks and trademark applications related to our brands and services, software copyrights, trade secrets and otherintellectual property rights and licenses. We seek to protect our intellectual property assets and brands through a combination of trademark, patent, copyrightand trade secret protection laws in the PRC and other jurisdictions, as well as through confidentiality agreements and other measures.We hold “汽车之家” and “车之家” (both mean “auto home” in English) and “AUTOHOME®” trademarks in China. In addition, as at December 31,2017, we held 175 pending trademark applications and 143 registered trademarks in China. As at the same date, we had 61 registered domain names,including our main website domain names, autohome.com.cn and che168.com, 119 pending patent applications, and 73 registered patents. We had 204computer software copyrights as of December 31, 2017.CompetitionWith respect to our auto media business, we face competition from China’s automotive vertical websites and mobile applications, such as Xcar,PCauto and BitAuto, from the automotive channels of major internet portals, such as Sina and Sohu, and from companies engaged in mobile social media,news, video and live-streaming applications. We may also face competition from online automobile transaction platforms, such as maodou.com, taoche.com,51auto, Uxin, Guazi and Renrenche, as we develop our auto e-commerce business. Our auto finance business faces competition from other auto financecompanies, such as Yixin. In addition, we also face competition from companies engaged in social media business, such as Jinri Toutiao and Tencent.Competition will be centered on factors similar to those affecting our current media services and leads generation services, primarily centered on increasinguser reach, user engagement and brand recognition, relationships with the suppliers, and attracting and retaining advertisers or customers, among otherfactors. For our transaction business, as online automobile transaction is a relatively new business model and consumers in China might be accustomed tomake automobile purchases with traditional dealerships, we cannot guarantee that the automobile consumers in China will accept such business model. See“Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—We face significant competition, and if we fail to competeeffectively, we may lose market share and our business, prospects and results of operations may be materially and adversely affected.”SeasonalityOur quarterly revenues and other operating results have fluctuated in the past and may continue to fluctuate depending upon a number of factors, manyof which are beyond our control. Our business experiences seasonal variations in association with the demand for automobiles in China. For example, the firstquarter of each year generally contributes the lowest portion of our annual net revenues primarily due to a slowdown in business activities around and duringthe Chinese New Year holiday, which occurs during the period. Consequently, our results of operations may fluctuate from quarter to quarter. As each of ourbusiness lines may have different seasonality factors and the mix of our revenue sources may shift from year to year, our past performance may not beindicative of future trends. See also “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—Our business is subject tofluctuations, which makes our results of operations difficult to predict and may cause our quarterly results of operations to fall short of expectations.” 46Table of ContentsLegal ProceedingsFrom time to time, we may be subject to various claims and legal actions that arise in the ordinary course of our business. There are currently no legalproceedings that, in the opinion of our management, may have a material adverse effect on our business and results of operations.PRC RegulationThis section summarizes the principal PRC laws and regulations relevant to our business and operations.Regulations on Value-Added Telecommunications ServicesOn September 25, 2000, the State Council promulgated the Telecommunications Regulations, or the Telecom Regulations, which draw a distinctionbetween “basic telecommunication services” and “value-added telecommunications services.” The Telecommunications Regulations were subsequentlyrevised on July 29, 2014 and on February 6, 2016. On December 28, 2015, the MIIT published the Classification Catalogue of Telecommunications Services(the 2015 Catalogue), which took effect on March 1, 2016. The first catalogue was published in September 2000 and was subsequently amended in 2001 and2003, respectively. Under the 2015 Catalogue, “value-added telecommunication services” was further classified into two sub-categories and 10 items.Internet content provision services, or ICP services, is under the second subcategory of value-added telecommunications businesses. Under the TelecomRegulations, commercial operators of value-added telecommunications services must first obtain an operating license from the MIIT or its provincial levelcounterparts.On September 25, 2000, the State Council issued the Administrative Measures on Internet Information Services, or the Internet Measures. The measureswere subsequently revised on January 8, 2011. According to the Internet Measures, commercial ICP service operators must obtain an ICP license from therelevant government authorities before engaging in any commercial ICP operations within the PRC.On March 1, 2009, the MIIT promulgated the Administrative Measures on Telecommunications Business Operating License, or the Telecom LicenseMeasures, which took effect on April 10, 2009. The measures were subsequently revised on September 1, 2017. The Telecom License Measures set forth thetypes of licenses required to operate value-added telecommunications services and the qualifications and procedures for obtaining such licenses. Forexample, an ICP operator providing value-added services in multiple provinces is required to obtain an inter-regional license, whereas an ICP operatorproviding the same services in one province is required to obtain a local license.To comply with these PRC laws and regulations, both of our ICP operators, Autohome Information and Shengtuo Hongyuan, hold ICP licenses.Autohome Information also holds a value-added telecommunications business operation license for provision of mobile network information services.Restrictions on Foreign Ownership in Value-Added Telecommunications ServicesAccording to the Provisions on Administration of Foreign Invested Telecommunications Enterprises, or the FITE Provisions, promulgated by the StateCouncil on December 11, 2001 and amended on September 10, 2008 and February 6, 2016, respectively, the ultimate foreign equity ownership in a value-added telecommunications service provider must not exceed 50%. Moreover, for a foreign investor to acquire any equity interest in a value-addedtelecommunication business in China, it must demonstrate a good track record and experience in operating value-added telecommunications services.Foreign investors that meet these requirements must obtain approvals from the MIIT and the Ministry of Commerce or its authorized local branches, and therelevant approval application process usually takes six to nine months. 47Table of ContentsOn July 13, 2006, the MIIT issued the Notice of the MIIT on Intensifying the Administration of Foreign Investment in Value-addedTelecommunications Services. This notice prohibits domestic telecommunication service providers from leasing, transferring or selling telecommunicationsbusiness operating licenses to any foreign investor in any form, or providing any resources, sites or facilities to any foreign investor for their illegal operationof a telecommunications business in China. According to this notice, either the holder of a value-added telecommunication business operating license or itsshareholders must legally own the domain names and trademarks used by such license holders in their provision of value-added telecommunication services.The notice further requires each license holder to have the necessary facilities, including servers, for its approved business operations and to maintain suchfacilities in the regions covered by its license. In addition, all value-added telecommunication service providers are required to maintain network and internetsecurity in accordance with the standards set forth in relevant PRC regulations. If a license holder fails to comply with the requirements in the notice and curesuch non-compliance, the MIIT or its local counterparts have the discretion to take measures against such license holders, including revoking their valued-added telecommunication business operating licenses.To comply with these PRC regulations, we operate our websites through our VIEs, Autohome Information and Shengtuo Hongyuan. Each of AutohomeInformation and Shengtuo Hongyuan is currently 50% owned by Min Lu and 50% owned by Haiyun Lei, both of whom are PRC citizens. Both AutohomeInformation and Shengtuo Hongyuan hold ICP licenses.Regulations on Internet Content ServicesThe National People’s Congress has enacted laws with respect to maintaining the security of internet operation and internet content. According to theAdministrative Measures for Internet Information Services, or the Internet Information Services Measures, which was issued by the State Council and becameeffective on January 8, 2011, violators may be subject to penalties, including criminal sanctions, for internet content that: • opposes the fundamental principles stated in the PRC constitution; • compromises national security, divulges state secrets, subverts state power or damages national unity; • harms the dignity or interests of the state; • incites ethnic hatred or racial discrimination or damages inter-ethnic unity; • undermines the PRC’s religious policy or propagates heretical teachings or feudal superstitions; • disseminates rumors, disturbs social order or disrupts social stability; • disseminates obscenity or pornography, encourages gambling, violence, murder or fear or incites the commission of a crime; • insults or slanders a third party or infringes upon the lawful rights and interests of a third party; or • is otherwise prohibited by law or administrative regulations.In accordance with the Internet Information Services Measures, ICP operators are required to monitor their websites. They may not post or disseminateany content that falls within these prohibited categories and must remove any such content from their websites. The PRC government may order ICPoperators to suspend their operations, or revoke their ICP licenses if such ICP license holders violate any of the above-mentioned content restrictions.On February 4, 2015, the China Internet Network Information Center promulgated the Administrative Provisions on Account Names of Internet Users,or the Account Names Provisions, which became effective as of March 1, 2015. The Account Name Provisions require all users of internet information serviceproviders to authenticate their real identity information for registration of accounts. Relevant internet information service providers are responsible for theprotection of users’ privacy, consistency of user information, such as account names, avatars, the requirements contemplated in the Account NamesProvisions, making reports to the competent authorities regarding any violation of the Account Names Provisions, and taking appropriate measures to stopany such violations, such as notifying the user to make corrections within a specified time and suspending or closing accounts in the event of continuingnon-compliance. 48Table of ContentsOn August 25, 2017, the Cyberspace Administration of China promulgated the Administrative Provisions on Internet Follow-up Comment Servicesand the Administrative Provisions on Internet Forum and Community Services, both of which became effective as of October 1, 2017. As stipulated in theProvisions, the internet follow-up comment service providers are imposed on strict primary obligations such as verifying the authenticity of registered users’identity information, protecting personal information of users and developing system to review follow-up comments on news information prior to thepublication. Moreover, the internet forum and community services providers may establish the systems of information review, real-time public informationcheck, emergency response, personal information protection and other information security administration systems. In addition, the service providers shouldnot publish information in violation of laws, regulations and the relevant provisions of the state.On September 7, 2017, the Cyberspace Administration of China promulgated the Provisions on the Administration of Information Services Providedthrough Chat Groups on the Internet, or the Chat Groups Provision, and the Administrative Provisions on the Information Services Provided through PublicOfficial Accounts of Internet Users, or the Public Official Accounts Provision, both of which became effective as of October 8, 2017. According to theProvisions, the internet service providers are required to verify the authenticity of identity information of their users. In addition, for any violation of lawsand regulations by chat groups or public official accounts, service providers should take certain measures such as issuing a warning, suspending publicationof the inappropriate information, and closing the chat groups or the public official accounts.These laws and regulations apply to the Internet content services we provide through our VIEs and impose responsibilities on the VIEs for monitoringthe websites, mobile applications and users, safeguarding the security of the internet as well as maintaining the internet content.Regulations on Internet PrivacyIn recent years, PRC government authorities have enacted legislation on internet use to protect personal information from any unauthorized disclosure.The PRC law does not prohibit ICP operators from collecting and using personal information from their users with the users’ consent. However, the InternetMeasures prohibit an ICP operator from insulting or slandering a third party or infringing the lawful rights and interests of a third party. The regulationsfurther authorize the relevant telecommunications authorities to order ICP operators to rectify unauthorized disclosure. ICP operators are subject to legalliability if the unauthorized disclosure results in damages or losses to users. The PRC government, however, has the power and authority to order ICPoperators to turn over personal information if an internet user posts any prohibited content or engages in illegal activities on the internet. On December 29,2011, the MIIT promulgated the Several Provisions on Regulating the Market Order of Internet Information Services, effective as of March 15, 2012. Itstipulates that ICP operators may not, without a user’s consent, collect the user’s information that can be used alone or in combination with other informationto identify the user and may not provide any such information to third parties without the user’s prior consent. ICP operators may only collect users’ personalinformation that is necessary to provide their services and must expressly inform the users of the method, content and purpose of the collection and use ofsuch personal information. In addition, an ICP operator may only use users’ personal information for the stated purposes under the ICP operator’s scope ofservice. ICP operators are also required to ensure the proper security of users’ personal information, and take immediate remedial measures if users’ personalinformation is suspected to have been inappropriately disclosed. If the consequences of any such disclosure are expected to be serious, ICP operators mustimmediately report the incident to the telecommunications regulatory authority and cooperate with the authorities in their investigations.On December 28, 2012, the Standing Committee of the National People’s Congress of the PRC issued the Decision on Strengthening the Protection ofOnline Information. Most requirements under this decision relevant to ICP operators are consistent with the requirements already established under the MIITprovisions discussed above, but are often stricter and broader. Under this decision, ICP operators are required to take such technical and other measuresnecessary to safeguard information against inappropriate disclosure. To further implement this decision and relevant rules, MIIT issued the Regulation ofProtection of Telecommunication and Internet User Information on July 16, 2013, which became effective on September 1, 2013.On March 15, 2017, the Standing Committee of the National People’s Congress of the PRC issued the General Rules of the Civil Law of the People’sRepublic of China, which came into effect on October 1, 2017. The General Rules have introduced personal information rights and data protection andprovide that personal information of a natural person should be protected by the law. The acquisition of information should be conducted in compliance withlaws and regulations. The organizations and individuals who require personal information of others should neither illegally collect, utilize, process ortransmit personal information of others nor illegally sell or buy, provide to others or make public the personal information of others. 49Table of ContentsThe Cyber Security Law of the People’s Republic of China became effective on June 1, 2017. According to the Cyber Security Law, network operatorsshould, in the course of collecting and using personal information, follow the principles of legitimacy, properness and necessity, disclose their rules withrespect to data collection and usage, clearly express the purposes, means and scope of collecting and using information. Prior consent from the persons whosedata is collected is required. In addition, network operators are not allowed to collect personal information which is irrelevant to the services they provide.To comply with these laws and regulations, we require our users to accept a user terms of service whereby they agree to provide certain personalinformation to us, and have established information security systems to protect users’ privacy.Regulations on AdvertisementsThe PRC government regulates advertising, including online advertising, principally through the SAIC, although there is no PRC law or regulation atthe national level that specifically regulates the online advertising business. Prior to November 30, 2004, in order to conduct any advertising business, anenterprise was required to hold an operating license for advertising in addition to a relevant business license. On November 30, 2004, the SAIC issued theAdministrative Rules for Advertising Operation Licenses, effective as of January 1, 2005, which was replaced by Administrative Provisions on AdvertisingRegistration issued on November 1, 2016 and took effect on December 1, 2016. The advertisement operation entities are restricted to radio stations, TVstations and newspaper and periodical publishers and the Advertising Operation License was cancelled. Therefore, our subsidiaries and VIEs are not requiredto hold an advertising operation license.Before we acquired Autohome Media (formerly known as Prbrownies Marketing Limited) in October 2013, we conducted our advertising businessthrough two subsidiaries of Autohome Information, namely Autohome Advertising and Chengshi Advertising, Shanghai Advertising and GuangzhouAdvertising due to the previous restrictions on foreign investors holding direct equity interests in PRC advertising companies. In October 2013, AutohomeHK acquired Autohome Media, a Hong Kong advertising and marketing company. Autohome Media has established subsidiaries in Beijing, Shanghai,Guangzhou, Tianjin, Chengdu and Huai’an. We have migrated our advertising business from Autohome Advertising, Chengshi Advertising, ShanghaiAdvertising and Guangzhou Advertising, to the subsidiaries of Autohome Media in 2015.Advertisers, advertising operators and advertising distributors are required by PRC advertising laws and regulations to ensure that the content of theadvertisements they produce or distribute are true and in full compliance with applicable laws and regulations. In addition, where a special governmentreview is required for certain categories of advertisements before publishing, the advertisers, advertising operators and advertising distributors are obligatedto confirm that such review has been duly performed and that the relevant approval has been obtained. Violation of these regulations may result in penalties,including fines, confiscation of advertising income, orders to cease dissemination of the advertisements and orders to publish an advertisement correcting themisleading information. In circumstances involving serious violations, the SAIC or its local branches may order the violator to terminate its advertisingoperation or even revoke its business license. Furthermore, advertisers, advertising operators or advertising distributors may be subject to civil liabilities ifthey infringe on the legal rights and interests of third parties.On April 24, 2015, the Standing Committee of the National People’s Congress issued the PRC Advertising Law or the Advertising Law, which cameinto effect on September 1, 2015. The Advertising Law applies to all advertising activities conducted via the internet. The Advertising Law requires thatusers must be able to close online pop-up ads with one click. Moreover, internet service providers are obligated to cease publishing any advertisements thatthey know or should know are illegal. Violation of these regulations may result in penalties, including fines, confiscation of the advertising incomes,termination of advertising operations and even suspension of the provider’s business license. 50Table of ContentsOn July 4, 2016, the SAIC issued the Interim Measures for the Administration of Internet Advertising or the Internet Advertising Measures, which cameinto effect as of September 1, 2016. All advertising activities by means of the internet are governed by the Advertising Law and the Internet AdvertisingMeasures. Pursuant to the Internet Advertising Measures, the term “Internet Advertisement” shall mean commercial advertisement that promote commoditiesor services, directly or indirectly, via Internet media such as websites, webpages and internet application programs in the form of texts, pictures, audios,videos or other forms, including the advertisement containing a web link or links, e-mail advertisement, paid search advertisements, and advertisementscontained in commercial presentations that promote commodities or services, etc. The Internet Advertising Measures require that an internet advertisementshall be identifiable and clearly identified as an “advertisement” so that users will tell it is an advertisement, and the following activities shall be prohibited:(i) providing or using any application programs or hardware to intercept, filter, cover, fast forward or otherwise restrict any authorized advertisement of otherpersons; (ii) using network pathways, network equipment or applications to disrupt the normal data transmission of advertisements, alter or block authorizedadvertisements of other persons or load advertisements without authorization; or (iii) using false statistical data, transmission effect or internet medium valueto induce incorrect quotations, seek undue interests or damage the interests of other persons.Pursuant to the Internet Advertising Measures, the punishments on illegal acts shall be administered by the local administrative authority for industryand commerce (“AIC”) in the place where the advertisement publisher is located. However, if an advertiser or advertising agent who violates the AdvertisingLaw or the Internet Advertising Measures is outside the jurisdiction of the local AIC of the advertisement publisher, such case may be referred to the localAIC where the advertiser or advertising agent is located; in the event that the local AIC in the place where the advertiser or advertising agent is located hasdiscovered any clues or received complaints or reports about such illegal acts, they may also exercise the administration. For any illegal advertisementspublished by advertisers themselves, such case shall be administered by the local AIC where the advertisers are located.To comply with these laws and regulations, we include clauses in our advertising contracts requiring that all advertising content provided byadvertisers must comply with relevant laws and regulations. Prior to posting on websites and mobile applications, our staff reviews advertising materials toensure there is no violent, pornographic or any other improper content, and will request the advertiser to provide government approval if the advertisement issubject to special government review.Regulations on Broadcasting Audio/Video Programs through the InternetOn July 6, 2004, the SARFT promulgated the Rules for the Administration of Broadcasting of Audio/Video Programs through the Internet and OtherInformation Networks, or the A/V Broadcasting Rules, which were replaced by Provisions on the Administration of Private Network and TargetedCommunication Audio-visual Program Services which took effect on June 1, 2016. For an entity that engages in content delivery, integrated broadcastcontrol, transmission distribution and other private network and targeted communication to send audio-visual program service, an “Internet Audio/VideoProgram Transmission License” is required.On April 13, 2005, the State Council announced Several Decisions on Investment by Non-state-owned Companies in Culture-related Business inChina. These decisions encourage and support non-state-owned companies to enter certain culture-related business in China, subject to restrictions andprohibitions for investment in audio/video broadcasting, website news and certain other businesses by non-state-owned companies. These decisionsauthorize the SARFT, the Ministry of Culture and the GAPP to adopt detailed implementation rules according to these decisions.On December 20, 2007, the SARFT and the MIIT jointly issued the Rules for the Administration of Internet Audio and Video Program Services,commonly known as Circular 56, which came into effect as of January 31, 2008 and was amended in August, 2015. Circular 56 reiterates the requirement setforth in the A/V Broadcasting Rules that online audio/video service providers must obtain an “internet audio/video program transmission license” from theSARFT. Furthermore, Circular 56 requires all online audio/video service providers to be either wholly state-owned or state-controlled companies. Accordingto relevant official answers to press questions published on the SARFT’s website dated February 3, 2008, officials from the SARFT and the MIIT clarified thatonline audio/video service providers that already had been operating lawfully prior to the issuance of Circular 56 may re-register and continue to operatewithout becoming state-owned or controlled, provided that such providers have not engaged in any unlawful activities. This exemption will not be grantedto online audio/video service providers established after Circular 56 was issued. These policies have been reflected in the Application Procedure forAudio/Video Program Transmission License. Failure to obtain the internet audio/video program transmission license may subject an online audio/videoservice provider to various penalties, including fines of up to RMB30,000, seizure of related equipment and servers used primarily for such activities andeven suspension of its online audio/video services. 51Table of ContentsTo comply with these laws and regulations, Autohome Information obtained an internet audio/video program transmission license on February 9,2010, which has been renewed on February 13, 2018, for automotive-industry-information-related audio/video programs posted on our autohome.com.cnwebsite and relevant mobile applications.Regulations on Producing Audio/Video ProgramsOn July 19, 2004, the SARFT promulgated the Administrative Measures on the Production and Operation of Radio and Television Programs, effectiveas of August 20, 2004. On August 28, 2015, State Press and Publication of the General Administration of Radio and Television Decree No. 3 was issued toamend some provisions of the aforesaid Measures. These Measures provide that anyone who wishes to produce or operate radio or television programs mustfirst obtain an operating permit. Applicants for this permit must meet several criteria. Both Autohome Information and Shengtuo Hongyuan hold operatinglicenses for the production and dissemination of radio and television programs for special topic programs, cartoons and television variety shows.Regulations on Internet Mapping ServicesAccording to the amended Notice on Printing and Distributing Regulations on the Management of Surveying and Mapping Qualification and Standardof Surveying and Mapping Qualification Classification issued by the National Administration of Surveying, Mapping and Geoinformation, or NASMG, inJuly 2014, an entity providing internet mapping services should apply for the Surveying and Mapping Qualification Certificate for Surveying and Mapping,and perform within the scope of the certificate. According to these rules, certain conditions and requirements, such as the number of technical personnel andmap security verification personnel, security facilities and approval from relevant provincial or national government on the service provider’s securitysystem, qualification management and filings management, are necessary for an entity applying for a Surveying and Mapping Qualification Certificate.Pursuant to the Notice on Further Strengthening the Administration of Internet Map Services Qualification issued by the NASMG in December 2011, anyentity that has not yet applied for a surveying qualification certificate for internet mapping services is prohibited from providing any internet mappingservices.On November 26, 2015, the State Council enacted the Administrative Regulations on Maps, or the Maps Regulations, effective as of January 1, 2016.The Maps Regulations requires entities engaging in internet mapping services, such as geographic positioning, the uploading of geographic information ormarkings, and the development of a public map database, to obtain a relevant qualification certificate for surveying and mapping. The Maps Regulationsrequire entities engaging in online map services to use mapping data approved by the relevant governmental authorities, host servers storing map data withinthe PRC, and establish a management system as well as protection measures for the data security of the online maps. The mapping data must not contain anycontent prohibited by the Maps Regulations, and no entities or individuals are allowed to upload or mark such prohibited content online. Further, entitiesengaging in internet mapping services shall keep confidential any information involving state secrets and trade secrets acquired during their work.We have provided maps on our websites and mobile applications for the convenience of our users to locate certain service providers. Both AutohomeInformation and Shengtuo Hongyuan hold the Surveying and Mapping Qualification Certificate for internet mapping. 52Table of ContentsRegulations on Online Cultural ServicesOn February 17, 2011, the Ministry of Culture promulgated the Interim Administrative Provisions on Internet Culture, which became effective onApril 1, 2011 and replaced the original measures promulgated in 2003 and amended in 2004. On December 15, 2017, the Decision of the Ministry of Cultureon the Revision or Abolishment of Certain Administrative Provisions was issued to amend some articles of the aforesaid provisions. The InterimAdministrative Provisions on Internet Culture require ICP operators engaged in “internet culture activities” to obtain an Internet Culture Business Permitfrom the provincial administration of culture. The term “internet culture activities” includes, among other things, online dissemination of internet culturalproducts (such as audio-video products, gaming products, performances of plays or programs, works of art and cartoons) and the production, reproduction,importation, publication and broadcasting of internet cultural products.Autohome Information has applied for and obtained an Internet Culture Business Permit in January 2013, and we have renewed our permit to include“use of information network to operate music entertainment products, game products, performance drama (section), performance.”Regulations on Online Performances and Online Live-streaming ServicesOn December 2, 2016, the Ministry of Culture issued the Administrative Measures for Business Activities of Online Performances, which took effect onJanuary 1, 2017. Under these measures, an operator of online performances conducting the business activities of online performances shall apply for anInternet Culture Business Permit with the competent provincial administrative cultural department, and the business scope indicated on the permit shallclearly include reference to online performances. An operator of online performances undertakes the primary responsibility for the business activities ofonline performances operated by it, and shall establish a content review and management system, arrange staff with corresponding qualifications to undertakethe work of reviewing the performance content, and establish technical supervision measures adaptable to content management in accordance with relevantlaws and regulations.The Provisions on the Administration of Online Live Streaming Services was issued by the State Internet Information Office on November 4, 2016 andwas effective on December 1, 2016. Under the provisions, those who provide online live-streaming services through online performances, internet video andaudio programs, and so forth, shall obtain relevant qualifications as required by laws and regulations. Online live streaming service providers shall carry outentity responsibilities, equip professionals comparable to the service scale, and improve systems for information review, information security management,duty patrols, emergency response, and technical guarantee. Online live streaming service providers shall establish platforms for reviewing live streamingcontent. Online live streaming service providers and online live streaming publishers that provide internet news information services without licenses, orexceeding the scope of their licenses, are subject to punishment. For other violations of these provisions that are subject to punishment by the national andlocal Internet information offices in accordance with law; if a crime is constituted, criminal liability shall be investigated in accordance with law. Violationsof the relevant laws and provisions in providing online live streaming services through Internet performances, online audio and visual programs and so forthare subject to punishment by the relevant departments in accordance with law.Currently we are providing online live-streaming services through autohome.com.cn website. Autohome Information has obtained an internetaudio/video program transmission license on February 9, 2010, which has been renewed on February 13, 2018 and will remain effective until February 13,2021. In addition, in January 2013, Autohome Information has obtained an Internet Culture Business Permit, which includes “use of information network tooperate music entertainment products, game products, performance drama (section), performance.”Regulations on Internet PublishingThe Administrative Provisions on Online Publishing Services, or the Online Publishing Provisions, was jointly issued by the MIIT and the StateGeneral Administration of Press, Publication, Radio, Film and Television in 2016, and came into effect on March 10, 2016. The Online Publishing Provisionsdefine “online publishing services” as providing online publications to the public through information networks. Any online publishing services provided inthe territory of the PRC are subject to these provisions. The Online Publishing Provisions requires any internet publishing services provider to obtain anonline publishing service license to engage in online publishing services. Under the Online Publishing Provisions, online publications refers to digital workswhich have publishing features such as digital work that have been edited, produced or processed and which are made available to the public throughinformation networks, including written works, pictures, maps, games, cartoons, audio/video reading materials and other methods. Any online game shallobtain approval from SAPPRFT before it is launched online. Furthermore, Sino-foreign equity joint ventures, Sino-foreign cooperative joint ventures andwholly foreign-owned enterprises cannot engage in providing web publishing services. 53Table of ContentsBased on a consultation we had with the local press and publication administration authority, we believe we are not required to obtain the internetpublishing license as the activities we engage in on our websites and mobile applications do not constitute “internet publishing activities,” as such term isused in the Online Publishing Provisions. We are also not aware of companies with an operation similar to ours that have obtained or been required to obtainthe internet publishing license. As a result, both Autohome Information and Shengtuo Hongyuan have not applied for such internet publishing approval.However, in the event that our activities are deemed to be “internet publishing,” we may be required to obtain approval from GAPP. If we are deemed to be inbreach of relevant internet publishing regulations, the PRC regulatory authorities may seize the related equipment and servers used primarily for suchactivities and confiscate any revenues generated from such activities. In addition, relevant PRC authorities may also impose a fine of five to ten times of anyrevenues exceeding RMB10,000 or a fine of not more than RMB50,000 if such related revenues are below RMB10,000.Regulations on Internet News Information ServiceOn May 2, 2017, the Cyberspace Administration of China issued the Provisions for the Administration of Internet News Information Services, orInternet News Provision, which became effective on June 1, 2017 and replaced the original provisions promulgated in 2005.Internet news information services shall include service of collecting, editing and publishing internet news information, service of reposting andservice of providing propagation platform. Under the Internet News Provision, internet news service providers shall also include entities that are notestablished by the press but reproduce internet news from other sources, provide electronic bulletin services on current and political events, and transmit suchinformation to the public. The Cyberspace Administration of China shall be in charge of the supervision and administration of the internet news informationservices throughout China.If we release information that may be deemed by authorities as internet news, we may be required to obtain the internet news information servicelicense. However, we have consulted the relevant government authorities and have been informed that we would not be required to obtain the internet newsreleasing license because the internet news posted on our websites and mobile applications is only automotive industry related news which is not political innature or related to macroeconomics. However, if any of the internet news posted on our websites and mobile applications is deemed by the government to bepolitical in nature, related to macroeconomics, or otherwise requires such license based on the sole discretion of the government authority, we would need toapply for such license. If we are deemed to be in breach of the Internet News Provision or other relevant internet news releasing regulations, the PRCregulatory authorities may suspend our information release activities and impose a fine exceeding RMB10,000 but not more than RMB30,000. In seriouscases, the PRC regulatory authorities may even suspend the internet service or internet access.Regulations on E-commerceChina’s e-commerce industry is at an early stage of development and there are few PRC laws or regulations specifically regulating the e-commerceindustry. In January 2014, the SAIC promulgated the Administrative Measures for Online Trading, which strengthen the protection of consumers and imposestringent requirements and obligations on online business operators and third-party online marketplace operators. Online business operators and third-partyonline marketplace operators are prohibited from collecting any information on consumers and business operators or disclosing, selling or providing anysuch information to any third party, or sending commercial electronic messages to consumers without their consent. Fictitious transactions, deletion ofadverse comments and technical attacks on competitors’ websites are prohibited as well. In addition, third-party online marketplace operators are required toexamine and verify the identifications of the online business operators and set up and retain relevant records for at least two years. For corporations, othereconomic organizations or individual-owned business that apply to enter the platforms to sell commodities or to provide services, the operators of the third-party trading platforms should examine the authenticity of the identities of the online business operators, register such operators and establish registrationfiles with regular verification and update, and should disclose the information about their business licenses or place the electronic linkage identifiers of theirbusiness licenses at notable positions of the homepages where they conduct their business activities. We are subject to these measures as a result of our onlineplatform services. 54Table of ContentsForeign investors were not allowed to own more than 50% of the equity interests in e-commerce companies which is a subcategory of value-addedtelecommunication services, and any such foreign investor must have experience in providing value-added telecommunications services overseas andmaintain a good track record, except for foreign investors in China (Shanghai) Pilot Free Trade Zone, subject to certain conditions. The NDRC and theMinistry of Commerce jointly issued the Catalogue for the Guidance of Foreign Investment Industries in March 2015, or the Catalogue, which further relaxesmarket access through regulatory reforms such as allowing foreign investors to have complete ownership of equity interests in e-commerce businesses. TheCatalogue took effect on April 10, 2015.Currently, we primarily cooperate with independent automobile sellers to facilitate their sales of automobiles through our e-commerce platforms.Regulations on Mobile Internet ApplicationsOn June 28, 2016, Cyberspace Administration of China promulgated the Administrative Provisions on Mobile Internet Applications InformationServices, or the Mobile Application Administrative Provisions, which took effect on August 1, 2016. According to the Mobile Application AdministrativeProvisions, “mobile internet application” refers to application software that runs on mobile smart devices providing information services after beingpre-installed, downloaded or embedded through other means. “Mobile internet application provider” refer to the owners or operators of mobile internetapplications. Internet application stores refer to platforms which provide services related to online browsing, searching and downloading of applicationsoftware and releasing of development tools and products through the internet. On December 16, 2016, the MIIT promulgated the Interim AdministrativeProvisions on the Pre-installation and Distribution of the Mobile Smart Terminal Application Software, which took effect on July 1, 2017 and requires,among others, that internet information service providers must ensure that a mobile application, as well as its ancillary resource files, configuration files anduser data can be uninstalled by a user easily, unless the mobile application is a basic function software, which refers to a software that supports the normalfunctioning of the hardware and operating system of a mobile smart device. In addition, mobile smart terminal application software involving charges shouldstrictly comply with the relevant regulations such as sale at an expressly marked price, and express the charge standard and method. The content expressedshould be true, accurate, eye-catching and normative, and users should be charged only after their confirmation.Pursuant to the Mobile Application Administrative Provisions, an internet application program provider must verify a user’s mobile phone number andother identity information under the principle of mandatory real name registration at the back-office end and voluntary real name display at the front-officeend. An internet application provider must not enable functions that can collect a user’s geographical location information, access user’s contact list, activatethe camera or recorder of the user’s mobile smart device or other functions irrelevant to its services, nor is it allowed to conduct bundle installations ofirrelevant application programs, unless it has clearly indicated to the user and obtained the user’s consent on such functions and application programs. Inrespect of an internet application service provider, the Mobile Application Administrative Provisions requires that, among others, it must file a record withthe local authority within 30 days after it rolls out the internet application service online. It must also examine the authenticity, security and legality ofinternet application providers on its platform, establish a system to monitor application providers’ credit and file a record of such information with relevantgovernmental authorities. If an application provider violates the regulations, the internet application store service provider must take measures to stop theviolations, including warning, suspension of release, withdrawal of the application from the platform, keeping a record and reporting the incident to therelevant governmental authorities. 55Table of ContentsRegulations on Foreign Investment in the Leasing IndustryOn September 18, 2013, the Ministry of Commerce enacted the Circular of the Ministry of Commerce on Printing and Distributing the AdministrativeMeasures of Supervision on Financial Leasing Enterprises, or the Circular No. 337, which became effective as of October 1, 2013. Circular No. 337 stipulatesthat the financial leasing enterprises in China shall be supervised and managed by the Ministry of Commerce, while the provincial competent departments ofcommerce shall supervise the financial leasing enterprises within their administrative regions. The financial leasing enterprises may, in accordance with theprovisions of relevant laws, regulations and rules, carry out the financial leasing businesses in such forms as direct lease, sublease, sale-and- lease-back,leveraged lease, entrusted lease and joint lease. The financial leasing enterprises shall take the leasing businesses such as financial leasing as their principalbusinesses while carrying out businesses in relation thereto such as the purchase of leased property, disposal of the residual value of assets underlying theleases and maintenance of assets underlying the leases, leasing transaction consultancy and guaranty services, transferring receivables to a third party,accepting rental deposit and other businesses approved by the authorities. However, under Circular No. 337, financial leasing enterprises are not allowed tocarry out illegal fund-raising activities in the name of financing lease as well as engage in financial business such as accepting deposits, and providing loansor entrusted loans. Moreover, financial leasing enterprises shall not engage in inter-bank borrowing and other businesses without the approval from relevantauthorities.The Financing JV primarily engages in auto financial leasing business. In September 2017, we entered into a definitive agreement to transfer all equityinterest we held in the Financing JV to a company unaffiliated to us. As of the date of this annual report, the transaction has not been consummated and issubject to a set of regulatory and customary closing conditions to be satisfied.Regulations on Automobile SalesOn April 5, 2017, the Ministry of Commerce promulgated the Measures on the Administrations of Automobile Sales, or the Measures on AutomobileSales, which took effect on July 1, 2017 and replaced the original Branded Automobile Sales Measures promulgated in 2005. According to the Measures onSales of Automobile, the supplier takes the way of selling the vehicle to the dealer, and the authorization term (excluding the shop construction term) shallnot be less than 3 years, and the first authorization term shall not be less than 5 years. An independent automobile seller who sells an automobile withoutauthorization from a supplier or an automobile which is not authorized to be sold by an automobile manufacturer outside the country shall provide areminder and explanation to the consumer in writing and inform the consumer of the relevant responsibility in writing. When a dealer or an independentautomobile seller sells the car to the consumer, it shall verify the identification of the registered consumer, sign the sales contract, and issue the sales invoice.The Measures on Sales of Automobile further provides that a supplier shall not require its dealers to have sales, after-sales service and other functions atthe same time, shall not restrict its dealers’ operations of goods of other suppliers, and shall not restrict the dealers from providing parts or other after-salesservices for automobiles of other suppliers. Except as otherwise agreed by the parties, a supplier shall not sell automobiles directly to consumers in the areawhere its dealer is authorized to sell.As regards to information recording, the Measures on Sales of Automobile requires the suppliers or the dealers and independent automobile sellers tofile their basic information at the State Council department in charge of the national automobile circulation information management system within 90 daysafter obtaining their respective business license. If the basic information of a supplier, a dealer or an independent automobile seller is changed, it shallcomplete the updated filing within 30 days from the date of the change. The basic information of the supplier, the dealer or the independent automobileseller, if it is established before the Measures, should be filed within 90 days from the date that the Measures took effect. The file of automobile sales, usersand other information shall be kept by the dealer and independent automobile seller for no less than 10 years.Currently, we provide a transaction platform for automobile buyers to liaise with third-party sellers on our platform and to purchase vehicles from suchsellers. 56Table of ContentsRegulations on Insurance Brokerage BusinessIn April 2015, the Standing Committee of the National People’s Congress promulgated the Insurance Law of PRC. In October 2015, the CIRCpromulgated the Provisions on the Supervision and Administration of Insurance Brokers, or the Insurance Brokers Provisions. The Insurance BrokersProvisions define insurance brokers as institutions which provide intermediary services, in favor of the insured, in the course of concluding insurancecontracts between the insured and the insurance companies and charge certain commission as agreed. Pursuant to the Insurance Law and Insurance BrokersProvisions, a license for engaging in insurance brokerage businesses is required in the course of setting up an insurance brokerage company. The companieswhich intend to provide insurance brokerage service should meet certain requirements set up by the CIRC and should not conduct insurance brokeragebusiness unless the aforesaid license is received.In July 2015, the CIRC promulgated the Circular of the CIRC on Issuing the Interim Measures for the Supervision of Internet Insurance Business, orCIRC Circular 69, which became effective on October 1, 2015. CIRC Circular 69 sets up strict restrictions on the institutions allowed to conduct internetinsurance business. CIRC Circular 69 stipulates that only insurance companies and professional insurance intermediaries established upon approval byinsurance regulatory authorities and registered could provide internet insurance services. Simultaneously, CIRC Circular 69 sets up certain requirements forproviding insurance services through self-operated online platforms or platforms operated by third parties.In September 2017, we have acquired Shanghai Tianhe Insurance Brokerage Co., Ltd., or Shanghai Tianhe, which is holding the license for engagingin insurance brokerage businesses. Shanghai Tianhe is currently conducting offline insurance brokerage business and might engage in online insurancebusiness in the future.Regulations on Intellectual Property RightsChina has adopted legislation governing intellectual property rights, including trademarks, patents and copyrights. China is a signatory to the majorinternational conventions on intellectual property rights and became a member of the Agreement on Trade Related Aspects of Intellectual Property Rightsupon its accession to the World Trade Organization in December 2001.Patent. The National People’s Congress adopted the Patent Law in 1984, and amended it in 1992, 2000 and 2008. The purpose of the Patent Law is toprotect lawful interests of patent holders, encourage invention, foster applications of inventions, enhance innovative capabilities and promote thedevelopment of science and technology. To be patentable, invention or utility models must meet three conditions: novelty, inventiveness and practicalapplicability. Patents cannot be granted for scientific discoveries, rules and methods for intellectual activities, methods used to diagnose or treat diseases,animal and plant breeds, substances obtained by means of nuclear transformation or a design which has major marking effect on the patterns or colors ofgraphic print products or a combination of both patterns and colors. The Patent Office under the State Intellectual Property Office is responsible for receiving,examining and approving patent applications. A patent is valid for a term of twenty years in the case of an invention and a term of ten years in the case ofutility models and designs. A third-party user must obtain consent or a proper license from the patent owner to use the patent. Otherwise, the use constitutesan infringement of patent rights. We had 119 pending patent applications and 73 registered patents as of December 31, 2017.Copyright. The National People’s Congress adopted the Copyright Law in 1990 and amended it in 2001 and 2010, respectively. The amendedCopyright Law extends copyright protection to internet activities, products disseminated over the internet and software products. In addition, there is avoluntary registration system administered by the China Copyright Protection Center. The amended Copyright Law also requires registration of a copyrightpledge.To address the problem of copyright infringement related to the content posted or transmitted over the internet, the National Copyright Administrationand the MIIT jointly promulgated the Measures for Administrative Protection of Internet Copyright on April 29, 2005. This measure became effective onMay 30, 2005. 57Table of ContentsIn order to further implement the Computer Software Protection Regulations promulgated by the State Council on December 20, 2001, as amended in2013, the National Copyright Administration of the PRC issued Computer Software Copyright Registration Procedures on February 20, 2002, which apply tosoftware copyright registration, license contract registration and transfer contract registration.In compliance with, and in order to take advantage of, the above rules, we have registered 204 computer software copyrights as of December 31, 2017.On May 18, 2006, the State Council promulgated the Protection of the Right of Communication through Information Networks, which becameeffective on July 1, 2006, as amended in 2013. Under this regulation, with respect to any information storage space, search or link services provided by aninternet service provider, if the legitimate rights owner believes that the works, performance or audio or video recordings pertaining to that service infringehis or her rights of communication, the rights owner may give the internet service provider a written notice containing the relevant information along withpreliminary documents supporting that an infringement has occurred, and requesting that the internet service provider delete, or disconnect the links to, suchworks or recordings. The rights owner will be responsible for the truthfulness of the content of the notice. Upon receipt of the notice, the internet serviceprovider must delete or disconnect the links to the infringing content immediately and forward the notice to the user that provided the infringing works orrecordings. If the user believes that the subject works or recordings have not infringed upon others’ rights, the user may submit to the internet service providera written explanation with preliminary documents supporting non-infringement, and a request for the restoration of the deleted works or recordings. Theinternet service provider should then immediately restore the deleted or disconnected content and forward the user’s written statement to the rights owner.On December 26, 2009, the Standing Committee of the National People’s Congress adopted the Torts Liability Law, which became effective on July 1,2010. Under this Torts Liability Law, both internet users and internet service providers may be liable for the wrongful acts of users who infringe the lawfulrights of other parties. If an internet user utilizes internet services to commit a tortious act, the party whose rights are infringed may request the internetservice provider to take measures, such as removing or blocking the content, or disabling the links thereto. Failure to take necessary measures after receivingsuch notice will subject the internet service providers to joint liability for any further damages suffered by the rights holder. Furthermore, if an internetservice provider fails to take necessary measures when it knows that an internet user utilizes its internet services to infringe the lawful rights and interests ofother parties, it will be held jointly liable with the internet user for damages resulting from the infringement.According to an interpretation by PRC Supreme People’s Court, which took effect on January 1, 2013, internet service providers will be held jointlyliable if they continue their infringing activities or do not remove infringing content from their websites once they know of the infringement or receive noticefrom the rights holder. If an internet service provider economically benefits from the works, performances, and sound or visual recordings provided bynetwork users, it must pay close attention to infringement of network information transmission rights by network users.Trademark. The PRC Trademark Law, adopted in 1982 and amended in 1993, 2001 and 2013, protects registered trademarks. The Trademark Officeunder the SAIC handles trademark registrations and grants a term of ten years for registered trademarks. Trademark license agreements must be filed with theTrademark Office for record. We hold “汽车之家” and “车之家” (“auto home” in English) and “AUTOHOME®” trademarks in China with each registeredunder different categories.Domain Names. In September 2002, the CNNIC issued the Implementing Rules for Domain Name Registration, as amended in June 2009 and May2012, that set forth detailed rules for registration of domain names. On August 24, 2017, the MIIT promulgated the Administrative Measures for InternetDomain Names, which came into effect on November 1, 2017 and replaced the original Measures promulgated in 2004. The Domain Name Measures regulatethe registration of domain names, such as the first tier domain name “.cn.” In 2002, the CNNIC issued the Measures on Domain Name Dispute Resolution, asamended in 2006, 2012 and 2014, pursuant to which the CNNIC can authorize a domain name dispute resolution institution to decide disputes. We haveregistered a number of domain names, including autohome.com.cn, autohome.com and che168.com. 58Table of ContentsRegulations on TaxSee “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Taxation—PRC” and “Item 10. Additional Information—E.Taxation—People’s Republic of China Taxation.”Regulations on Foreign ExchangeForeign exchange activities in China are primarily governed by the following regulations: • Foreign Currency Administration Rules (2008), or the Exchange Rules; and • Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or the Administration Rules.Under the Exchange Rules, if documents certifying the purposes of the conversion of RMB into foreign currency are submitted to the relevant foreignexchange conversion bank, the RMB will be convertible for current account items, including the distribution of dividends, interest and royalties payments,and trade and service-related foreign exchange transactions. Conversion of RMB for capital account items, such as direct investment, loans, securitiesinvestment and repatriation of investment, however, is subject to the approval of, or registration with, SAFE or its local counterpart. Capital investments byPRC entities outside of China, after obtaining the required approvals of, or making filings with, the relevant approval authorities, such as the Ministry ofCommerce and the NDRC or their local counterparts, are also required to register with SAFE or its local counterpart.Under the Administration Rules, foreign-invested enterprises may only buy, sell and/or remit foreign currencies at banks authorized to conduct foreignexchange business after providing valid commercial documents and, in the case of capital account item transactions, obtaining approval from or beingregistered with SAFE or its local counterpart.In utilizing the proceeds we received from our equity offerings, as an offshore holding company with PRC subsidiaries, we may (a) make additionalcapital contributions to our PRC subsidiaries, (b) establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, (c) makeloans to our PRC subsidiaries or VIEs or (d) acquire offshore entities with business operations in China in offshore transactions. However, most of these usesare subject to PRC regulations and approvals. For example: • capital contributions to our PRC subsidiaries, whether existing or newly established, must be approved by the Ministry of Commerce or its localcounterparts; • loans by us to our PRC subsidiaries, each of which is a foreign-invested enterprise, to finance their activities cannot exceed statutory limits andmust be registered with SAFE or its local branches; and • loans by us to our VIEs, which are domestic PRC entities, must be approved by the NDRC (in the case of middle or long term loans) or be withinthe limits approved by SAFE (in the case of short term loans), and must also be registered with SAFE or its local branches. 59Table of ContentsOn March 30, 2015, SAFE issued the SAFE Circular 19, which became effective on June 1, 2015. On June 9, 2016, the SAFE issued the Circular of theState Administration of Foreign Exchange on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, orSAFE Circular 16, which revised some provisions of SAFE Circular 19. According to SAFE Circular 19 and SAFE Circular 16, the flow and use of theRenminbi capital converted from registered capital denominated in foreign currency of a foreign-invested company is regulated such that Renminbi capitalmay not be used for business beyond its business scope or to provide loans to persons other than the foreign-invested company’s affiliates unless otherwisepermitted under its business scope. Violations of SAFE Circular 19 or SAFE Circular 16 could result in administrative penalties. Pursuant to both of SAFECircular 19 and SAFE Circular 16, foreign-invested enterprises may either continue to follow the current payment-based foreign currency settlement systemor choose to follow the “conversion-at-will” system for foreign currency settlement. Where a foreign-invested enterprise follows the conversion-at-will systemfor foreign currency settlement, it may convert part or all of the amount of the foreign currency in its capital account, special account for foreign debt orspecial account for overseas listing into Renminbi at any time. The converted Renminbi will be kept in a designated account labeled as settled but pendingpayment, and if the foreign-invested enterprise needs to make payment from such designated account, it still needs to go through the review process with itsbank and provide necessary supporting documents. SAFE Circular 19 and SAFE Circular 16, therefore, have substantially lifted the restrictions on the usageby a foreign-invested enterprise of its Renminbi registered capital, foreign debt and repatriated funds raised through overseas listing converted from foreigncurrencies. According to SAFE Circular 19 and SAFE Circular 16, such Renminbi capital, foreign debt and repatriated funds raised through overseas listingmay be used at the discretion of the foreign-invested enterprise and SAFE will eliminate the prior approval requirement and only examine the authenticity ofthe declared usage afterwards. Nevertheless, it is still not clear whether foreign-invested enterprises like our PRC subsidiaries are allowed to extendintercompany loans to our VIEs. In addition, as SAFE Circular 19 and SAFE Circular 16 were promulgated recently, there remain substantial uncertaintieswith respect to the interpretation and implementation of these circulars by relevant authorities. See “Item 3. Key Information—D. Risk Factors—RisksRelated to Our Corporate Structure—PRC regulation of loans to, and direct investment in, PRC entities by offshore holding companies and governmentalcontrol of currency conversion may restrict or prevent us from using the proceeds of our equity offerings to make loans to our PRC subsidiaries and VIEs or tomake additional capital contributions to our PRC subsidiaries, which may materially and adversely affect our liquidity and our ability to fund and expandour business.”Moreover, on January 26, 2017, SAFE promulgated Circular of the State Administration of Foreign Exchange on Further Advancing the Reform ofForeign Exchange Administration and Improving Examination of Authenticity and Compliance (“Circular 3”). The Circular 3 stipulates several controlmeasures with respect to the outbound remittance of any profit from domestic entities to offshore entities, including (i) under the principle of genuinetransaction, banks should review board resolutions, the original version of tax filing records and audited financial statements before wiring the foreignexchange profit distribution of a foreign-invested enterprise exceeding US$50,000; and (ii) domestic entities should hold income to make up previous years’losses before remitting the profits to offshore entities. Moreover, pursuant to Circular 3, verification on the genuineness and compliance of foreign directinvestments in domestic entities has also been tightened.Regulations on Dividend DistributionThe principal regulations governing dividend distributions of wholly foreign-owned enterprises include: • the Companies Law (2005, as amended in 2013); • the Wholly Foreign-Owned Enterprise Law (2016); and • the Wholly Foreign-Owned Enterprise Law Implementing Rules (2014).Under these regulations, wholly foreign-owned enterprises in the PRC may pay dividends only out of their accumulated profits as determined inaccordance with PRC accounting standards and regulations. In addition, these wholly foreign-owned enterprises are required to set aside at least 10% of theirrespective accumulated profits each year, if any, to fund certain statutory reserve funds, until the aggregate amount of such fund reaches 50% of its registeredcapital. 60Table of ContentsRegulations on Offshore Investment by PRC ResidentsOn July 4, 2014, the SAFE promulgated the Notice on Relevant Issues Concerning Foreign Exchange Control of Domestic Residents’ OverseasInvestment and Financing and Roundtrip Investment through Offshore Special Purpose Vehicles, or SAFE Circular No. 37, which replaced the former Noticeon Relevant Issues Concerning Foreign Exchange Administration for PRC Residents to Engage in Financing and Inbound Investment via Overseas SpecialPurpose Vehicles (generally known as SAFE Circular No. 75) promulgated by the SAFE on October 21, 2005.SAFE Circular No. 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control ofan offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domesticenterprises or offshore assets or interests, which is referred to in SAFE Circular No. 37 as a “special purpose vehicle.” SAFE Circular No. 37 further requiresamendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as an increase or decrease of capitalcontributed by PRC residents, share transfer or exchange, merger, division or other material events. In the event that a PRC resident holding interests in aspecial purpose vehicle fails to complete the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from makingprofit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities and the special purpose vehicle may berestricted in its ability to contribute additional capital into its PRC subsidiaries. Furthermore, failure to comply with the various SAFE registrationrequirements described above could result in liability under PRC law for evasion of foreign exchange controls.Currently, there is no PRC resident among our shareholders. Should there be any PRC residents proposed to become our shareholders in the future, theyshall register with the competent local branch of the SAFE with respect to their investments in our company as required by SAFE Circular No. 37 and shallupdate their registration filings with the SAFE when there are any changes that should be registered under SAFE Circular No. 37.Regulations on Employee Stock Options PlansIn December 2006, the PBOC promulgated the Administrative Measures of Foreign Exchange Matters for Individuals, setting forth the respectiverequirements for foreign exchange transactions by individuals (both PRC or non-PRC citizens) under either the current account or the capital account. Therelevant implementing rules which were issued in January 2007 and further revised in May 2016 by SAFE specified approval requirements for certain capitalaccount transactions, such as a PRC citizen’s participation in employee stock ownership plans or share option plans of an overseas publicly listed company.In February 2012, SAFE promulgated the Stock Option Notice that supersedes the requirements and procedures for the registration of PRC residentindividuals’ participation in stock incentive plans set forth by certain rules promulgated by SAFE in March 2007. The purpose of the Stock Option Notice isto regulate the foreign exchange administration of PRC resident individuals who participate in employee stock holding plans and share option plans ofoverseas listed companies.According to the Stock Option Notice, if a PRC resident individual participates in any employee stock incentive plan of an overseas listed company, aPRC domestic qualified agent appointed through the PRC subsidiary of such overseas listed company must, among other things, file, on behalf of suchindividual, an application with SAFE or its local counterpart to obtain approval for an annual allowance with respect to the purchase of foreign exchange inconnection with stock holding or share option exercises. With the approval from SAFE or its local counterpart, the PRC domestic qualified agent shall open aspecial foreign exchange account at a PRC domestic bank to hold the funds required in connection with the stock purchase or option exercise, any returnedprincipal or profits upon sales of shares, any dividends issued on the stock and any other income or expenditures approved by SAFE or its local counterpart.Under the Foreign Currency Administration Rules, as amended, the foreign exchange proceeds of domestic entities and individuals can be remittedinto China or deposited abroad, subject to the terms and conditions to be issued by SAFE. However, the implementing rules in respect of depositing theforeign exchange proceeds abroad have not been issued by SAFE. The foreign exchange proceeds from the sales of shares can be converted into RMB ortransferred to such individuals’ foreign exchange savings account after the proceeds have been remitted back to the special foreign exchange account openedat the PRC domestic bank. If share options are exercised in a cashless exercise, the PRC domestic individuals are required to remit the proceeds to specialforeign exchange accounts. 61Table of ContentsMany issues with respect to the Stock Option Notice require further interpretation. We and our PRC employees who participate in an employee stockincentive plan are subject to the Stock Option Notice as we are an overseas listed company. We have registered with the local counterparts of SAFE for ourPRC resident employees who participate in our share incentive plans, as required under the Stock Option Notice and relevant rules. If we or our PRCemployees fail to comply with the Stock Option Notice, we and our PRC employees may face sanctions imposed by the PRC foreign exchange authority orany other PRC government authorities, including restrictions on foreign currency conversions and additional capital contribution to our PRC subsidiaries.In addition, the SAT has issued circulars concerning employee share options. Under these circulars, our employees working in China who exerciseshare options will be subject to PRC individual income tax. Our PRC subsidiary has obligations to file documents related to employee share options withrelevant tax authorities and withhold the individual income taxes of employees who exercise their share options. If our employees fail to pay and we fail towithhold their income taxes, we may face sanctions imposed by tax authorities or any other PRC government authorities. See “Item 3. Key Information—D.Risk Factors—Risks Related to Doing Business in China—Failure to comply with PRC regulations regarding the registration requirements for employeeshare ownership plans or share option plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.”Regulation on EmploymentPursuant to the PRC Labor Law and the PRC Labor Contract Law, employers must execute written labor contracts with full-time employees. Allemployers must compensate their employees with wages equal to at least the local minimum wage standards. All employers are required to establish a systemfor labor safety and sanitation, strictly abide by state rules and standards and provide employees with workplace safety training. Violations of the PRC LaborContract Law and the PRC Labor Law may result in the imposition of fines and other administrative liabilities.In addition, employers in China are obliged to provide employees with welfare schemes covering pension insurance, unemployment insurance,maternity insurance, work-related injury insurance, medical insurance and housing funds.Regulations on Concentration in Merger and Acquisition TransactionsThe M&A Rules established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. These rules require, among other things, that the Ministry of Commerce be notified in advance of any change-of-control transactionin which a foreign investor will take control of a PRC domestic enterprise or a foreign company with substantial PRC operations, if certain thresholds underthe Provisions on Thresholds for Prior Notification of Concentrations of Undertakings issued by the State Council on August 3, 2008 are triggered. In August2006, six PRC regulatory agencies, including the CSRC, jointly adopted the Provisions Regarding Mergers and Acquisitions of Domestic Enterprises byForeign Investors, or the M&A Rule, which became effective in September 2006 and was further amended in June 2009. This M&A Rule purports to require,among other things, offshore SPVs, formed for listing purposes through acquisition of PRC domestic companies and controlled by PRC companies orindividuals, to obtain the approval from the CSRC prior to publicly listing their securities on an overseas stock exchange.Complying with these requirements could affect our ability to expand our business or maintain our market share. See “Item 3. Key Information—D.Risk Factors—Risks Related to Doing Business in China—Certain regulations in the PRC may make it more difficult for us to pursue growth throughacquisitions.” C.Organizational StructureThe following diagram illustrates our corporate structure, including our principal subsidiaries and VIEs, as of the date of this annual report: 62Table of Contents 63Table of Contents (1)The two individuals are Min Lu and Haiyun Lei, each a PRC citizen. Each of Min Lu and Haiyun Lei holds 50% of the equity interests in each ofAutohome Information, Shanghai Advertising, Guangzhou Advertising and Shengtuo Hongyuan.As of March 31, 2018, Yun Chen owned 52.7% of our total issued and outstanding ordinary shares. Yun Chen is a wholly owned subsidiary of Ping AnInsurance (Group) Company of China, Ltd., a public company listed on the Hong Kong Stock Exchange, which beneficially owned 52.7% of the total votingrights in our company.In September 2016 and March 2017, the then individual nominee shareholders of Shengtuo Hongyuan, Guangzhou Advertising, AutohomeInformation and Shanghai Advertising entered into Equity Interest Purchase Agreements and Debt Transfer and Offset Agreements with Min Lu and HaiyunLei, pursuant to which the then individual nominee shareholders transferred all of their equity interests in each of the entities to Min Lu and Haiyun Lei.Shengtuo Hongyuan, Guangzhou Advertising, Shanghai Advertising and Autohome Information have completed their AIC registration filings with therelevant Chinese authorities. Upon the execution of the above Equity Interest Purchase Agreements and Debt Transfer and Offset Agreements, all contractualarrangements between the then individual nominee shareholders and our wholly owned subsidiaries were terminated. Autohome WFOE entered into a seriesof contractual agreements with (i) Guangzhou Advertising and each of its individual nominee shareholders, (ii) Autohome Information, each of its individualnominee shareholders and two of its subsidiaries, Autohome Advertising and Chengshi Advertising, and (iii) Shanghai Advertising and each of its individualnominee shareholders in September 2016, March 2017 and March 2017, respectively. Chezhiying WFOE entered into a series of contractual agreements withShengtuo Hongyuan, each of its individual nominee shareholders and its two subsidiaries in September 2016.For the information regarding our contractual arrangements, please refer to “Item 7.B. Related Party Transactions — Contractual Agreements with OurVariable Interest Entities.”In consideration of the previous restrictions imposed on the shareholders of foreign-invested companies engaging in advertising business, we onceconducted advertising business by entering into a series of contractual arrangements with Guangzhou Advertising and Shanghai Advertising. See “Item 3.Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds that the agreements that establish the structurefor operating our services in China do not comply with PRC governmental restrictions on foreign investment in internet businesses, or if these regulations orthe interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in thoseoperations.” Since the regulatory environment developed, such restrictions were lifted in 2015. Therefore, in 2015, we completed the migration of ouradvertising business from Guangzhou Advertising, Shanghai Advertising and other PRC entities to the PRC subsidiaries of Autohome Media. GuangzhouAdvertising and Shanghai Advertising are currently not conducting any business. In August 2017 and March 2018, we decided to liquidate and dissolveGuangzhou Advertising and Shanghai Advertising, respectively. Currently we are undertaking the governmental procedures to liquidate, dissolve andde-register Guangzhou Advertising and Shanghai Advertising, which are expected to be completed by the end of 2018. Autohome WFOE has signed thetermination agreements with respect to the contractual agreements that it has entered into with Guangzhou Advertising and Shanghai Advertising and each oftheir individual nominee shareholders to terminate the contractual arrangements on the date of the issuance of an approval notice for the deregistration ofGuangzhou Advertising and Shanghai Advertising by the competent Bureau of Industry and Commerce in charge of such two entities, respectively. D.Property, Plants and EquipmentOur corporate headquarters is located in Beijing, China, where we lease office space with an area of approximately 25,821 square meters. We generallymake rental payments on a monthly basis. In addition, as of December 31, 2017, we also leased office space in 78 cities for our representative offices,including regional operation centers in Shanghai, Guangzhou and Tianjin in China. We believe that our existing facilities are generally adequate to meet ourcurrent needs, but we expect to seek additional space as needed to accommodate future growth.Our servers are primarily hosted at internet data centers owned by major domestic internet data center providers. The hosting services agreementstypically have a term of one year. We believe that our current facilities are adequate and that we will be able to obtain additional facilities, principallythrough leasing, to accommodate any future expansion plans. 64Table of ContentsITEM 4AUNRESOLVED STAFF COMMENTSNone. ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTSYou should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financialstatements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks anduncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as aresult of various factors, including those set forth under “Risk Factors” and elsewhere in this annual report. A.Operating ResultsOverviewWe are the leading online destination for automobile consumers in China. Through our two websites, autohome.com.cn and che168.com, accessiblethrough PCs and mobile devices, and our mobile applications, we deliver comprehensive, independent and interactive content to automobile buyers andowners, as well as offering them our transaction facilitation and auto financing services. We generate revenues from media services, leads generation servicesand online marketplace. In 2017, we derived 49.7%, 42.1% and 8.2% of our total net revenues from our media services, leads generation services and onlinemarketplace, respectively, while in 2016, each of these three revenue lines contributed 39.4%, 32.1% and 28.5% of our total net revenues, respectively. Thechange in the composition of revenue lines was primarily due to the implementation of our strategy to de-emphasize direct vehicle sales and to focus onfacilitating transactions. Through our media services, we provide automakers with solutions in connection with brand promotion, new model releases andsales promotions. Our large and engaged user base of automobile consumers provides a broad reach for automakers’ marketing messages. Our leadsgeneration services enable our dealer subscribers to create their own online showrooms, list pricing and promotional information, provide dealer contactinformation, place advertisements and manage customer relationships to help them reach a broad set of potential customers and effectively market theirautomobiles to consumers online and ultimately generate sales leads. In 2017, while we continued to strengthen our existing business, we also furtherdeveloped our transaction business. Our transaction business includes new vehicle transaction business consisting of direct vehicle sales and platform-basedservices facilitating transactions, and used automobile listing. In early 2017, we also launched our auto financing business and started to provide services toour cooperative banks and financial institutions by displaying and marketing their financial products, covering loans, leases and insurance services forconsumers and independent automobile sellers. Through offering these services on our platform, we believe we are on the right track to build a robustautomotive eco-platform to serve consumers throughout their automobile ownership life cycles.Our net revenues increased from RMB3,464.0 million in 2015 to RMB5,961.6 million in 2016 and RMB6,210.2 million (US$954.5 million) in 2017,representing a CAGR of 33.9%. Our net income attributable to Autohome Inc. increased from RMB990.6 million in 2015 to RMB1,227.9 million in 2016and RMB2,001.6 million (US$307.6 million) in 2017, representing a CAGR of 42.1%.General Factors Affecting Our Results of OperationsOur business and results of operations are significantly affected by China’s overall economic conditions and the general trends in the automotiveindustry, especially new automobile sales in China. Economic growth in China has contributed to an increase in household disposable income and improvedthe availability of financing for automobile purchases. These factors, coupled with the rapid growth of the automotive industry and the emergence ofindustry-wide favorable governmental policies in recent years, have contributed to the increased number of new automobiles sold in China and havepromoted the development of automobile transaction business, in particular, the auto-financing business. Regardless of China’s overall favorable policies,some local governments have different approaches and have even tightened the local regulations on automobile transactions, which may slow the growth rateof new automobile sales and decrease the demand for our services. In addition, our business is subject to the overall advertising expenditures by automakersand automobile dealers, the development of online advertising industry in China and the market acceptance of online advertising and promotion. Our resultsof operations can also be significantly impacted by our ability to minimize costs and maximize efficiency in our operations. 65Table of ContentsIn addition, our business and results of operations may be affected by our user reach, the level of user experience and engagement. Automaker anddealer advertisers, who contribute a substantial portion of our revenues, choose to advertise on our websites and mobile applications in significant part due toour leading market position in the online automotive advertising industry. Also, effective marketing and promotion activities conducted by us are critical forus to maintain and enhance our brand recognition and attract more traffic to our platform. We anticipate that our ability to continue to attract a large andgrowing user base and maintain a high level of user engagement and satisfactory user experience will affect our ability to attract advertisers and dealersubscribers to our websites and mobile applications and in turn, our ability to generate sales leads. Finally, our business and results of operations may beaffected by the development of e-commerce in China and consumers’ acceptance of online automobile purchases.Specific Factors Affecting Our Results of OperationsWhile our business and results of operations are generally affected by China’s overall economic conditions, the general trends in China’s automotiveindustry, our user reach and engagement and consumers’ acceptance of online automobile purchases, our results of operations are more directly affected bythe specific financial factors set forth below.Net RevenuesAs of December 31, 2015, we had two revenue lines, namely advertising services and dealer subscription services. To better present our business in linewith the business development, we changed our revenue reporting lines to three revenue lines, namely media services, leads generation services and onlinemarketplace. We retrospectively adjusted our revenue line information for all periods presented to reflect these changes. These adjustments are also reflectedin the following discussion of our net revenue results for comparison to prior year results.We currently generate our net revenues from media services, leads generation services and online marketplace. Media services mainly includeautomaker advertising services and regional marketing campaigns conducted by certain automobile brands’ regional offices. Leads generation servicesprimarily include (i) dealer subscription services, (ii) advertising services sold to individual dealer advertisers, and (iii) other value-added services. We sellour advertising services primarily to automakers and dealers through third-party advertising agencies, with automakers contributing a substantial majority ofour advertising services revenues. We offer rebates to advertising agencies and cash incentives to automakers and automobile dealers who participate invarious incentive programs on our online transaction platform. Our net revenues are presented net of rebates to advertising agencies and cash incentives toautomakers and automobile dealers. We generate revenues from leads generation services through dealer subscription services, advertising services sold toindividual dealer advertisers, and other value-added services. We sell our dealer subscription services to automobile dealers mainly on a fixed-feesubscription basis.We also generate online marketplace revenues from the new vehicle transaction business, which is composed of direct vehicle sales and platform-basedservices facilitating transactions on the Autohome Mall platform and the revenues from auto-financing business. We record revenues from direct sales ongross basis when vehicles are delivered and title has passed to the buyers. In addition, we earn service fees for new vehicle displayed and transactionsfacilitated through the Autohome Mall platform. The service fees are recognized ratably over the display period or recognized when the vehicles aredelivered to customers. For auto-financing services, we earn service fees for the generation of sales leads or the facilitation of financial product transactionsthrough our platform. The service fees are recognized when the sales leads are delivered or upon the completion of transaction facilitation. 66Table of ContentsThe following table sets forth the principal components of our net revenues in absolute amounts and as percentages of our total net revenues for theyears presented: For the Year Ended December 31, 2015 2016 2017 RMB % RMB % RMB US$ % (in thousands, except percentages) Net revenues: Media services 1,878,397 54.3% 2,347,626 39.4% 3,083,496 473,925 49.7% Leads generation services 1,403,892 40.5 1,916,445 32.1 2,616,009 402,073 42.1 Online marketplace 181,686 5.2 1,697,550 28.5 510,676 78,489 8.2 Total net revenues 3,463,975 100.0% 5,961,621 100.0% 6,210,181 954,487 100.0% Media Services RevenuesWe generate media services revenues primarily from automaker advertising services and regional marketing campaigns conducted by certainautomobile brands’ regional offices. In 2015, 2016 and 2017, 87, 95 and 101 automakers operating in China purchased media services from us. As a result ofour high penetration in the automaker market, we believe that our future media services revenue growth will be driven primarily by automakers’ increasedadvertising spending on our websites and mobile applications as they continue to shift their advertising budgets from traditional media to online media, aswell as further development of mobile advertising, and monetization leveraging our enriched content and big data analytic capabilities.Increased spending will be driven primarily by a combination of (i) our ability to increase advertising volume, either due to the availability ofadditional advertising locations, such as the mobile platform, as we expand our service offerings, or due to higher sell-through rates, which is calculated asthe percentage of advertising locations actually sold over total advertising locations available for sale in a given period, (ii) our ability to increase ourpricing, as measured by price per location per day, as our user reach continues to expand, thereby enhancing the effectiveness of the services we offer andbuilding automakers increasing awareness of our platform, and (iii) our ability to constantly provide more diversified and optimized portfolio of productofferings. We primarily use a “cost per time” pricing model to price our online advertising services by charging advertisers on a daily basis for anadvertisement placed in a given location on our websites and mobile applications. However, as we continue to grow our user base and enhance userengagement, we began to explore “cost per thousand impressions,” “cost per click” and other performance-based pricing models. These new initiatives havealready begun to generate revenues but the amount was still insignificant compared to the revenues generated from the “cost per time” pricing model.Leads Generation Services RevenuesWe generate leads generation services revenues through (i) dealer subscription services, (ii) advertising services sold to individual dealer advertisers,and other value-added services. Our dealer subscribers are dealers that have purchased subscription packages which are delivered through our dealershipinformation system. We provide our dealer subscribers with additional tools and features to enable them to more effectively market their inventories on ourwebsites and mobile applications. We provided leads generation services to 21,858, 24,096 and 27,167 dealers in 2015, 2016 and 2017, respectively. Ourleads generation services revenues accounted for 40.5%, 32.1% and 42.1% of our net revenues in 2015, 2016 and 2017, respectively. We believe that ourleads generation services revenues will continue to grow in the near future, driven by our ability to command higher fees for different subscription packagesand provide more diversified value-added services to our dealer customers with our capabilities of connecting dealers with our large user base, and expandingthe dealer client base.Online Marketplace RevenuesWe generate online marketplace revenues through the new vehicle transaction business, which is composed of direct vehicle sales and platform-basedservices facilitating transactions on the Autohome Mall platform, and auto-financing business. Our online marketplace revenues accounted for 5.2%, 28.5%and 8.2% of our net revenues in 2015, 2016 and 2017, respectively. Revenues from direct vehicle sales accounted for 73.6%, 96.3% and 70.0% of onlinemarketplace revenues in 2015, 2016 and 2017, respectively. With the implementation of our strategy to focus on facilitating transactions, we cleared alldirect vehicle sales inventories as of December 31, 2017. Going forward, we will explore diversified business models and opportunities to build a robust andcomprehensive e-commerce platform and continue to develop our auto-financing business. 67Table of ContentsCost of RevenuesCost of revenues refers primarily to (i) content-related costs, (ii) depreciation and amortization expenses, (iii) bandwidth and internet data center(“IDC”) costs, (iv) value-added tax (“VAT”) and surcharges and (v) cost of sales including tax. The following table sets forth the principal components of ourcost of revenues in absolute amounts and as a percentage of our total net revenues for the years indicated: For the Year Ended December 31, 2015 2016 2017 RMB % RMB % RMB US$ % (in thousands, except percentages) Cost of revenues: Content-related costs(1) 184,635 5.3% 269,313 4.5% 390,885 60,078 6.3% Depreciation and amortization expenses 43,160 1.3 42,570 0.7 41,579 6,391 0.7 Bandwidth and IDC costs 38,893 1.1 51,766 0.9 89,889 13,816 1.4 VAT and surcharges 269,491 7.8 349,373 5.9 484,811 74,513 7.8 Cost of sales, including tax 132,942 3.8 1,680,143 28.1 351,521 54,028 5.7 Total cost of revenues 669,121 19.3% 2,393,165 40.1% 1,358,685 208,826 21.9% (1)Including share-based compensation expenses of RMB6.9 million for 2015, RMB12.3 million for 2016 and RMB15.2 million (US$2.3 million) for2017, respectively.Content-related Costs. Content-related costs are costs directly related to creating and editing the original generated content, organizing andmaintaining user generated content on our websites and mobile applications, and maintaining our professionally generated content. Content-related costsmainly include salaries and benefits, toll free telephone charges, travel and office expenses of our editorial personnel, expenses we incur in the execution ofthe offline portion of our advertisers’ online promotions and expenses we pay to third parties for creating and publishing certain rich media content andprofessionally generated content displayed on our websites and mobile applications. We expect our content-related costs may continue to increase primarilydue to our business growth.Depreciation and Amortization Expenses. A substantial majority of our amortization expenses relate to the amortization of intangibles includingtrademarks that we acquired in connection with the acquisitions of Cheerbright, China Topside and Norstar in June 2008, shortly after the inception of ourcompany. Depreciation expenses are related to servers and other equipment that are directly related to our revenue-generating business activities andleasehold improvements. We expect our amortization expenses will decrease after the end of the estimated useful lives of certain intangible assets.Bandwidth and IDC Costs. Bandwidth and IDC costs consist of fees that we pay to telecommunication carriers and other service providers fortelecommunication services and for hosting our servers at their internet data centers, as well as fees we pay to our content delivery network service providerfor the distribution of our content. Our bandwidth and IDC costs are expected to continue to increase in subsequent periods as our user traffic continued toincrease and we require more high-quality bandwidth and more cabinets to support user traffic growth and improve our users’ experience.VAT and Surcharges. After VAT reform in 2012, our PRC subsidiaries and VIEs excluding Beijing Prbrownies Software Co., Ltd. and ChengduPrbrownies Software Co., Ltd. are subject to a 6% VAT for the media services and leads generation services provided and 17% for the direct vehicle salesunder online marketplace. Advertising services are also subject to the cultural construction fee. For Beijing Prbrownies Software Co., Ltd. and ChengduPrbrownies Software Co., Ltd., they are subject to 17% VAT for the dealer subscription services, which were sold in the form of software products startingfrom October 2014. Since November 2014 and December 2016, respectively, Beijing Prbrownies Software Co., Ltd. and Chengdu Prbrownies Software Co.,Ltd. were entitled to a 14% VAT refund on the total VAT payable at the rate of 17% after being certified as software resolutions by the relevant authority. Asa result of the above, our overall VAT and surcharges as a percentage of our total net revenues excluding direct vehicle sales was 8.1% in 2015, 8.1% in 2016and 8.3% in 2017. 68Table of ContentsCost of Sales, including tax. Cost of sales includes cost of vehicle purchases, other directly attributable costs of direct vehicle sales under the newvehicle transaction business and write-down of inventories and prepayment for vehicle purchase cost. Our direct vehicle sales were subject to 17% VAT rate.Rebates relating to new vehicles purchased but still held by us as of the balance sheet date are recorded as a reduction to cost of inventories while rebatesrelating to new vehicles purchased and sold during the reporting period are recorded as a reduction to cost of revenues.Operating ExpensesOur operating expenses consist of sales and marketing expenses, general and administrative expenses and product development expenses. Thefollowing table sets forth our operating expenses in absolute amounts and as percentages of our total net revenues for the years indicated: For the Year Ended December 31, 2015 2016 2017 RMB % RMB % RMB US$ % (in thousands, except percentages) Operating expenses: Sales and marketing expenses(1) 1,127,484 32.6% 1,536,939 25.8% 1,647,519 253,219 26.5% General and administrative expenses(2) 193,655 5.6 306,794 5.2 281,951 43,335 4.5 Product development expenses(3) 273,908 7.9 571,354 9.6 878,773 135,065 14.2 Total operating expenses 1,595,047 46.0% 2,415,087 40.6% 2,808,243 431,619 45.2% (1)Including share-based compensation expenses of RMB36.6 million for 2015, RMB50.8 million for 2016, and RMB53.1 million (US$8.2 million) for2017, respectively.(2)Including share-based compensation expenses of RMB40.1 million for 2015, RMB78.0 million for 2016, and RMB60.0 million (US$9.2 million) for2017, respectively.(3)Including share-based compensation expenses of RMB24.3 million for 2015, RMB54.3 million for 2016, and RMB49.6 million (US$7.6 million) for2017, respectively.Sales and Marketing Expenses. Our sales and marketing expenses primarily consist of the marketing expenses incurred in connection with promotingour brands through search engines, mobile platforms and navigation sites, sales promotion activities and salaries and benefits and sales commissions for oursales and marketing personnel. Our sales and marketing expenses also include office and travel-related expenses and business development expensesassociated with our sales and marketing activities. We expect that our sales and marketing expenses will continue to increase in the future as we will enhanceour user engagement, enlarge our sales force to expand our coverage and transform us from a content-led vertical media business to an automotiveeco-platform based on advanced data and technology.General and Administrative Expenses. Our general and administrative expenses primarily consist of personnel-related expenses for management andadministrative personnel and professional service fees. We expect that our general and administrative expenses will be relatively stable compared to ourrevenue growth in the future. 69Table of ContentsProduct Development Expenses. Our product development expenses primarily consist of personnel-related expenses associated with the developmentof new technologies and products as well as enhancement of our websites and mobile applications. We expect that our product development expenses willincrease as we expand our business, develop new features and functionalities, increase the accessibility of our websites, mobile applications and thetransaction platform, invest further in AR and VR related technologies and enhance our big data analysis capabilities.TaxationCayman IslandsAutohome Inc., Autohome E-commerce Inc., Autohome Link Inc. and Autohome Financing Limited are incorporated in the Cayman Islands. Under thecurrent laws of the Cayman Islands, companies incorporated in the Cayman Islands are not subject to income or capital gains tax. In addition, dividendpayments are not subject to withholding tax in the Cayman Islands.British Virgin IslandsCheerbright is a company incorporated in the British Virgin Islands. Under the current laws of the British Virgin Islands, Cheerbright is not subject toincome or capital gains tax. In addition, dividend payments are not subject to withholding tax in the British Virgin Islands.Hong KongAutohome HK, Autohome Media, Autohome E-commerce Hong Kong Limited, Autohome Link Hong Kong Limited and Autohome Financing HongKong Limited are incorporated in Hong Kong. Companies incorporated and registered in Hong Kong are subject to Hong Kong profits tax on the taxableincome as reported in their respective statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate is16.5% in Hong Kong. For 2015, 2016 and 2017, we did not make any provisions for Hong Kong profit tax as there were no assessable profits derived from orearned in Hong Kong during these periods. Under the Hong Kong tax law, our subsidiaries in Hong Kong are exempted from income tax on their foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends.PRCOn February 24, 2017, the Standing Committee of the National People’s Congress amended the PRC Enterprise Income Tax Law, which was issued onMarch 16, 2007. The Implementing Regulations of the Law of the PRC on Enterprise Income Tax was issued on December 6, 2007 and became effective onJanuary 1, 2008. Under the PRC Enterprise Income Tax Law and its implementation rules, a standard 25% enterprise income tax rate is generally applicableto both foreign-invested enterprises and domestic enterprises, unless they qualify for certain exceptions.In September 2010, Autohome WFOE was recognized as an HNTE, effective 2010 and was eligible for a 15% preferential enterprise income tax rateeffective through 2018. Beijing Autohome Technologies was recognized as an HNTE in July 2015 and therefore was eligible for the preferential 15%enterprise income tax rate from 2015 to 2017 upon their filing with the relevant tax authority. The HNTE qualification is subject to an annual evaluation anda three-year review by the relevant authorities in China. However, should we lose this qualification for any reason, both Autohome WFOE and BeijingAutohome Technologies will no longer enjoy the 15% preferential tax rate, and the applicable enterprise income tax rate may increase to up to 25%. BeijingPrbrownies was recognized as an HNTE in February 2016, qualifying it for the preferential 15% enterprise income tax rate from 2015 to 2017 upon its filingwith the relevant tax authority. In addition to being recognized as an HNTE, Beijing Prbrownies was also recognized as an eligible software enterprise by therelevant tax authorities in 2016 and 2017, qualifying it for the exemption of enterprise income tax for the tax year 2015 and 2016. 70Table of ContentsPursuant to the Circular on Income Tax Policies for Further Encouraging the Development of Software Industry and Integrated Circuit Industry jointlyissued by the SAT and the MOF on April 20, 2012, and the Circular on Issues concerning Preferential Enterprise Income Tax Policies for Software andIntegrated Circuit Industries jointly issued by the MOF, the SAT, the NDRC and the MIIT on May 4, 2016, eligible software enterprises which pass annualreview and filing by the relevant tax authorities can enjoy exemption for enterprise income tax for the first and second year as calculated from the profitmaking year or no later than December 31, 2017 if no profit is made prior to that date, and thereafter enjoy half of the statutory rate of 25% for the thirdthrough fifth year thereafter until the expiration of the preferential period. Beijing Prbrownies started to make profit since 2015, and it passed the review andfiling as an eligible software enterprise by the relevant tax authorities in 2016 and 2017, which qualified it for the exemption of enterprise income tax for2015 and 2016. If Beijing Prbrownies passes the aforesaid review and filing again in 2018, it will enjoy a reduced enterprise income tax for 2017. However, ifBeijing Prbrownies fails to pass the review and filing by the relevant tax authorities, it will no longer enjoy the preferential tax rate, and the applicableenterprise income tax rate may increase to up to 15% as an HNTE if it still maintains the HNTE qualification, or up to 25% if it loses the HNTE qualification.Except for the above mentioned Autohome WFOE, Beijing Autohome Technologies and Beijing Prbrownies, our remaining PRC subsidiaries and allthe VIEs were subject to EIT at a rate of 25% for 2015, 2016 and 2017.If our holding company in the Cayman Islands, Autohome Inc., were deemed to be a “PRC resident enterprise” under the Enterprise Income Tax Law, itwould be subject to enterprise income tax on its global income at a rate of 25%. If a subsidiary of us established in Hong Kong were deemed to be a “PRCresident enterprise” and Autohome Inc. were not deemed to be a “PRC resident enterprise” under the Enterprise Income Tax Law, then dividends payable bysuch subsidiary to Autohome Inc. may become subject to 10% PRC dividend withholding tax. Under such circumstances, it is not clear whether dividendspayable by our PRC subsidiaries to their respective shareholders in Hong Kong would still be subject to PRC dividend withholding tax at a rate of 5%. Ifsuch subsidiary in Hong Kong were deemed to be a “PRC resident enterprise” under the Enterprise Income Tax Law, it would be subject to enterprise incometax at a rate of 25%. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Our global income and the dividends thatwe may receive from our PRC subsidiaries, dividends distributed to our non-PRC shareholders and ADS holders, and gains recognized by such shareholdersor ADS holders, may be subject to PRC taxes under the Enterprise Income Tax Law, which would have a material adverse effect on our results of operations.”Critical Accounting PoliciesWe prepare our financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect thereported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the end of each reporting period and the reported amount ofrevenue and expenses during each reporting period. We evaluate these estimates and assumptions based on historical experience, knowledge and assessmentof current business and other conditions and expectations that we believe to be reasonable under the circumstances. Since the use of estimates is an integralcomponent of the financial reporting process, actual results could differ from these estimates and assumptions.Some of our accounting policies require higher degrees of judgment than others in their application. When reviewing our consolidated financialstatements, you should consider (a) our selection of critical accounting policies, (b) the judgment and other uncertainties affecting the application of suchpolicies and (c) the sensitivity of reported results to changes in conditions and assumptions. For further information on our significant accounting policies,see Note 2 to our consolidated financial statements for 2015, 2016 and 2017. We consider the policies discussed below to be critical to an understanding ofour consolidated financial statements as their application places significant demands on the judgment of our management. We believe the following criticalaccounting policies are most significant to the presentation of our financial statements and some of which may require the most difficult, subjective andcomplex judgments. They should be read in conjunction with our consolidated financial statements, the risks and uncertainties of which are described under“Item 3. Key Information—D. Risk Factors” and other disclosures included in this annual report.Revenue RecognitionOur revenue is derived from media services, leads generation services and online marketplace. Revenue is recognized only when the price is fixed ordeterminable, persuasive evidence of an arrangement exists, the service is performed and collectability of the related fee is reasonably assured based on theguidance in ASC 605, Revenue Recognition. 71Table of ContentsContracts are signed to establish significant terms such as the price and services to be provided. We consider the price for our services to be fixed ordeterminable when we and our customers have signed the contracts. We assess the creditworthiness of our customers prior to signing the contracts to ensurecollectability is reasonably assured. Non-refundable payments received before all of the relevant criteria for revenue recognition are satisfied and are to berecognized ratably over a period are recorded as deferred revenue.Starting 2016, in order to better present the business, we changed our revenue reporting lines into media services, leads generation services and onlinemarketplace, from advertising services and dealer subscription services, with the comparative figures for the year ended December 31, 2015 revisedaccordingly.Media servicesMedia services revenues mainly include revenues from automaker advertising services and regional marketing campaigns conducted by certainautomobile brands’ regional offices. The majority of our online advertising service arrangements involve multiple deliverables such as banneradvertisements, links and logos, other media insertions and promotional activities that are delivered over different periods of time.In determining its best estimated selling price for each deliverable, we considered our overall pricing model and objectives, as well as market orcompetitive conditions that may impact the price at which we would transact if the deliverable were sold regularly on a standalone basis. We monitor theconditions that affect its determination of selling price for each deliverable and reassess such estimates periodically. Revenue is recognized ratably when theadvertisements are published over the stated display period in the case of websites and mobile applications or when the services have been rendered in thecase of promotional activities. The amount recognized is limited to the amount that is not contingent upon the delivery of additional deliverables or meetingother specified performance conditions.Leads generation servicesLeads generation services primarily include revenues from (i) dealer subscription services, (ii) advertising services sold to individual dealer advertisers,and other value-added services. Under the dealer subscription services, we make available throughout the subscription period a webpage linked to itswebsites where the dealers can publish information such as the pricing of their products, locations and addresses and other related information. Revenue isrecognized ratably as services are provided over the subscription period.Online marketplaceOnline marketplace revenues mainly include revenues from the new vehicle transaction business, which is composed of direct vehicle sales andplatform-based services facilitating transactions on the Autohome Mall platform, and auto-financing business. For direct vehicle sales, we recognize revenueon a gross basis as we act as the principal, are the primary obligor of the sales arrangements and are subject to inventory risk. Revenue from direct vehiclesales are recognized when a sales contract has been executed and the vehicle has been delivered. Under the platform-based service arrangements, we earnservice fee for the new vehicle displayed and transactions facilitated through the Autohome Mall platform. The service fee is recognized ratably over thedisplay period or recognized when the vehicles are delivered to customers. For the auto-financing business, we earn service fees for the generation of salesleads or for facilitating financial product transactions through our platform. The service fee is recognized when the sales leads are delivered or upon thecompletion of the facilitated transaction.Rebates and cash incentives provided to customersWe provide rebates to agency companies based on cumulative annual advertising and service volume. We estimate our obligations under suchagreements based on an evaluation of the likelihood of the agency companies’ achievement of the advertising and service volume targets and evaluation ofthe agency companies’ purchase trends and history. 72Table of ContentsWe also provide cash incentives to automakers and dealers who participated in various incentive programs on our online transaction platform. Thecash incentives are accounted for as a reduction of revenue in accordance with ASC 605-50, “Revenue Recognition: Customer Payments and Incentives.”However, for the cash incentives not within the scope of ASC 605-50 and provided to the end users for the promotional purpose, they are recognized asexpense.We have estimated and recorded rebates and cash incentives to agency companies, dealers and automakers cumulatively amounting toRMB578.5 million, RMB653.5 million and RMB886.9 million (US$136.3 million) for the years ended December 31, 2015, 2016 and 2017, as a reduction ofrevenue, respectively.Income taxesWe account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on thedifference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which thedifferences are expected to reverse. We record a valuation allowance against deferred tax assets if, based on the weight of available evidence, it ismore-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognizedin income in the period that includes the enactment date.We apply ASC 740, Accounting for Income Taxes, to account for uncertainty in income taxes. ASC 740 prescribes a recognition threshold a taxposition is required to meet before being recognized in the financial statements. We have recorded unrecognized tax benefits in the other liabilities line itemin the accompanying consolidated balance sheets. We have elected to classify interest and penalties related to unrecognized tax benefits, if and whenrequired, as part of “income tax expense”, in the consolidated statements of operations data.Our estimated liability for unrecognized tax benefits and the related interest and penalties are periodically assessed for adequacy and may be affectedby changing interpretations of laws, rulings by tax authorities, changes and/or developments with respect to tax audits, and expiration of the statute oflimitations. The actual benefits ultimately realized may differ from our estimates. As each audit is concluded, adjustments, if any, are recorded in ourconsolidated financial statements. Additionally, in future periods, changes in facts and circumstances, and new information may require us to adjust therecognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recognized in theperiod in which they occur.We adopted ASU No. 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes, which simplifies the presentation ofdeferred income taxes by requiring deferred tax assets and liabilities to be classified as non-current on the balance sheet, starting the first quarter of 2017 on aretrospective basis. After adoption of this ASU, current deferred tax assets of RMB99.2 million as of December 31, 2016 on consolidated balance sheet wasreclassified as non-current.Fair Value Measurements of Financial InstrumentsOur financial instruments primarily comprise of cash and cash equivalents, restricted cash, short-term investments, accounts receivable, amounts duefrom related parties, prepaid expenses and other current assets, other non-current assets, accrued expenses and other payables, notes payable, and amounts dueto related parties. The carrying values of these financial instruments approximated their fair values due to the short-term maturity of these instruments.ASC topic 820 (“ASC 820”), Fair Value Measurements and Disclosures, establishes a three-tier fair value hierarchy, which prioritizes the inputs usedin measuring fair value as follows:Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active marketsLevel 2 – Include other inputs that are directly or indirectly observable in the marketplaceLevel 3 – Unobservable inputs which are supported by little or no market activity 73Table of ContentsASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) costapproach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets orliabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on thevalue indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required toreplace an asset.Accounts Receivable and Allowance for Doubtful AccountsAccounts receivable are carried at net realizable value. An allowance for doubtful accounts is recorded in the period when a loss is probable based onan assessment of specific evidence indicating troubled collection, historical experience, accounts aging and other factors. An accounts receivable balance iswritten off after all collection effort has ceased.InventoriesInventories consist of new vehicles held for sale, stated at the lower of cost or market. Cost is determined using the specific identification method. Ourpurchase arrangements with certain automakers entitle us to receive a specified amount of cash rebates if certain conditions are met during the stated rebateperiods. We account for these rebates in accordance with ASC 605-50, Revenue Recognition: Customer Payments and Incentives. Rebates relating to newvehicles purchased but still held by us as of the balance sheet date are recorded as a reduction to cost of inventories while rebates relating to new vehiclespurchased and sold during the reporting period are recorded as a reduction to cost of revenues.Adjustments are recorded to write down the cost of inventory to the estimated market value for slow-moving and damaged goods. The amount of write-down is also dependent upon factors such as inventory aging, historical and forecasted consumer demand, and promotional environment. Write-downs arerecorded in cost of revenues in the consolidated statements of operations data.GoodwillGoodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of anacquired business. Our goodwill at December 31, 2016 and 2017 were related to our acquisition of Cheerbright, China Topside and Norstar. In accordancewith ASC 350, Goodwill and Other Intangible Assets, recorded goodwill amounts are not amortized, but rather are tested for impairment annually or morefrequently if there are indicators of impairment present.Goodwill is tested for impairment at the reporting unit level on an annual basis (December 31 for us) and between annual tests if an event occurs orcircumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. These events or circumstancesinclude a significant change in stock prices, business environment, legal factors, financial performances, competition, or events affecting the reporting unit.Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities toreporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The estimation of fair value of reportingunit using a discounted cash flow methodology also requires significant judgments, including estimation of future cash flows, which is dependent on internalforecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of ourweighted average cost of capital. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results andmarket conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for thereporting unit.Our management has determined that we represent the lowest level within the entity at which goodwill is monitored for internal management purposes.Our management evaluated the recoverability of goodwill by performing a qualitative assessment before using a two-step impairment test approach at thereporting unit level. Based on an assessment of the qualitative factors, our management determined that it is more-likely-than-not that the fair value of thereporting unit is in excess of its carrying amount. Therefore, our management concluded that it was not necessary to proceed to the two-step goodwillimpairment test. As of December 31, 2016 and 2017, goodwill was RMB1.5 billion and RMB1.5 billion (US$231.2 million), respectively. No impairmentloss was recorded for any of the years presented.If we reorganize our reporting structure in a manner that changes the composition of one or more of its reporting units, goodwill is reassigned based onthe relative fair value of each of the affected reporting units. 74Table of ContentsShare-based CompensationWe account for share-based awards granted to employees under ASC 718, Compensation—Stock Compensation, which requires that share-basedawards granted to employees be measured based on the grant date fair value and recognized as compensation expense over the requisite service period (whichis generally the vesting period) in the consolidated statements of operations data. We have elected to recognize compensation expense using the straight-linemethod for all share-based awards granted with service conditions that have a graded vesting schedule. Under ASC 718, an entity can make an accountingpolicy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. We have elected to estimate theforfeitures rate at the time of grant and revise, if necessary, in subsequent periods if actual forfeitures differ from initial estimates.Forfeiture rates are estimated based on historical and future expectations of employee turnover rates and are adjusted to reflect future changes incircumstances and facts, if any. Share-based compensation expense is recorded net of estimated forfeitures such that expense is recorded only for those share-based awards that are expected to vest. To the extent that we revise these estimates in the future, the share-based payments could be materially impacted inthe period of revision, as well as in following periods. We, with the assistance of an independent third-party valuation firm, determined the fair value of thestock options granted to employees. The binomial option pricing model was applied in determining the estimated fair value of the options granted toemployees. Subsequent to the IPO, fair value of the ordinary shares is the price of our publicly traded shares.We account for a change in any of the terms or conditions of share-based awards as a modification in accordance with ASC subtopic 718-20,Compensation-Stock Compensation: Awards Classified as Equity, whereby the incremental fair value, if any, of a modified award, is recorded ascompensation cost on the date of modification for vested awards or over the remaining vesting period for unvested awards. The incremental compensationcost is the excess of the fair value of the modified award on the date of modification over the fair value of the original award immediately before themodification.Results of OperationsThe following table presents our results of operations in absolute amounts and as a percentage of our total net revenues for the years indicated. For the Year Ended December 31, 2015 2016 2017 RMB % RMB % RMB US$ % (in thousands, except percentages) Net revenues Media services 1,878,397 54.3% 2,347,626 39.4% 3,083,496 473,925 49.7% Leads generation services 1,403,892 40.5 1,916,445 32.1 2,616,009 402,073 42.1 Online marketplace 181,686 5.2 1,697,550 28.5 510,676 78,489 8.2 Total net revenues 3,463,975 100.0 5,961,621 100.0 6,210,181 954,487 100.0 Cost of revenues(1) (669,121) (19.3) (2,393,165) (40.1) (1,358,685) (208,826) (21.9) Gross Profit 2,794,854 80.7 3,568,456 59.9 4,851,496 745,661 78.1 Operating expenses Sales and marketing expenses(1) (1,127,484) (32.6) (1,536,939) (25.8) (1,647,519) (253,219) (26.5) General and administrative expenses(1) (193,655) (5.6) (306,794) (5.2) (281,951) (43,335) (4.5) Product development expenses(1) (273,908) (7.9) (571,354) (9.6) (878,773) (135,065) (14.2) Operating profit 1,199,807 34.6 1,153,369 19.3 2,043,253 314,042 32.9 Interest income 63,218 1.8 88,168 1.5 220,282 33,857 3.5 Earnings/(loss) from equity method investments 102 0.0 (6,638) (0.1) (10,571) (1,625) (0.2) Other income, net 13,064 0.4 13,953 0.2 8,577 1,318 0.1 Income before income taxes 1,276,191 36.8 1,248,852 20.9 2,261,541 347,592 36.3 Income tax expense (285,542) (8.2) (32,629) (0.5) (267,082) (41,050) (4.3) Net income 990,649 28.6 1,216,223 20.4 1,994,459 306,542 32.0 Net loss attributable to noncontrolling interests — — 11,691 0.2 7,160 1,100 0.1 Net income attributable to Autohome Inc. 990,649 28.6% 1,227,914 20.6% 2,001,619 307,642 32.1% 75Table of Contents (1)Including share-based compensation expenses as follows: For the Year Ended December 31, 2015 2016 2017 RMB % RMB % RMB US$ % (in thousands, except percentages) Allocation of Share-Based Compensation Expenses Cost of revenues 6,939 0.2% 12,310 0.2% 15,166 2,331 0.2% Sales and marketing expenses 36,584 1.1 50,814 0.9 53,064 8,155 0.9 General and administrative expenses 40,142 1.1 77,965 1.3 59,954 9,215 1.0 Product development expenses 24,280 0.7 54,304 0.9 49,602 7,624 0.8 Total share-based compensation expenses 107,945 3.1% 195,393 3.3% 177,786 27,325 2.9% Year Ended December 31, 2017 Compared to Year Ended December 31, 2016Net Revenues. Our net revenues increased by 4.2% from RMB5,961.6 million in 2016 to RMB6,210.2 million (US$954.5 million) in 2017. Thisincrease was due to a 33.7% increase in combined revenues from media and leads generation services, partially offset by the decrease in revenues from directvehicle sales as part of the Company’s implementation of an asset-light strategy.Media services. Our media services revenues increased by 31.3% from RMB2,347.6 million in 2016 to RMB3,083.5 million (US$473.9 million) in2017. This increase was due to increased revenue from automaker advertising services and regional marketing campaigns conducted by certain automobilebrands’ regional offices.The increase in revenues from our media services was attributable to 23.5% increase in average revenue per automaker advertiser fromRMB24.7 million in 2016 to RMB30.5 million (US$4.7 million) in 2017, as automakers continued to allocate more of their advertising budgets to our onlineadvertising and marketing channels, with increasingly diversified and optimized portfolio of products being offered.Leads generation services. Leads generation services revenues increased by 36.5% from RMB1,916.4 million in 2016 to RMB2,616.0 million(US$402.1 million) in 2017. The increase in leads generation services revenues was mainly driven by 21.1% year-over-year increase in average revenue perpaying dealer from RMB79.5 thousand in 2016 to RMB96.3 thousand (US$14.8 thousand) in 2017 as dealers continue to allocate a greater portion of theirbudgets to our services, as well as an expanded dealer client base. We provided leads generation services to 27,167 dealers in 2017, compared with 24,096dealers in 2016. 76Table of ContentsOnline marketplace. Online marketplace revenues were RMB510.7 million (US$78.5 million) in 2017 compared to RMB1,697.6 million in 2016.Revenues from direct vehicle sales account for 96.3% and 70.0% of online marketplace revenues in 2016 and 2017, respectively.Cost of Revenues. Our cost of revenues decreased by 43.2% from RMB2,393.2 million in 2016 to RMB1,358.7 million (US$208.8 million) in 2017,primarily due to a decrease in cost of sales related to direct vehicle sales.Content-related Costs. Our content-related costs increased by 45.1% from RMB269.3 million in 2016 to RMB390.9 million (US$60.1 million) in2017, primarily due to a 20.3% increase of salaries and benefits of our editorial personnel (including share-based compensation expenses) fromRMB116.0 million in 2016 to RMB139.5 million (US$21.4 million) in 2017. Our content-related costs included share-based compensation expenses, whichincreased from RMB12.3 million in 2016 to RMB15.2 million (US$2.3 million) in 2017.Depreciation and Amortization Expenses. Our depreciation and amortization expenses were RMB41.6 million (US$6.4 million) in 2017 compared toRMB42.6 million in 2016.Bandwidth and IDC Costs. Our bandwidth and IDC costs increased by 73.6% from RMB51.8 million in 2016 to RMB89.9 million (US$13.8 million)in 2017, primarily due to increased bandwidth and IDC requirements to fulfill the growth of our user traffic, improve the user experience and enhance our bigdata analysis capabilities.VAT and Surcharges. VAT and related surcharges increased by 38.8% from RMB349.4 million for 2016 to RMB484.8 million (US$74.5 million) in2017, as a result of increased revenues.Cost of sales including tax. Cost of sales including tax were RMB351.5 million (US$54.0 million) in 2017 compared to RMB1,680.1 million in 2016.RMB50.2 million and RMB1.5 million (US$0.2 million) of write-down was recorded in cost of sales in 2016 and 2017, respectively.Operating Expenses. Our operating expenses increased by 16.3% from RMB2,415.1 million in 2016 to RMB2,808.2 million (US$431.6 million) in2017, primarily due to increases in product development expenses and sales and marketing expenses.Sales and Marketing Expenses. Our sales and marketing expenses increased by 7.2% from RMB1,536.9 million in 2016 to RMB1,647.5 million(US$253.2 million) in 2017. This increase was primarily due to (i) a 13.1% increase in marketing and promotional expenses from RMB879.1 million in 2016to RMB994.4 million (US$152.8 million) in 2017, mainly in connection with the promotion of our mobile platforms and offline execution and promotionalexpenses, and (ii) a 5.1% increase in salaries and benefits (including share-based compensation expenses) from RMB528.6 million in 2016 toRMB555.8 million (US$85.4 million) in 2017, which is in line with our overall growth. As a percentage of net revenues, sales and marketing expenses were26.5% in 2017, compared to 25.8% in 2016. Our sales and marketing expenses in 2017 included share-based compensation expenses of RMB53.1 million(US$8.2 million), compared to RMB50.8 million in 2016.General and Administrative Expenses. Our general and administrative expenses decreased by 8.1% from RMB306.8 million in 2016 toRMB282.0 million (US$43.3 million) in 2017. This decrease was primarily attributable to a 4.6% decrease in salaries and benefits (including share-basedcompensation expenses) from RMB190.4 million in 2016 to RMB181.7 million (US$27.9 million) in 2017. As a percentage of net revenues, general andadministrative expenses decreased from 5.2% in 2016 to 4.5% in 2017. Our general and administrative expenses for 2017 included share-based compensationexpenses of RMB60.0 million (US$9.2 million), compared to RMB78.0 million in 2016.Product Development Expenses. Our product development expenses increased by 53.8% from RMB571.4 million in 2016 to RMB878.8 million(US$135.1 million) in 2017. The increase was primarily attributable to a 41.1% increase in salaries and benefits (including share-based compensationexpenses) from RMB505.7 million in 2016 to RMB713.6 million (US$109.7 million) in 2017, as a result of the increase in product development headcount,which is in line with our overall growth and continuous reinvestment in future growth opportunities. As a percentage of net revenues, product developmentexpenses increased from 9.6% in 2016 to 14.2% in 2017. Our product development expenses for 2017 included share-based compensation expenses ofRMB49.6 million (US$7.6 million), compared to RMB54.3 million in 2016. 77Table of ContentsIncome before Income Taxes. Our income before income taxes was RMB2,261.5 million (US$347.6 million) in 2017 compared toRMB1,248.9 million in 2016.Income Tax Expense. We incurred income tax expense of RMB267.1 million (US$41.1 million) in 2017, a significant increase compared withRMB32.6 million in 2016, primarily due to an increase in taxable income and withholding tax liability associated with special cash dividend.Net Income Attributable to Autohome Inc. As a result of the foregoing, we had net income attributable to Autohome Inc. of RMB2,001.6 million(US$307.6 million) in 2017, increased by 63.0% compared with net income attributable to Autohome Inc. of RMB1,227.9 million in 2016.Year Ended December 31, 2016 Compared to Year Ended December 31, 2015Net Revenues. Our net revenues increased by 72.1% from RMB3,464.0 million in 2015 to RMB5,961.6 million in 2016. This increase was due to thesignificant revenue growth from our online marketplace and a 29.9% increase in revenues from media and leads generation services.Media services. Our media services revenues increased by 25.0% from RMB1,878.4 million in 2015 to RMB2,347.6 million in 2016. This increase wasdue to increased revenue from automaker advertising services and regional marketing campaigns conducted by certain automobile brands’ regional offices.The increase in revenues from our media services was attributable to 14.5% increase in average revenue per automaker advertiser fromRMB21.6 million in 2015 to RMB24.7 million in 2016, as automakers continued to allocate more of their advertising budgets to our online advertising andmarketing channels.Leads generation services. Leads generation services revenues increased by 36.5% from RMB1,403.9 million in 2015 to RMB1,916.4 million in 2016.The increase in leads generation services revenues was mainly driven by 23.8% year-over-year increase in average revenue per paying dealer fromRMB64.2 thousand in 2015 to RMB79.5 thousand in 2016 as dealers continue to allocate a greater portion of their budgets to our services. We providedleads generation services to 24,096 dealers in 2016, compared with 21,858 dealers in 2015.Online marketplace. Online marketplace revenues were RMB1,697.6 million in 2016 compared to RMB181.7 million in 2015. Revenues from directvehicle sales were RMB133.6 million and RMB1,635.1 million in 2015 and 2016, respectively, accounting for 73.6% and 96.3% of online marketplacerevenues.Cost of Revenues. Our cost of revenues increased by 257.7% from RMB669.1 million in 2015 to RMB2,393.2 million in 2016, primarily due to anincrease in cost of sales related to direct vehicle sales.Content-related Costs. Our content-related costs increased by 45.9% from RMB184.6 million in 2015 to RMB269.3 million in 2016, primarily due toa 36.7% increase of salaries and benefits of our editorial personnel (including share-based compensation expenses) from RMB84.9 million in 2015 toRMB116.0 million in 2016. Our content-related costs included share-based compensation expenses, which increased from RMB6.9 million in 2015 toRMB12.3 million in 2016.Depreciation and Amortization Expenses. Our depreciation and amortization expenses were RMB42.6 million in 2016 compared to RMB43.2 millionin 2015.Bandwidth and IDC Costs. Our bandwidth and IDC costs increased by 33.1% from RMB38.9 million in 2015 to RMB51.8 million in 2016, primarilydue to increased bandwidth and IDC requirements to fulfill the growth of our user traffic, improve the user experience and enhance our big data analysiscapabilities. 78Table of ContentsVAT and Surcharges. VAT and related surcharges increased by 29.6% from RMB269.5 million for 2015 to RMB349.4 million in 2016, as a result ofincreased revenues.Cost of sales including tax. Cost of sales including tax were RMB1,680.1 million in 2016 compared to RMB132.9 million in 2015. Nil andRMB50.2 million of write-down was recorded in cost of sales in 2015 and 2016, respectively.Operating Expenses. Our operating expenses increased by 51.4% from RMB1,595.0 million in 2015 to RMB2,415.1 million in 2016, primarily due toincreases in sales and marketing expenses, product development expenses and general and administrative expenses.Sales and Marketing Expenses. Our sales and marketing expenses increased by 36.3% from RMB1,127.5 million in 2015 to RMB1,536.9 million in2016. This increase was primarily due to (i) a 38.3% increase in marketing and promotional expenses from RMB635.6 million in 2015 to RMB879.1 millionin 2016, mainly in connection with the promotion of our mobile platforms including mobile applications, and (ii) a 27.0% increase in salaries and benefits(including share-based compensation expenses) from RMB416.2 million in 2015 to RMB528.6 million in 2016, which is in line with our overall growth. Asa percentage of net revenues, sales and marketing expenses decreased from 32.6% in 2015 to 25.8% in 2016. Our sales and marketing expenses in 2016included share-based compensation expenses of RMB50.8 million, compared to RMB36.6 million in 2015.General and Administrative Expenses. Our general and administrative expenses increased by 58.4% from RMB193.7 million in 2015 toRMB306.8 million in 2016. This increase was primarily attributable to a 79.5% increase in salaries and benefits (including share-based compensationexpenses) from RMB106.1 million in 2015 to RMB190.4 million in 2016. As a percentage of net revenues, general and administrative expenses decreasedfrom 5.6% in 2015 to 5.2% in 2016. Our general and administrative expenses for 2016 included share-based compensation expenses of RMB78.0 million,compared to RMB40.1 million in 2015.Product Development Expenses. Our product development expenses increased by 108.6% from RMB273.9 million in 2015 to RMB571.4 million in2016. The increase was primarily attributable to a 107.4% increase in salaries and benefits (including share-based compensation expenses) fromRMB243.8 million in 2015 to RMB505.7 million in 2016, as a result of the increase of product development headcount, which is in line with our overallgrowth and continuous reinvestment in future growth opportunities. As a percentage of net revenues, product development expenses increased from 7.9% in2015 to 9.6% in 2016. Our product development expenses for 2016 included share-based compensation expenses of RMB54.3 million, compared toRMB24.3 million in 2015.Income before Income Taxes. Our income before income taxes was RMB1,248.9 million in 2016 compared to RMB1,276.2 million in 2015.Income Tax Expense. We incurred income tax expense of RMB32.6 million in 2016, a significant decrease compared with RMB285.5 million in2015, primarily due to change in the enacted tax rate of Beijing Prbrownies which resulted in tax benefit of RMB173.6 million being recorded in 2016.Net Income Attributable to Autohome Inc.. As a result of the foregoing, we had net income attributable to Autohome Inc. of RMB1,227.9 million in2016, increased by 24.0% compared with net income attributable to Autohome Inc. of RMB990.6 million in 2015.InflationSince our inception, inflation in China has not materially impacted our results of operations. According to the National Bureau of Statistics of China,the consumer price index in China increased by 1.4%, 2.0% and 1.6% in 2015, 2016 and 2017, and the year-over-year percent changes in the consumer priceindex for December 2015, 2016 and 2017 were increases of 1.6%, 2.1% and 1.8%, respectively. Although we have not in the past been materially affected byinflation since our inception, we can provide no assurance that we will not be affected in the future by higher rates of inflation in China. 79Table of ContentsRecent Accounting PronouncementsSee Item 17 of Part III, “Financial Statements—Note 2—Summary of significant accounting policies—Recent accounting pronouncements.” B.Liquidity and Capital ResourcesCash Flows and Working CapitalOur principal sources of liquidity are cash generated from our operating activities and our issuance of ADSs. In December 2013, we completed ourinitial public offering and raised net proceeds of US$142.6 million, after deducting underwriting commissions and discounts and expenses. In November2014, we completed our 2014 Offering and raised net proceeds of US$97.3 million, after deducting underwriting commissions and discounts and expenses.Our principal uses of cash for 2015, 2016 and 2017 were operating activities, including employee compensation, tax expenses, marketing expenses,bandwidth and IDC costs and purchase of vehicles, investments and other capital expenditures. As of December 31, 2017, we had cash and cash equivalentsand short-term investments altogether amounting to RMB8,154.2 million (US$1,253.3 million).We believe that our current cash and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs, including our cashneeds for at least the next 12 months. We may require additional cash due to unanticipated business conditions or other future developments. We may alsoneed additional cash resources if we find and wish to pursue opportunities for investments, acquisitions, strategic cooperation or other similar actions. If ourexisting cash is insufficient to meet our requirements, we may seek to sell additional equity securities, debt securities or secure debt funding from financialinstitutions.The following table sets forth a summary of our cash flows for the years indicated. For the Year Ended December 31, 2015 2016 2017 RMB RMB RMB US$ (in thousands) Net cash generated from operating activities 1,461,841 1,625,896 2,473,018 380,096 Net cash used in investing activities (407,657) (514,906) (4,913,827) (755,241) Net cash generated from financing activities 30,200 27,920 61,070 9,386 Effect of exchange rate changes on cash and cash equivalents 13,847 2,354 (2,584) (397) Net increase/(decrease) in cash and cash equivalents 1,098,231 1,141,264 (2,382,323) (366,156) Cash and cash equivalents at beginning of year 1,054,416 2,152,647 3,293,911 506,265 Cash and cash equivalents at end of year 2,152,647 3,293,911 911,588 140,109 Operating ActivitiesNet cash generated from operating activities was RMB2,473.0 million (US$380.1 million) for 2017. This amount was primarily attributable to netincome of RMB1,994.5 million (US$306.5 million), (a) adjusted for (i) certain non-cash items, primarily including share-based compensation expenses ofRMB177.8 million (US$27.3 million), deferred income taxes of RMB12.3 million (US$1.9 million), depreciation of property and equipment ofRMB81.9 million (US$12.6 million), loss from equity method investments of RMB10.6 million (US$1.6 million), and fair value change of short-terminvestments of RMB29.0 million (US$4.5 million) and (ii) changes in operating assets and liabilities that positively affected operating cash flow, primarilydue to an increase in accrued expenses and other payables of RMB425.3 million (US$65.4 million), an increase in deferred revenue of RMB397.3 million(US$61.1 million), a decrease in prepaid expenses and other current assets of RMB191.3 million (US$29.4 million), a decrease in inventory ofRMB94.1 million (US$14.5 million) and a decrease in restricted cash of RMB9.3 million (US$1.4 million), (b) partially offset by changes in operating assetsand liabilities that negatively affected operating cash flow, primarily due to an increase in accounts receivable of RMB688.9 million (US$105.9 million),decrease in income tax payable of RMB172.4 million (US$26.5 million), and a decrease in notes payable of RMB31.1 million (US$4.8 million). The increasein accrued expenses and other payables was mainly due to the increase in accrued rebates to advertising agencies in accordance with the growth of mediaservice revenues, accrual for the year-end bonuses to employees during the period and marketing expenses. The increase in deferred revenue was mainlyattributable to the growth of our dealer subscription services. The decrease in prepaid expenses and other current assets and inventories was attributable to theclearance of direct sales vehicle inventories. The decrease in restricted cash and notes payable was primarily due to the maturity and settlement of short-termbank acceptance notes used for the purchase of new vehicles. The increase in accounts receivable was primarily due to the increase of our media services. 80Table of ContentsNet cash generated from operating activities was RMB1,625.9 million for 2016. This amount was primarily attributable to net income ofRMB1,216.2 million, (a) adjusted for (i) certain non-cash expenses, primarily share-based compensation expenses of RMB195.4 million, deferred incometaxes of RMB103.8 million, depreciation of property and equipment of RMB65.2 million, and write-down of inventories and prepayment for vehiclepurchase cost of RMB50.2 million and (ii) changes in operating assets and liabilities that positively affected operating cash flow, primarily an increase inaccrued expenses and other payables of RMB308.9 million, an increase in deferred revenue of RMB139.7 million and a decrease in restricted cash ofRMB51.8 million, (b) partially offset by changes in operating assets and liabilities that negatively affected operating cash flow, primarily a decrease in notespayable of RMB143.9 million, an increase in accounts receivable of RMB132.8 million and increase in prepaid expenses and other current assets ofRMB77.6 million. The increase in accrued expenses and other payables was mainly due to the increase in accrued rebates to advertising agencies inaccordance with growth of media service revenues, accrual for the year-end bonuses to employees during the period and customer deposit received. Theincrease in deferred revenue was mainly attributable to the growth of our dealer subscription services. The decrease in restricted cash and notes payable wasprimarily due to the maturity and settlement of short-term bank acceptance notes used for the purchase of new vehicles. The increase in accounts receivablewas primarily due to the increase of our media services. The increase in prepaid expenses and other current assets was mainly due to the advance payment forpurchase of new vehicles.Net cash generated from operating activities was RMB1,461.8 million for 2015. This amount was primarily attributable to net income ofRMB990.6 million, (a) adjusted for (i) certain non-cash expenses, primarily share-based compensation expenses of RMB107.9 million, depreciation ofproperty and equipment of RMB51.3 million and deferred income taxes of RMB6.5 million, and (ii) changes in operating assets and liabilities that positivelyaffected operating cash flow, primarily an increase in deferred revenue of RMB433.7 million and an increase in accrued expenses and other payables ofRMB316.7 million, and (b) partially offset by changes in operating assets and liabilities that negatively affected operating cash flow, primarily an increase inaccounts receivable of RMB340.9 million and increase in prepaid expenses and other current assets of RMB264.4 million and inventories ofRMB111.7 million. The increase in deferred revenues was mainly attributable to the growth of our dealer subscription services. The increase in accruedexpenses and other payables was mainly due to the increase in accrued rebates to advertising agencies in accordance with growth of revenue and accrual forthe year-end bonuses to employees during the period. The increase in accounts receivable was primarily due to the increase of our advertising services. Theincrease in prepaid expenses and inventories was mainly due to the advance payment for and purchase of vehicles.Investing ActivitiesNet cash used in investing activities was RMB4,913.8 million (US$755.2 million) in 2017, which was primarily attributable to the purchase of termdeposits and adjustable-rate financial products, capital expenditures primarily related to the purchase of electronic equipment, purchase of operating licenseand investment in and disposal of equity investees.Net cash used in investing activities was RMB514.9 million in 2016, which was primarily attributable to the purchase of term deposits and adjustable-rate financial products, capital expenditures primarily related to purchase of electronic equipment and leasehold improvements and investment in our newjoint ventures. 81Table of ContentsNet cash used in investing activities was RMB407.7 million in 2015, which was primarily attributable to the purchase of term deposits, the investmentin our new joint ventures and the capital expenditures primarily related to purchase of electronic equipment and leasehold improvements.Financing ActivitiesNet cash generated from financing activities in 2017 was RMB61.1 million (US$9.4 million), which was attributable to proceeds from exercise ofshare-based awards.Net cash generated from financing activities in 2016 was RMB27.9 million, which was primarily attributable to proceeds from exercise of share-basedawards.Net cash generated from financing activities in 2015 was RMB30.2 million, which was attributable to proceeds from exercise of share-based awards.Capital ExpendituresCash outflow in connection with capital expenditures amounted to RMB89.2 million, RMB88.8 million and RMB86.4 million (US$13.3 million) in2015, 2016 and 2017, respectively. These capital expenditures were primarily used to purchase servers and other electronic equipment for our business andleasehold improvements.Holding Company StructureOur ability to pay dividends is primarily dependent on our receiving distributions of funds from our subsidiaries. Relevant PRC statutory laws andregulations permit payments of dividends by our PRC subsidiaries only out of their retained earnings, if any, as determined in accordance with PRCaccounting standards and regulations. The results of operations reflected in the consolidated financial statements prepared in accordance with U.S. GAAPdiffer from those reflected in the statutory financial statements of our PRC subsidiaries.Under PRC law, our PRC subsidiaries are required to provide for certain statutory reserves, namely a general reserve, an enterprise expansion fund and astaff welfare and bonus fund and allocate at least 10% of their after-tax profits on an individual company basis as determined under PRC accountingstandards to the general reserve, and have the right to discontinue allocations to the general reserve if such reserve has reached 50% of registered capital onan individual company basis. In addition, they are also required to make appropriations to the enterprise expansion fund and staff welfare and bonus fund atthe discretion of their respective boards of directors. Our VIEs in the PRC are also subject to similar statutory reserve requirements. These reserves can only beused for specific purposes and are not transferable to us in the form of loans, advances or cash dividends. As of December 31, 2015, 2016 and 2017, our PRCsubsidiaries and our VIEs had appropriated RMB19.2 million, RMB36.0 million and RMB51.8 million (US$8.0 million), respectively, of retained earningsfor their statutory reserves.As a result of these PRC laws and regulations, prior to allocations of after-tax profits to the statutory reserves, our PRC subsidiaries and VIEs arerestricted in their ability to transfer a portion of their net assets to us.Foreign exchange and other regulation in the PRC may further restrict our PRC subsidiaries and VIEs from transferring funds to us in the form ofdividends, loans and advances. As of December 31, 2016 and 2017, the amounts of the net restricted assets of our PRC subsidiaries and our VIEs wereRMB5,165.7 million and RMB6,789.4 million (US$1,043.5 million), respectively. C.Research and Development, Patents and Licenses, Etc.Technology and Product DevelopmentOur technologies and infrastructure are critical to our success. We follow a user-centric strategy for our system architecture and have developed robustand scalable technology platforms with sufficient flexibility to support our rapid growth. 82Table of ContentsA key component of our user-centric strategy is our user intelligence engine which we have developed and are continually enhancing. Our userintelligence engine allows us to rapidly gather user intelligence by analyzing large amounts of data from many sources throughout our content productionsystem. We can utilize such user intelligence data to personalize user interfaces, associate and understand the relationship of information from differentsources and facilitate interactions among users and various elements on our websites and mobile applications. It also helps us recommend suitable products,services and user connections to our users. Through our user intelligence engine, we can engage our users more closely by providing them with relevantcontent. We are also able to provide precision marketing services to our automakers, dealers and other automotive-related customers so that they can deliverrelevant advertisements to targeted users who are more receptive to such marketing information.We distribute our web content to numerous network nodes close to our users by utilizing the content delivery networks, allowing most of our usercommunications to bypass internet congestion. With our technological expertise, we manage the content delivery networks to enhance our websiteresponsiveness and to improve user experience. As such, we believe our websites have a performance advantage over other automotive vertical websites.We invested heavily in mobile technologies and were among the earliest in our industry in China to introduce a mobile version of our websites andboth Apple iOS- and Android-based applications to allow our users to easily access our content. We have built up a team of research and developmentpersonnel to focus exclusively on the development of our mobile websites and applications and to explore new business models and opportunities throughmobile technology. We plan to continue to leverage our mobile technology to enhance the functions and user interfaces of our mobile applications for AppleiOS- and Android- platforms focusing on convenience, real-time interaction and location based services.We had an experienced product development team of 1,659 engineers as of December 31, 2017. Our past innovation has focused on helping usersresearch, select and purchase suitable automobiles through our websites. We plan to develop additional products and services for our mobile applications andmedia-related technology, enhance the big data analysis capabilities as well as AR and VR related technologies. Our product development expenses wereRMB273.9 million, RMB571.4 million and RMB878.8 million (US$135.1 million) for the years ended December 31, 2015, 2016 and 2017, respectively.Intellectual PropertyOur intellectual property includes trademarks and trademark applications related to our brands and services, software copyrights, trade secrets and otherintellectual property rights and licenses. We seek to protect our intellectual property assets and brands through a combination of trademark, patent, copyrightand trade secret protection laws in the PRC and other jurisdictions, as well as through confidentiality agreements and other measures.We hold “汽车之家” and “车之家” (both mean “auto home” in English) and “AUTOHOME®” trademarks in China. In addition, as at December 31,2017, we held 175 pending trademark applications and 143 registered trademarks in China. As at the same date, we had 61 registered domain names,including our main website domain names, autohome.com.cn and che168.com, 119 pending patent applications and 73 registered patents. We had 204computer software copyrights as of December 31, 2017. D.Trend InformationOther than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events since thebeginning of our fiscal year 2017 that are reasonably likely to have a material effect on our net revenues, income from operations, profitability, liquidity orcapital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial condition. E.Off-Balance Sheet ArrangementsWe have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have notentered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity. Furthermore, we do not have any retained orcontingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have anyvariable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or researchand development services with us. 83Table of ContentsF.Tabular Disclosures of Contractual ObligationsThe following summarizes our contractual obligations as of December 31, 2017: Payments Due by Period Less than1 Year 1 to 3 years 3 to 5 Years More than5 Years Total (in thousands of RMB) Operating lease obligations(1) 82,360 48,982 — — 131,342 (1)Operating lease obligations primarily related to the lease of office space.Rental expenses for the years ended December 31, 2015, 2016 and 2017 were RMB49.9 million, RMB84.7 million and RMB95.7 million (US$14.7million), respectively. G.Safe HarborSee “Forward-Looking Statements” on page 1 of this annual report.ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A.Directors and Senior ManagementThe following table sets forth information regarding our directors and executive officers as of the date of this annual report. Directors and Executive Officers Age Position/TitleMin Lu 57 Chairman of the Board and Chief Executive OfficerDong Liu 53 DirectorHan Qiu 43 DirectorZheng Liu 49 DirectorJunling Liu 53 Independent DirectorTianruo Pu 49 Independent DirectorDazong Wang 63 Independent DirectorJun Zou 47 Chief Financial OfficerHaifeng Shao 46 PresidentMr. Min Lu has served as our chairman of the board and our chief executive officer since June 2016. Before joining our company, Mr. Min Lu was thechief of the strategy center of Ping An Insurance (Group) Company of China, Ltd., or Ping An Group. Having worked at Ping An for 20 years, Mr. Lu is anexperienced professional in the Chinese insurance industry, as well as a specialist in strategic development. Mr. Lu has also served as deputy general managerof Ping An Life Insurance Company of China, Ltd., or Ping An Life, and general manager of the bank assurance business unit of Ping An Life. From 2009 to2014, Mr. Lu served as chairman and chief executive officer of Ping An Health Insurance Company of China, Ltd. Mr. Lu holds an MBA degree from theUniversity of Dundee.Mr. Dong Liu has served as our director since June 2016. Mr. Dong Liu joined Ping An Group in 2014 and is currently deputy general manager ofChina Ping An Trust Co., Ltd., or Ping An Trust, and general manager of the Private Equity Investments Group. Prior to joining Ping An Group, Mr. Liu waschief representative of the Government of Singapore Investment Corporation, or GIC, Greater China, and Senior Vice President of GIC from 2007 to 2014,principal investment officer of IFC China from 2003 to 2007, senior investment officer of the International Finance Corporation, part of The World BankGroup, in Washington D.C. from 1998 to 2003 and senior economist at The World Bank Group in Washington D.C. from 1994 to 1998. Mr. Liu has morethan 20 years of international and domestic investment experience. Since returning to China in 2003, Mr. Liu has led investments in sectors such as theconsumer, healthcare, education, environmental protection, financial services, technology and agribusiness industries. 84Table of ContentsMs. Han Qiu has served as our director since June 2016. Ms. Han Qiu is the general manager of Shenzhen Qianhai Credit Service Company and thedeputy general manager of Shanghai Yizhangtong Network Technology Co., Ltd., subsidiaries of Ping An Group. With over 15 years of experience infinance, risk management and data science, Ms. Qiu has deep technical knowledge in big data and analytics. Prior to her current role, Ms. Qiu headed theGroup Big Data Center at Ping An Group. In addition, Ms. Qiu has served as head of change at Standard Chartered Bank and vice president of businessintelligence at Fullerton Financial Holdings/Temasek Holdings. Ms. Qiu has also previously worked as an associate at McKinsey & Company and heldtechnical leadership positions at GE Money/GE Capital.Mr. Zheng Liu has served as our director since December 2017. Mr. Liu currently serves as the deputy general manager of Ping An Property InsuranceCompany of China and the general director of its agency business unit. Mr. Liu has nearly 25 years of experience in business management and the industry ofinsurance, in particular property insurance. He joined Ping An Group in 1993 and has served consecutively as the assistant to the general manager, the deputygeneral manager and the general manager of Ping An Property Insurance Company of China’s Beijing Branch. In 2011, Mr. Liu was relocated to Ping AnProperty Insurance Company of China’s headquarters, and has since then served consecutively as its deputy general manager and general director of westernChina business unit, then its deputy general manager and general director of new sales channel business unit, and its deputy general manager and generaldirector of northern Chines business unit. Mr. Zheng Liu received a Bachelor of Laws degree from Sun Yat-sen University in 1991.Mr. Junling Liu has served as our independent director since January 2015. Mr. Liu is the co-founder and Chairman of New Peak Group, a leadingdigital and mobile health group in China since 2015. Before New Peak Group, he was the co-founder and chief executive officer of Yihaodian from 2008 to2015. Before 2008, Mr. Liu was the co-president of Dell China and Hong Kong. Prior to that, he was a managing director of Avaya China. Mr. Liu receivedhis Master of International Business Administration from Flinders University in Australia.Mr. Tianruo Pu has served as our independent director since December 2016. Mr. Pu currently serves as an independent director and chairman of theaudit committee of JMU Limited (NASDAQ: JMU), the former Wowo Limited, a Chinese internet e-commerce company listed on the NASDAQ, as anindependent director and member of the audit committee of Renren Inc., a Chinese social network platform listed on the New York Stock Exchange, and as anindependent director and chairman of the audit committee of 3SBio Inc., a Chinese bio-pharmaceutical company listed on the Hong Kong Stock Exchange.Mr. Pu is also the chief financial officer of Zhaopin Limited, a leading career platform in China. Mr. Pu has more than twenty years of work experience infinance and accounting in both the United States and China. Prior to joining Zhaopin, Mr. Pu was the chief financial officer of UTStarcom, a globaltelecommunications equipment company listed on the NASDAQ, and prior to that, Mr. Pu served as the chief financial officer at China NuokangBio-Pharmaceutical Inc. Mr. Pu received an MBA degree from Northwestern University Kellogg School of Management in 2000 and a Master of Sciencedegree in accounting from the University of Illinois in 1996.Dr. Dazong Wang has served as our independent director since December 2016. Dr. Wang has been the founder and the chairman of Ophoenix CapitalManagement since 2011. Dr. Wang also serves as a director of FUBA Automotive Electronics GmbH, Germany, a leading supplier of automotive receptionsystems, as a director of Merit Automotive Electronics Systems, S.L., Spain, a leading supplier of complex automotive mechatronics modules and as a directorof Committee of 100, a non-profit membership organization of prominent Chinese Americans. From 2008 to 2011, Dr. Wang was the president and chiefexecutive officer of Beijing Automotive Industry Corporation. From 2006 to 2008, Dr. Wang served as the vice president of Shanghai Automotive IndustryCorporation, where he was responsible for engineering and key component operations. Before that, Dr. Wang served several positions in General MotorsCompany, or GM, from 1985 to 2006, including, senior staff engineer, China country manager and engineering director for North America operations.Dr. Wang received a Ph.D. degree from Cornell University and a Master of Science degree from Huazhong University of Science and Technology in China. 85Table of ContentsMr. Jun Zou has served as our chief financial officer since September 2017. Mr. Zou has over 23 years of experience in financial management andcapital markets in the U.S., Europe and China. He most recently served as iDreamSky’s chief financial officer from 2014 to 2016, during which time he led thecompany’s initial public offering on the Nasdaq Global Select Market and the company’s subsequent privatization. Prior to joining iDreamSky, Mr. Zouserved as the chief financial officer for several U.S.-listed Chinese companies, including E-Commerce China Dangdang Inc. (NYSE: DANG, now privatized), aleading business-to-consumer e-commerce company in China from 2012 to 2014, and Xunlei Ltd. (NASDAQ: XNET), a leading cloud-based accelerationtechnology company in China from 2010 to 2012. He has also worked as the chief financial officer for the global technical services business unit and thehead of the global customer financing and treasury at Huawei Technologies, a Fortune 500 technology company in China from 2006 to 2008. Beforereturning to China, Mr. Zou served in progressive managerial roles in treasury, customer finance, strategic planning and eventually as global controller forthe managed services business unit at Ericsson in the U.S. and Sweden. Mr. Zou received a master degree in business administration from the University ofTexas in the U.S. and a bachelor degree in international business and economics from Shanghai International Studies University in China.Mr. Haifeng Shao has served as our president since February 2018. Mr. Shao worked for Ping An Group for over 22 years, including 15 years as a seniormanager in the financial services division, and seven years in its internet finance division. He joined Ping An Group in 1996 where he served successively asthe General Assistant Manager of Ping An Life Insurance, Shanghai Branch; the Deputy General Manager of Ping An Life Insurance, Yunnan Branch; and theDeputy General Manager of Ping An Annuity Insurance. Starting 2012, Mr. Shao served as the General Manager of Ping An E-wallet. In 2016, Mr. Shaoserved as the General Manager of Ping An Finance One Account. Mr. Shao received a Bachelor of Arts in Literature from Nanjing Normal University in 1995. B.Compensation of Directors and Executive OfficersFor the fiscal year ended December 31, 2017, we incurred an aggregate compensation expense of approximately RMB13.6 million (US$2.1 million) forour executive officers and directors (not including share-based compensation expenses). Our PRC subsidiaries and VIEs are required by law to makecontributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance, housingfund and other statutory benefits. Other than the above-mentioned statutory contributions mandated by applicable PRC law, we have not set aside or accruedany amount to provide pension, retirement or other similar benefits to our executive officers and directors. For additional information on share incentivegrants to our directors and executive officers, see “—Share Incentive Plans.”Employment AgreementsWe have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employedfor a specified time period. We may terminate employment for cause at any time without advance notice or remuneration for certain acts of the executiveofficer, such as a conviction or plea of guilty to a felony or any crime involving moral turpitude, negligent or dishonest acts to our detriment, or misconductor a failure to perform agreed duties. In such case, the executive officer will not be entitled to receive payment of any severance benefits or other amounts byreason of the termination, and the executive officer’s right to all other benefits will terminate, except as required by any applicable law. We may alsoterminate an executive officer’s employment without cause upon one-month advance written notice. In such case of termination by us, we are required toprovide compensation to the executive officer, including cash compensation determined based on the term of office of the involved executive officer. Theexecutive officer may terminate the employment at any time with a one-month advance written notice, if there is any significant change in the executiveofficer’s duties and responsibilities inconsistent in any material and adverse respect with his or her title and position, or a material reduction in the executiveofficer’s annual salary before the next annual salary review, or if otherwise approved by the board of directors.Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence andnot to use, except as required in the performance of his duties in connection with the employment, any of our confidential information or trade secrets, anyconfidential information or trade secrets of our clients or prospective clients, or the confidential or proprietary information of any third party received by usand for which we have confidential obligations. The executive officers have also agreed to disclose in confidence to us all inventions, designs and tradesecrets which they conceive, develop or reduce to practice and to assign all right, title and interest in them to us, and assist us in obtaining patents, copyrightsand other legal rights for these inventions, designs and trade secrets. 86Table of ContentsIn addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or heremployment. Specifically, each executive officer has agreed not to (a) approach our clients, advertisers or contacts or other persons or entities introduced tothe executive officer for the purpose of doing business with such persons or entities that will harm our business relationships with these persons or entities;(b) assume employment with or provide services to any of our competitors, or engage, whether as principal, partner, licensor or otherwise, any of ourcompetitors; or (c) seek directly or indirectly, to solicit the services of any of our employees who is employed by us on or after the date of the executiveofficer’s termination, or in the year preceding such termination.Share Incentive Plans2011 Share Incentive PlanIn May 2011, we adopted our 2011 Share Incentive Plan to attract and retain the best available personnel, provide additional incentives to employees,directors and consultants and promote the success of our business. The maximum aggregate number of our Class A ordinary shares which may be issuedpursuant to all awards under the 2011 Share Incentive Plan, as currently in effect, is 7,843,100. As of March 31, 2018, options to purchase 98,337 Class Aordinary shares under the 2011 Share Incentive Plan at an exercise price of US$2.20 were outstanding. The following table summarizes, as of March 31, 2018,the outstanding options we had granted to our directors, officers and other individuals under our 2011 Share Incentive Plan: Name Options Exercise Price(US$/Share) Date of Grant Date ofExpiration Vesting ScheduleIndividuals other than directors andofficers as a group 98,337 US$2.20 May 6, 2011December 19, 2011October 22, 2013January 16, 2014 Ten years after grantdate Approximately4 years fromeach date ofgrantThe following paragraphs describe the principal terms of the 2011 Share Incentive Plan:Types of awards. The Plan permits the awards of incentive and non-statutory share-based awards, share appreciation rights, restricted shares andrestricted share units. The following briefly describes the principal features of the various awards that may be granted under the 2011 Share Incentive Plan. • Options. The administrator may grant incentive stock options, or ISOs, or non-statutory stock options, NSOs, under our 2011 Share IncentivePlan. Unless the administrator determines otherwise, the exercise price of options granted under our 2011 Share Incentive Plan must at least beequal to the fair market value of our ordinary shares on the date of grant and its term may not exceed ten years. In addition, for any participantwho owns more than 10% of the total combined voting rights of all classes of our outstanding shares, or of certain of our parent or subsidiary, theterm of an ISO must not exceed five years and the exercise price of such ISO must equal at least 110% of the fair market value on the grant date.The administrator determines the term of all other options.After termination of an employee, director or consultant, he or she may exercise his or her option, to the extent vested as of such date oftermination, within 60 days of termination, or such longer period of time stated in the option agreement. In the absence of a specified period oftime in the option agreement, the option will remain exercisable for a period of 12 months in the event of a termination due to death ordisability. However, in no event may an option be exercised later than the expiration of its term. • Share appreciation rights. Share appreciation rights may be granted under our 2011 Share Incentive Plan. Share appreciation rights allow therecipient to receive the appreciation in the fair market value of our Class A ordinary shares between the exercise date and the date of grant. Theexercise price of share appreciation rights granted under our 2011 Share Incentive Plan must at least be equal to the fair market value of ourClass A ordinary shares on the date of grant. The administrator determines the terms of share appreciation rights, including when such rights vestand become exercisable and whether to settle such awards in cash or with our ordinary shares, or a combination thereof. Share appreciation rightsexpire under the same rules that apply to options. 87Table of Contents • Restricted shares. Restricted shares may be granted under our 2011 Share Incentive Plan. Restricted share awards are Class A ordinary shares thatare subject to various restrictions, including restrictions on transferability and forfeiture provisions. Restricted shares will vest and therestrictions on such shares will lapse, in accordance with terms and conditions established by the administrator. The administrator will determinethe number of restricted shares granted to any employee. The administrator may impose whatever conditions to vesting it determines to beappropriate. For example, the administrator may set restrictions based on the achievement of specific performance goals and/or continued serviceto us. Holders of restricted share awards generally will have voting rights but not dividend rights, unless the administrator provides otherwise.Restricted shares that do not vest for any reason will be forfeited by the recipient and will revert to us. • Restricted Share Units. A restricted share unit award is the grant of the right to receive an ordinary share at a future date and may be subject toforfeiture. Our plan administrator has the discretion to set performance objectives or other vesting criteria that will determine the number or valueof restricted share units to be granted. Unless otherwise determined by our plan administrator, a restricted share unit is nontransferable and maybe forfeited or repurchased by us upon termination of employment or service during a restricted period. Our plan administrator, at the time ofgrant, specifies the dates on which the restricted share units become fully vested.Administration. Our board of directors or the compensation committee of our board of directors administers our 2011 Share Incentive Plan. Subject tothe provisions of our 2011 Share Incentive Plan, the administrator has the power to determine the terms of the awards, including the recipients, the exerciseprice, the number of shares subject to each such award, the vesting schedule applicable to the awards, together with any vesting acceleration, and the form ofconsideration payable upon exercise. The administrator also has the authority to modify or amend awards, to prescribe rules and to construe and interpret the2011 Share Incentive Plan. Our board of directors may delegate limited authority to additional committees with respect to certain employees and consultantsto reduce the burden on the board in administering the 2011 Share Incentive Plan.Award Agreement. Options, share appreciation rights, restricted shares, or restricted share units granted under the plan are evidenced by an awardagreement that sets forth the terms, conditions, and limitations for each grant.Eligibility. We may grant awards to our employees, directors and consultants of our company. However, we may grant options that are intended toqualify as incentive share-based awards only to our employees and employees of our parent companies and subsidiaries.Transferability. Unless the administrator provides otherwise, our 2011 Share Incentive Plan does not allow for the transfer of awards other than by willor the laws of descent and distribution and only the recipient of an award may exercise an award during his or her lifetime.Certain adjustments. In the event of certain changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefitsavailable under the 2011 Share Incentive Plan, the administrator will make adjustments to one or more of the number and class of shares that may bedelivered under the plan and/or the number, class and price of shares covered by each outstanding award and the numerical share limits contained in the plan.In the event of our proposed liquidation or dissolution, the administrator will notify participants as soon as practicable and all awards will terminateimmediately prior to the consummation of such proposed transaction.Change in control transactions. Our 2011 Share Incentive Plan provides that in the event of our merger or change in control, as defined in the 2011Share Incentive Plan, each outstanding award will be treated as the administrator determines, except that if the successor corporation or its parent orsubsidiary does not assume or substitute an equivalent award for each outstanding option or share appreciation right, then such option or share appreciationright will be exercisable for a period of time determined by the administrator in its sole discretion. The option or share appreciation right will then terminateupon the expiration of the specified period of time.Amendment and Termination. Our board of directors has the authority to amend, suspend or terminate the 2011 Share Incentive Plan. 88Table of Contents2013 Share Incentive PlanWe adopted the 2013 Share Incentive Plan in November 2013. The maximum aggregate number of Class A ordinary shares which may be issuedpursuant to all awards under the 2013 Share Incentive Plan is 3,350,000. As of March 31, 2018, 952,959 restricted shares under the 2013 Share Incentive planwere outstanding. The following table summarizes, as of March 31, 2018, the outstanding awards we granted under the 2013 Share Incentive Plan: Name Restricted Shares Date of Grant Vesting ScheduleMin Lu * March 23, 2017 Approximately four yearsfrom the date of grantJunling Liu * April 30, 2015 Approximately four yearsfrom each date of grant December 19, 2016 Tianruo Pu * December 19, 2016 Approximately four yearsfrom the date of grantDazong Wang * December 19, 2016 Approximately four yearsfrom the date of grantDirectors and officers as a group * BetweenApril 30, 2015toMarch 23, 2017 Approximately four yearsfrom each date of grantOther individuals as a group * BetweenMay 8, 2014toApril 13, 2017 Approximately four yearsfrom each date of grant *Less than one percent of our total outstanding share capital.The following paragraphs summarize the terms of the 2013 Share Incentive Plan:Types of awards. The 2013 Share Incentive Plan permits the awards of options, restricted shares and restricted share units. The following brieflydescribe the principal features of the various awards that may be granted under the 2013 Share Incentive Plan. • Options. Options provide for the right to purchase a specified number of our ordinary shares at a specified price and usually will becomeexercisable at the discretion of our plan administrator in one or more installments after the grant date. The option exercise price may be paid,subject to the discretion of the plan administrator, in cash or check, in our Class A ordinary shares which have been held by the option holder forsuch period of time as may be required by our plan administrator, in other property with value equal to the exercise price, through a broker-assisted cashless exercise, or by any combination of the foregoing. • Restricted Shares. A restricted share award is the grant of our Class A ordinary shares which are subject to certain restrictions and may be subjectto risk of forfeiture. Unless otherwise determined by our plan administrator, a restricted share is nontransferable and may be forfeited orrepurchased by us upon termination of employment or service during a restricted period. Our plan administrator may also impose otherrestrictions on the restricted shares, such as limitations on the right to vote or the right to receive dividends. • Restricted share units. A restricted share unit award is the grant of the right to receive an ordinary share at a future date and may be subject toforfeiture. Our plan administrator has the discretion to set performance objectives or other vesting criteria that will determine the number or valueof restricted share units to be granted. Unless otherwise determined by our plan administrator, a restricted share unit is nontransferable and maybe forfeited or repurchased by us upon termination of employment or service during a restricted period. Our plan administrator, at the time ofgrant, specifies the dates on which the restricted share units become fully vested. 89Table of ContentsPlan Administration. Our board or a committee of one or more members of our board duly authorized for the purpose of the 2013 Share Incentive Plancan act as the plan administrator.Award Agreement. Options, restricted shares or restricted share units granted under the 2013 Share Incentive Plan are evidenced by an award agreementthat sets forth the terms, conditions and limitations for each grant.Exercise Price. The exercise price in respect of any option shall be determined by the plan administrator and set forth in the award agreement whichmay be a fixed or variable price related to the fair market value of the shares. The exercise price per share subject to an option may be amended or adjusted inthe absolute discretion of the plan administrator, the determination of which shall be final, binding and conclusive.Eligibility. We may grant awards to our directors, employees or consultants.Term of the Options. The term of each option grant shall be no more than ten years from the date of the grant.Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is set forth in the award agreement.Transfer Restrictions. Unless otherwise determined by the plan administrator, no awards may be transferred other than by will or the laws of descentand distribution. Nevertheless, awards (other than incentive share-based awards) can be transferred to certain persons or entities related to the planparticipants.Termination. The 2013 Share Incentive Plan will expire in 2023 and may be terminated earlier with the approval of our board.Amended and Restated 2016 Share Incentive PlanOur board of directors adopted and amended the 2016 Share Incentive Plan, or the Amended and Restated 2016 Plan, in March 2017 and April 2017,respectively. The Amended and Restated 2016 Plan was approved by our Hong Kong Parent, Ping An Insurance (Group) Company of China, Ltd., a companylisted on the Hong Kong Stock Exchange, at its general meeting on June 16, 2017 and was subsequently approved, confirmed and ratified by ourshareholders at our extraordinary general meeting of shareholders on June 27, 2017. The maximum aggregate number of Class A ordinary shares which maybe issued pursuant to all awards under the Amended and Restated 2016 Plan is 4,890,000. As of March 31, 2018, options to purchase 1,404,630 Class Aordinary shares under the Amended and Restated 2016 Plan at exercise prices ranging from US$22.19 to US$69.90 were outstanding. The following tablesummarizes, as of March 31, 2018, the outstanding options we had granted under the Amended and Restated 2016 Plan: Name Options ExercisePrice(US$/Share) Date of Grant Date of Expiration Vesting ScheduleMin Lu * 29.55 July 11, 2017 Ten years aftergrant date Approximately four years from the dateof grantDong Liu * 58.68 January 1, 2018 Ten years aftergrant date Approximately four years from the dateof grantJun Zou * 65.10 December 1, 2017 Ten years aftergrant date Approximately four years from the dateof grantHaifeng Shao * 69.90 March 22, 2018 Ten years aftergrant date Approximately four years from the dateof grantDirectors and officers as a group * 29.55~69.90 BetweenJuly 11, 2017andMarch 22, 2018 Ten years after grantdate Approximately four years from eachdate of grantOther individuals as a group * 22.19~38.42 Between June 3, 2016andNovember 30, 2017 Ten years after grantdate Approximately four years from eachdate of grant *Less than one percent of our total outstanding share capital. 90Table of ContentsThe following paragraphs describe the principal terms of the Amended and Restated 2016 Plan:Types of awards. The Amended and Restated 2016 Plan permits the awards of options, restricted shares and restricted share units. The following brieflydescribe the principal features of the various awards that may be granted under the Amended and Restated 2016 Plan. • Options. Options provide for the right to purchase a specified number of our ordinary shares at a specified price and usually will becomeexercisable at the discretion of our plan administrator in one or more installments after the grant date. The total number of Class A ordinaryshares issued and to be issued upon the exercise of the options granted and to be granted to any participant in any 12-month period up to andincluding the date of grant shall not exceed 1% of the issued and outstanding shares of the Company as at the date of grant. The option exerciseprice may be paid, subject to the discretion of the plan administrator, in cash or check, in our Class A ordinary shares which have been held bythe option holder for such period of time as may be required by our plan administrator, in other property with value equal to the exercise price,through a broker-assisted cashless exercise, or by any combination of the foregoing. For so long as we remain a subsidiary of the Hong KongParent, the administration of the Amended and Restated 2016 Plan shall comply with the Hong Kong Listing Rules in respect of options.The options shall lapse (to the extent not already exercised) automatically on the earliest of: (i) expiry of the term of any option, (ii) the date oftermination of employment, (iii) expiry of the 60-day period from the date of voluntary resignation of the participant, (iv) the date of terminationof such other contract or agreement constituting a participant for his breach of the terms thereof or in accordance with the termination provisionsof such contract or agreement by any contracting party, (v) expiry of the three-month period following the occurrence of an event which causesthe participant to cease to be an eligible person, including ill-health, injury, disability, death or retirement, (vi) the date on which the resolutionto voluntarily wind up the Company is passed and the date of the commencement of winding up of the Company. • Restricted Shares. A restricted share award is the grant of our Class A ordinary shares which are subject to certain restrictions and may be subjectto risk of forfeiture. Unless otherwise determined by our plan administrator, a restricted share is nontransferable and may be forfeited orrepurchased by us upon termination of employment or service during a restricted period. Our plan administrator may also impose otherrestrictions on the restricted shares, such as limitations on the right to vote or the right to receive dividends. • Restricted share units. A restricted share unit award is the grant of the right to receive an ordinary share at a future date and may be subject toforfeiture. Our plan administrator has the discretion to set performance objectives or other vesting criteria that will determine the number or valueof restricted share units to be granted. Unless otherwise determined by our plan administrator, a restricted share unit is nontransferable and maybe forfeited or repurchased by us upon termination of employment or service during a restricted period. Our plan administrator, at the time ofgrant, specifies the dates on which the restricted share units become fully vested.Plan Administration. Our board or a committee of one or more members of our board duly authorized for the purpose of the Amended and Restated2016 Plan can act as the plan administrator. Such committee may from time to time in its absolute discretion waive or amend the rules of the Amended andRestated 2016 Plan as it deems desirable, provided that, except with the prior approval of the shareholders of our Company and the shareholders of our HongKong Parent (for so long as we remain a subsidiary of the Hong Kong Parent) in general meetings: (i) no alteration to any of the matters set out in Rule 17.03of the Hong Kong Listing Rules shall be made to the advantage of participants; and (ii) no alteration to the terms and conditions of the Amended andRestated 2016 Plan which are of a material nature or any change to the terms of the options granted may be made, except where the alterations take effectautomatically under the existing terms of the Amended and Restated 2016 Plan, provided that as we remain a subsidiary of the Hong Kong Parent, theamended terms must still comply with the relevant requirements of Chapter 17 of the Hong Kong Listing Rules. 91Table of ContentsAward Agreement. Options, restricted shares or restricted share units granted under the Amended and Restated 2016 Plan are evidenced by an awardagreement that sets forth the terms, conditions and limitations for each grant.Exercise Price. The exercise price in respect of any option shall be determined by the plan administrator and set forth in the award agreement whichmay be a fixed or variable price related to the fair market value of the shares. The exercise price per share subject to an option may be amended or adjusted inthe absolute discretion of the plan administrator, the determination of which shall be final, binding and conclusive. For so long as we remain a subsidiary ofthe Hong Kong Parent, the determination of the exercise price shall comply with the Hong Kong Listing Rules.Eligibility. We may grant awards to our directors, employees or consultants.Term of the Options. The term of each option grant shall be no more than ten years from the date of the grant.Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is set forth in the award agreement.Transfer Restrictions. Unless otherwise determined by the plan administrator, no awards may be transferred other than by will or the laws of descentand distribution. Nevertheless, awards (other than options) can be transferred to certain persons or entities related to the plan participants.Termination. The Amended and Restated 2016 Plan will expire in 2027 and may be terminated earlier with the approval of our board.2016 Share Incentive Plan IIWe adopted the 2016 Share Incentive Plan II (as amended by Amendment No. 1 to the 2016 Share Incentive Plan II), or the Amended 2016 ShareIncentive Plan II, in December 2016. The maximum aggregate number of Class A ordinary shares which may be issued pursuant to all awards under theAmended 2016 Share Incentive Plan II is 3,000,000. As of March 31, 2018, 404,894 restricted shares under the Amended and Restated 2016 Plan II wereoutstanding.The following table summarizes, as of March 31, 2018, the outstanding restricted shares that we granted to our current directors and executive officersand to other individuals as a group under our 2016 Share Incentive Plan II. Name Restricted Shares Date of Grant Vesting ScheduleJun Zou * December 1, 2017 Approximately four yearsfrom the date of grantHaifeng Shao * March 22, 2018 Approximately four yearsfrom the date of grantDirectors and officers as a group * December 1, 2017;March 22, 2018 Approximately four yearsform each date of grantOther individuals as a group * BetweenApril 13, 2017andNovember 30, 2017 Approximately four yearsfrom each date of grant 92Table of Contents *Less than one percent of our total outstanding share capital.The following paragraphs describe the principal terms of the Amended 2016 Share Incentive Plan II:Types of awards. The Amended 2016 Share Incentive Plan II permits the awards of restricted shares. A restricted share award is the grant of our Class Aordinary shares which are subject to certain restrictions and may be subject to risk of forfeiture. Unless otherwise determined by our plan administrator, arestricted share is nontransferable and may be forfeited or repurchased by us upon termination of employment or service during a restricted period. Our planadministrator may also impose other restrictions on the restricted shares, such as limitations on the right to vote or the right to receive dividends.Plan Administration. Our board or a committee of one or more members of our board duly authorized for the purpose of the Amended 2016 ShareIncentive Plan II can act as the plan administrator.Award Agreement. Restricted shares granted under the Amended 2016 Share Incentive Plan II are evidenced by an award agreement that sets forth theterms, conditions and limitations for each grant.Eligibility. We may grant awards to our directors, employees or consultants.Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is set forth in the award agreement.Transfer Restrictions. Unless otherwise determined by the plan administrator, no awards may be transferred other than by will or the laws of descentand distribution, or to certain persons or entities related to the plan participants.Termination. The Amended 2016 Share Incentive Plan II will expire in 2026 and may be terminated earlier with the approval of our board of directors. C.Board PracticesOur board of directors consists of seven directors. A director is not required to hold any shares in the Company by way of qualification. A director mayvote with respect to any contract, proposed contract or arrangement in which he or she is materially interested provided (a) such director, if his or her interestin such contract or arrangement is material, has declared the nature of his or her interest at the earliest meeting of the board at which it is practicable for him orher to do so, either specifically or by way of a general notice and (b) if such contract or arrangement is a transaction with a related party, such transaction hasbeen approved by the audit committee. The directors may exercise all the powers of the company to borrow money, mortgage its undertaking, property anduncalled capital, and issue debentures or other securities whenever money is borrowed or as security for any obligation of the company or of any third party.None of our non-executive directors has a service contract with us that provides for benefits upon termination of service.Committees of the Board of DirectorsWe have established three committees under the board of directors: the audit committee, the compensation committee and the nominating andcorporate governance committee. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below.Audit Committee. Our audit committee consists of Messrs. Tianruo Pu, Dazong Wang and Junling Liu. Mr. Tianruo Pu is the chairman of our auditcommittee. We have determined that Messrs. Tianruo Pu, Dazong Wang and Junling Liu satisfy the “independence” requirements of Section 303A of the NewYork Stock Exchange Listed Company Manual and Rule 10A-3 under the Securities Exchange Act of 1934. In addition, our board of directors hasdetermined that Mr. Tianruo Pu qualifies as an audit committee financial expert as defined in Item 16A of Form 20-F. The audit committee oversees ouraccounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among otherthings: 93Table of Contents • appointing the independent auditors and preapproving all auditing and non-auditing services permitted to be performed by the independentauditors; • reviewing with the independent auditors any audit problems or difficulties and management’s response; • discussing the annual audited financial statements with management and the independent auditors; • reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor andcontrol major financial risk exposures; • reviewing and approving all proposed related party transactions; • meeting separately and periodically with management and the independent auditors; and • monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures toensure proper compliance.In 2017, our audit committee held meetings or passed resolutions by unanimous written consent six times.Compensation Committee. Our compensation committee consists of Messrs. Min Lu, Zheng Liu and Dazong Wang. Mr. Min Lu is the chairman of ourcompensation committee. We have determined that Dr. Dazong Wang satisfies the “independence” requirements of Section 303A of the New York StockExchange Listed Company Manual. The compensation committee assists the board in reviewing and approving the compensation structure, including allforms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting duringwhich his compensation is deliberated. The compensation committee is responsible for, among other things: • reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executiveofficers; • reviewing and recommending to the board for determination with respect to the compensation of our nonemployee directors; and • reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements.In 2017, our compensation committee held meetings or passed resolutions by unanimous written consent seven times.Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Messrs. Min Lu and Tianruo Puand Ms. Han Qiu. Mr. Min Lu is the chairperson of our nominating and corporate governance committee. We have determined that Mr. Tianruo Pu satisfiesthe “independence” requirements of Section 303A of the New York Stock Exchange Listed Company Manual. The nominating and corporate governancecommittee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and itscommittees. The nominating and corporate governance committee is responsible for, among other things: • selecting and recommending to the board nominees for election by the shareholders or appointment by the board; • reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills,experience and diversity; • making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and 94Table of Contents • advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as ourcompliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on anyremedial action to be taken.In 2017, our nominating and corporate governance committee held meetings or passed resolutions by unanimous written consent three times.Duties of DirectorsUnder Cayman Islands law, our directors have a duty to act honestly in good faith with a view to our best interests. Our directors also owe to ourcompany a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his or her duties a greater degreeof skill than may reasonably be expected from a person of his or her knowledge and experience. However, English and Commonwealth courts have movedtowards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands. In fulfillingtheir duty of care to us, our directors must ensure compliance with our memorandum and articles of association. Our company has the right to seek damages ifa duty owed by our directors is breached.Terms of Directors and OfficersOur officers are elected by and serve at the discretion of the board of directors. At each annual general meeting, one-third of our directors then existing,or if their number is not a multiple of three, then the number nearest to and not exceeding one-third, shall retire from office by rotation, provided that thechairman of the board and/or our chief executive officer shall not, whilst holding such office, be subject to retirement by rotation or be taken into account indetermining the number of directors to retire in each year. D.EmployeesWe had 3,292, 3,752 and 4,097 employees as of December 31, 2015, 2016 and 2017, respectively. The following table sets forth the number of ouremployees by function as of December 31, 2017: Functional Area Number of Employees Sales and marketing 1,824 Product development 1,659 Content and editorial 429 Management and administrative 185 Total 4,097 Through a combination of short-term performance evaluations and long-term incentive arrangements, we intend to build a competent, loyal and highlymotivated workforce. We have not experienced any work stoppages due to labor disputes. E.Share OwnershipClass A Ordinary SharesAs of March 31, 2018, we had 117,413,293 Class A ordinary shares outstanding (excluding 749,007 Class A ordinary shares that are reserved for futuregrants under our share incentive plans). In addition, as of March 31, 2018, we had granted, and had outstanding, options to purchase a total of 1,502,967Class A ordinary shares and 1,357,853 restricted shares to our employees and directors. For information regarding the Share Incentive Plans, see “Item 6.Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers.”Class B Ordinary SharesAs of March 31, 2018, we had zero Class B ordinary shares outstanding. 95Table of ContentsBeneficial Ownership of Ordinary SharesExcept as specifically noted in the table, the following table sets forth information with respect to the beneficial ownership of our Class A ordinaryshares as of March 31, 2018: • each of our directors and executive officers; and • each person known to us to own beneficially more than 5% of our ordinary shares.Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned bya person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through theexercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in the computation of thepercentage ownership of any other person. Class A Ordinary Shares Beneficially Owned as of March 31, 2018 Number %(1) Directors and Executive Officers: Min Lu(2) * * Dong Liu(3) — — Han Qiu(4) — — Zheng Liu(5) — — Junling Liu(6) * * Tianruo Pu(7) * * Dazong Wang(8) * * Jun Zou(9) — — Haifeng Shao(10) — — All Directors and Executive Officers as a Group * * Principal Shareholders: Yun Chen Capital Cayman(11) 61,824,328 52.7% Kayne Anderson Rudnick Investment Management LLC(12) 8,761,806 7.5% *Less than one percent of our total outstanding share capital.(1)For each person and group included in this column, percentage ownership is calculated by dividing the number of shares beneficially owned by suchperson or group by the sum of the total number of our total ordinary shares outstanding, which is 117,413,293 as of March 31, 2018, and the number ofshares such person or group has the right to acquire upon exercise of option, warrant or other right within 60 days after March 31, 2018.(2)Represents Class A ordinary shares in the form of ADSs vested from restricted shares held by Mr. Lu. The business address of Mr. Lu is 10th Floor,Tower B, CEC Plaza, No. 3 Dan Ling Street, Haidian District, Beijing 100080, People’s Republic of China.(3)The business address of Mr. Liu is Ping An Finance Building, No. 1333 Lujiazui Loop, Pudong District, Shanghai 200120, People’s Republic of China.(4)The business address of Ms. Qiu is 8th Floor, Tower B, No. 166 Kaibin Street, Xuhui District, Shanghai 200232, People’s Republic of China.(5)The business address of Mr. Liu is No. 115 Lane 572, Bibo Road, Pudong, Shanghai, 201203, People’s Republic of China.(6)Represents Class A ordinary shares in the form of ADSs vested from restricted shares held by Mr. Liu. The business address of Mr. Liu is Floor 3,Building 9, No. 115 Lane 572, Bibo Road, Pudong, Shanghai, 201203, People’s Republic of China.(7)Represents Class A ordinary shares in the form of ADSs vested from restricted shares held by Mr. Pu. The business address of Mr. Pu is 5/F, ShoukaiPlaza No.10 Furong Street, Wangjing, Chaoyang District, Beijing 100102, People’s Republic of China.(8)Represents Class A ordinary shares in the form of ADSs vested from restricted shares held by Dr. Wang. The business address of Dr. Wang is 502 NorthTower, 1 Guanghua Road, Chaoyang District, Beijing, 100020, People’s Republic of China.(9)The business address of Mr. Zou is 10th Floor, Tower B, CEC Plaza, No. 3 Dan Ling Street, Haidian District, Beijing 100080, People’s Republic ofChina.(10)The business address of Mr. Shao is 10th Floor, Tower B, CEC Plaza, No. 3 Dan Ling Street, Haidian District, Beijing 100080, People’s Republic ofChina.(11)Represents 61,824,328 Class A ordinary shares beneficially owned as of March 31, 2018 and as reported in a Schedule 13D/A filed by Yun ChenCapital Cayman, a Cayman Islands company and a special purpose vehicle and subsidiary of Ping An Insurance (Group) Company of China, Ltd., acompany organized under the laws of the People’s Republic of China. Ping An Insurance (Group) Company of China, Ltd.’s business address is PingAn Finance Building, No. 1333 Lujiazui Loop, Pudong District, Shanghai 200120, People’s Republic of China. 96Table of Contents(12)The number of Class A ordinary shares beneficially owned is as of February 13, 2018 as reported in a Schedule 13G/A filed by Kayne AndersonRudnick Investment Management LLC, or Kayne Anderson, and consists of 8,761,806 Class A ordinary shares represented by American depositaryshares. Kayne Anderson is an investment adviser in accordance with §240.13d-1(b)(1)(ii)(E). Kayne Anderson’s business address is 1800 Avenue of theStars, 2nd Floor, Los Angeles, CA 90067.To our knowledge, as of March 31, 2018, 55,588,965 Class A ordinary shares were held by one record holder in the United States, which was DeutscheBank Trust Company Americas, the depositary of our ADS program (excluding 749,007 Class A ordinary shares that are reserved for future grants under ourshare incentive plans). No Class B ordinary shares were held by record holders in the United States. The number of beneficial owners of our ADSs in theUnited States is likely to be much larger than the number of record holders of our Class A ordinary shares in the United States.ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A.Major ShareholderAs of March 31, 2018, Yun Chen owned 52.7% of our total issued and outstanding ordinary shares. Yun Chen is a wholly owned subsidiary of Ping AnInsurance (Group) Company of China, Ltd. As such, we are indirectly controlled by Ping An Insurance (Group) Company of China, Ltd., which beneficiallyowned 52.7% of the total voting rights in our company.Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” B.Related Party TransactionsContractual Arrangements with Our Variable Interest EntitiesPRC laws and regulations currently limit foreign ownership of companies that engage in internet services. We established the following contractualarrangements by and among the following entities to conduct part of our operations in China: • our wholly owned PRC subsidiary, Autohome WFOE, Autohome Information, the shareholders of Autohome Information and two subsidiaries ofAutohome Information, namely Chengshi Advertising and Autohome Advertising; and • our wholly owned PRC subsidiary, Chezhiying WFOE, Shengtuo Hongyuan, the shareholders of Shengtuo Hongyuan and two subsidiaries ofShengtuo Hongyuan, namely Beijing Autohome Used Car Appraisal Co., Ltd., or Autohome Used Car Appraisal, and Beijing Autohome UsedCar Brokerage Co., Ltd., or Autohome Used Car Brokerage.In September 2016, the then individual nominee shareholders of Shengtuo Hongyuan and Guangzhou Advertising entered into Equity InterestPurchase Agreements and Debt Transfer and Offset Agreements with Min Lu and Haiyun Lei, pursuant to which the then individual nominee shareholderstransferred all of their equity interests in each of the entities to Min Lu and Haiyun Lei. In March 2017, the then individual nominee shareholders ofAutohome Information and Shanghai Advertising entered into Equity Interest Purchase Agreements and Debt Transfer and Offset Agreements with Min Luand Haiyun Lei, pursuant to which the then individual nominee shareholders transferred all of their equity interests in each of the entities to Min Lu andHaiyun Lei. Upon the execution of the above Equity Interest Purchase Agreements and Debt Transfer and Offset Agreements, all contractual arrangementsbetween the then individual nominee shareholders and our wholly owned subsidiaries have been terminated. Autohome WFOE entered into a series ofcontractual agreements with (i) Guangzhou Advertising and each of its individual nominee shareholders, (ii) Autohome Information, each of its individualnominee shareholders and two of its subsidiaries, Autohome Advertising and Chengshi Advertising, and (iii) Shanghai Advertising and each of its individualnominee shareholders in September 2016, March 2017 and March 2017, respectively. Chezhiying WFOE entered into a series of contractual agreements withShengtuo Hongyuan, each of its individual nominee shareholders and its two subsidiaries in September 2016. Guangzhou Advertising and ShanghaiAdvertising are currently not conducting any substantial business and are in the process of liquidation and dissolution, which are expected to be completedby the end of 2018. During such process, Autohome WFOE has signed the termination agreements with respect to the contractual agreements that it hasentered into with Guangzhou Advertising and Shanghai Advertising and each of their individual nominee shareholders to terminate the contractualarrangements on the date of the issuance of an approval notice for the deregistration of Shanghai Advertising and Guangzhou Advertising by the competentBureau of Industry and Commerce in charge of such two entities, respectively. 97Table of ContentsThe following is a summary of our current contractual arrangements (i) by and among Autohome WFOE, Autohome Information and two of itssubsidiaries, Autohome Advertising and Chengshi Advertising, and the shareholders of Autohome Information, and (ii) by and among Chezhiying WFOE,Shengtuo Hongyuan and its two subsidiaries, and the shareholders of Shengtuo Hongyuan. The contractual agreements by and among Autohome WFOE andShanghai Advertising and its shareholders and the contractual agreements by and among Autohome WFOE and Guangzhou Advertising and its shareholdersare substantially the same as the contractual agreements among Autohome WFOE, Autohome Information and its shareholders.Agreements that Provide Effective Control over Autohome Information and Shengtuo HongyuanEquity Interest Pledge Agreements. Pursuant to the equity interest pledge agreements between Autohome WFOE and each of the two shareholders ofAutohome Information entered into in March 2017, each shareholder of Autohome Information pledges to Autohome WFOE all of his or her equity interestsin Autohome Information to secure the performance of such shareholder’s respective obligations and Autohome Information’s obligations under the loanagreements, equity option agreements, and the exclusive technology consulting and service agreements. See “—Contractual Agreements with our VariableInterest Entities—Agreements that Transfer Economic Benefits of Autohome Information and Shengtuo Hongyuan to Us” and “—Contractual Agreementswith our Variable Interest Entities—Agreements that Provide Us the Options to Purchase the Equity Interests in Autohome Information” for a brief descriptionof these obligations. Without Autohome WFOE’s consent, shareholders of Autohome Information shall not create or permit to create any encumbrances onthe pledged equity interests in Autohome Information. In the event of default, Autohome WFOE is entitled to request immediate repayment of theoutstanding amounts payable under the loan agreements, the equity option agreements and the exclusive technology consulting and service agreements or todispose of the pledged equity interests at Autohome WFOE’s sole discretion. The equity pledge agreements have an indefinite term and will terminate afterall the secured obligations under these agreements have been satisfied in full or the pledged equity interests have been transferred to Autohome WFOE or itsdesignee.Pursuant to the equity interest pledge agreements between Autohome WFOE and Autohome Information entered into in September 2016, AutohomeInformation pledges to Autohome WFOE all of its equity interests in Chengshi Advertising and Autohome Advertising to secure the performance of itsobligations under the equity option agreements and the obligations of Chengshi Advertising and Autohome Advertising under the exclusive technologyconsulting and service agreements. These equity interest pledge agreements contain substantially the same terms as the equity interest pledge agreementsbetween Autohome WFOE and the shareholders of Autohome Information.In September 2016, Chezhiying WFOE and each of the shareholders of Shengtuo Hongyuan entered into equity interest pledge agreements. The termsof these agreements are substantially the same as the equity interest pledge agreements between Autohome WFOE and each of the two shareholders ofAutohome Information described above. In September 2016, Chezhiying WFOE and Shengtuo Hongyuan entered into equity interest pledge agreements. Theterms of these agreements are substantially the same as the equity interest pledge agreements between Autohome WFOE and Autohome Information. As of thedate of this annual report, we have completed the registration for the equity interest pledge agreements between Autohome WFOE and AutohomeInformation’s individual shareholders, and between Chezhiying WFOE and Shengtuo Hongyuan’s individual shareholders.Power of Attorney. In September 2016 and in March 2017, Autohome Information and each of the shareholders of Autohome Information haveexecuted an irrevocable power of attorney appointing Autohome WFOE, or any person designated by Autohome WFOE, as their attorney-in-fact to vote ontheir behalf at the shareholders’ meetings of Autohome Advertising and Chengshi Advertising and Autohome Information and to exercise full voting rightsas the shareholders of these companies with powers granted under PRC laws and regulations and the articles of association of each of the above companies,including the rights to appoint directors and management personnel. 98Table of ContentsIn September 2016, Shengtuo Hongyuan and each of the shareholders of Shengtuo Hongyuan have executed an irrevocable power of attorneyappointing Chezhiying WFOE, or any person designated by Chezhiying WFOE, as their attorney-in-fact to vote on their behalf at the shareholders’ meetingsof Shengtuo Hongyuan’s subsidiaries and Shengtuo Hongyuan and to exercise full voting rights as the shareholders of these companies with powers grantedunder PRC laws and regulations and the articles of association of each of the above companies, including the rights to appoint directors and managementpersonnel.Agreements that Transfer Economic Benefits of Autohome Information and Shengtuo Hongyuan to UsExclusive Technology Consulting and Service Agreements. Pursuant to the exclusive technology consulting and service agreements entered intobetween Autohome WFOE and each of Autohome Information, Autohome Advertising and Chengshi Advertising respectively in March 2017, September2016 and September 2016, Autohome WFOE has the exclusive right to provide each of these VIEs comprehensive technology and management consultingservices. In addition, Autohome WFOE is obligated to provide financing support to each of these VIEs to ensure the cash flow requirements of the day-to-dayoperations of these VIEs. Each of these VIEs is obligated to pay to Autohome WFOE service fees, which are calculated based on such VIE’s revenues reducedby its VAT and surcharges, operating expenses and an appropriate amount of retained profit that is determined pursuant to our tax planning strategies andrelevant tax laws. Such service fees may be adjusted by Autohome WFOE at Autohome WFOE’s sole discretion. Autohome WFOE owns the intellectualproperties arising from the performance of these agreements. These agreements have a 30-year term that can be automatically extended for another 10 years atthe option of Autohome WFOE and can only be terminated by the parties’ mutual written consent or by Autohome WFOE’s prior 30-day notice at its solediscretion. During the term of these agreements, these VIEs may not enter into any agreements with third parties for the provision of any technology ormanagement consulting services without prior consent of Autohome WFOE.In September 2016, Chezhiying WFOE and each of Shengtuo Hongyuan and its two subsidiaries entered into exclusive technology consulting andservice agreements. The terms of these agreements are substantially the same as the exclusive technology consulting and service agreements betweenAutohome WFOE and each of Autohome Information, Autohome Advertising and Chengshi Advertising described above.Autohome WFOE and Chezhiying WFOE recognized service fees from all the VIEs in the amount of RMB365.5 million in 2015, RMB125.8 million in2016 and RMB414.8 million (US$63.8 million) in 2017 in consideration for services provided to the VIEs.Loan Agreements. Pursuant to the loan agreements between Autohome WFOE and each of the two shareholders of Autohome Information entered intoin March 2017, Autohome WFOE granted interest-free loans to these two shareholders of Autohome Information. The loans are to be used solely for thepurpose of making capital contributions to the registered capital of Autohome Information. The term of the loans is indefinite and must be repaid in themanner specified in the agreements upon written notice from Autohome WFOE at any time in Autohome WFOE’s sole discretion or upon an event of defaultby the shareholders of Autohome Information.In September 2016, Chezhiying WFOE and each of the shareholders of Shengtuo Hongyuan entered into loan agreements. The terms of theseagreements are substantially the same as the loan agreements between Autohome WFOE and each of the two shareholders of Autohome Information describedabove.Agreements that Provide Us the Options to Purchase the Equity Interests in Autohome Information and Shengtuo HongyuanEquity Option Agreements. Pursuant to the equity option agreements among Autohome WFOE, Autohome Information and each of the twoshareholders of Autohome Information entered into in March 2017, each shareholder of Autohome Information jointly and severally grants to AutohomeWFOE an option to purchase all or part of his or her equity interests in Autohome Information at a price equivalent to the lowest price permitted by PRC law.The purchase price is to be offset against the loan repayments under the loan agreements. If there will be additional payments to be made by AutohomeInformation to these shareholders required by the PRC law, these shareholders must immediately return the received payments to Autohome WFOE.Autohome WFOE may exercise its option at any time or transfer the rights and obligations under the equity option agreement to any of its designated parties.The equity option agreements have an indefinite term and will terminate at the earlier of (i) the date on which the equity interests in Autohome Informationhave been transferred to Autohome WFOE or its designated parties, or (ii) the unilateral termination by Autohome WFOE. 99Table of ContentsPursuant to the equity option agreements among Autohome WFOE, Autohome Information and two of Autohome Information’s subsidiaries, namelyAutohome Advertising and Chengshi Advertising, entered into in September 2016, Autohome Information granted Autohome WFOE or its designated partiesan option to purchase all or part of Autohome Information’s equity interests in these Autohome Information subsidiaries at a price equivalent to the lowestprice permitted by PRC law. Autohome WFOE may exercise its option at any time. The equity option agreements have an indefinite term and will terminateat the earlier of (i) the date on which all of Autohome Information’s equity interests in these subsidiaries have been transferred to Autohome WFOE or itsdesignated parties, or (ii) the unilateral termination by Autohome WFOE.In September 2016, Chezhiying WFOE, Shengtuo Hongyuan and each of the shareholders of Shengtuo Hongyuan entered into equity optionagreements. The terms of these agreements are substantially the same as the equity option agreements among Autohome WFOE, Autohome Information andeach of the two shareholders of Autohome Information described above. In September 2016, Chezhiying WFOE, Shengtuo Hongyuan and each of the twosubsidiaries of Shengtuo Hongyuan entered into equity option agreements. The terms of these agreements are substantially the same as the equity optionagreements among Autohome WFOE, Autohome Information and each of Autohome Advertising and Chengshi Advertising.Transactions with Entities Affiliated with Our ShareholdersSince Ping An Group became our controlling shareholder, it provided services including rental and property management service and othermiscellaneous services to us for a total amount of RMB21.6 million in 2016 and RMB55.2 million (US$8.5 million) in 2017, respectively.We earned service fees primarily for facilitating transactions for Ping An Group or its affiliates on our platform and providing advertising services toPing An Group for a total amount of RMB21.2 million (US$3.3 million) in 2017.Since Ping An Group became our controlling shareholder, we and a subsidiary of Ping An Group entered into a sales contract under which we soldvehicles to the latter for a total amount of RMB21.9 million in 2016. The outstanding receivable was collected in full as of December 31, 2016.Investor’s Rights AgreementsWe entered into an investor’s rights agreement with Yun Chen on September 30, 2016. Under this investor’s rights agreement, so long as Yun Chenholds at least 20% of our issued and outstanding shares, (i) we must permit Yun Chen and its designated representatives, at their own cost and expense, atreasonable times and upon reasonable prior notice to us, to review our books and records and to discuss our financial condition with our officers; and (ii) wemust provide to Yun Chen our financial statements stated in the investor’s rights agreement so long as its external auditor considers it to be necessary toconsolidate our financial statements into Yun Chen’s financial statements in accordance with the PRC accounting standards.Employment AgreementsSee “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Employment Agreements” for adescription of the employment agreements we have entered into with our senior executive officers. 100Table of ContentsShare Incentive PlansSee “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers” for a description of share-basedcompensation awards we have granted to our directors, officers and other individuals as a group.See Note 12 to our financial statements for further information about our related party transactions. C.Interests of Experts and CounselNot applicable.ITEM 8. FINANCIAL INFORMATION A.Consolidated Statements and Other Financial InformationWe have appended consolidated financial statements filed as part of this annual report.Legal ProceedingsFrom time to time, we may be subject to various claims and legal actions that arise in the ordinary course of our business. There are currently no legalproceedings that, in the opinion of our management, may have a material adverse effect on our business and results of operations.Dividend PolicyOur board of directors has complete discretion to declare dividends. Even if our board of directors decides to pay dividends, the form, frequency andamount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and otherfactors that the board of directors may deem relevant.Our board of directors declared dividends of RMB49.9 million and RMB249.2 million in February 2012 and May 2013, respectively, to all of ourshareholders. The dividends, net of applicable withholding taxes, were paid in April 2012 and June and July 2013, respectively. In November 2017, ourboard of directors declared a special cash dividend to the holders of our ordinary shares of record as of the close of business on January 4, 2018, or the RecordDate. We paid a cash dividend of US$0.76 per share (inclusive of applicable fees payable to our depositary bank) on or about January 15, 2018 to the holdersof our ordinary shares as of the Record Date. Our board of directors decides the timing, amount and form of any future dividends, if any, based on, amongother things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from oursubsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. We do not have any plan to payadditional cash dividends on our ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our remaining available funds andany future earnings to operate and expand our business.We are a holding company incorporated in the Cayman Islands. We may rely on dividends from our subsidiaries in China for our cash requirements,including any payment of dividends to our shareholders. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us. See “Item 4.Information on the Company—B. Business Overview—PRC Regulation—Regulations on Dividend Distribution.”If we pay any dividends, we will pay our ADS holders to the same extent as holders of our ordinary shares, subject to the terms of the depositagreement, including the fees and expenses payable thereunder. See “Item 12. Description of Securities other than Equity Securities—D. AmericanDepositary Shares.” Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars. 101Table of ContentsB.Significant ChangesExcept as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidatedfinancial statements included in this annual report.ITEM 9. THE OFFER AND LISTING A.Offering and Listing DetailsSee “—C. Markets.” B.Plan of DistributionNot applicable. C.MarketsOur ADSs, each representing one Class A ordinary share, have been listed on the NYSE since December 2013 and trade under the symbol “ATHM.”The following table provides the high and low trading prices for our ADSs on the NYSE for the periods indicated. Trading Price High Low US$ US$ Annual High and Low Fiscal Year 2013 (from December 11, 2013) 37.88 26.51 Fiscal Year 2014 57.93 28.50 Fiscal Year 2015 56.59 28.00 Fiscal Year 2016 33.70 19.32 Fiscal Year 2017 67.69 25.00 Quarterly Highs and Lows First Fiscal Quarter of 2016 33.70 21.53 Second Fiscal Quarter of 2016 32.15 20.08 Third Fiscal Quarter of 2016 27.20 19.32 Fourth Fiscal Quarter of 2016 28.88 22.07 First Fiscal Quarter of 2017 36.01 25.00 Second Fiscal Quarter of 2017 46.48 28.63 Third Fiscal Quarter of 2017 67.69 44.34 Fourth Fiscal Quarter of 2017 66.45 52.93 First Fiscal Quarter of 2018 92.65 65.35 Monthly Highs and Lows October 2017 62.69 54.67 November 2017 66.45 53.43 December 2017 65.57 52.93 January 2018 86.86 65.35 February 2018 86.50 70.51 March 2018 92.65 73.20 April 2018 (through April 12) 97.59 79.01 D.Selling ShareholdersNot applicable. E.DilutionNot applicable. 102Table of ContentsF.Expenses of the IssueNot applicable.ITEM 10. ADDITIONAL INFORMATION A.Share CapitalNot applicable. B.Memorandum and Articles of AssociationWe are a Cayman Islands company and our affairs are governed by our memorandum and articles of association and the Companies Law of the CaymanIslands, referred to as the Companies Law below. The following are summaries of certain provisions of our memorandum and articles of association in effectas of the date of this annual report insofar as they relate to the material terms of our ordinary shares.Registered Office and ObjectsOur registered office in the Cayman Islands is located at 2nd Floor Harbour Center 42 North Church Street George Town, Grand Cayman, CaymanIslands. The memorandum of association provides, inter alia, that the liability of the shareholders of our company is limited to the amount, if any, for thetime being unpaid on the ordinary shares. The objects for which our company is established are unrestricted (including acting as an investment company),and we shall have and be capable of exercising all the functions of a natural person of full capacity irrespective of corporate benefit, as provided in section27(2) of the Companies Law and in view of the fact that we are an exempted Company, we will not trade in the Cayman Islands with any person, firm orcorporation except in furtherance of our business carried on outside the Cayman Islands.Board of DirectorsSee “Item 6. Directors, Senior Management and Employees—C. Board Practices—Duties of Directors” and “—Terms of Directors and Officers.”Ordinary SharesGeneralOur ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of our Class A ordinary shares and Class B ordinaryshares will have the same rights except for voting and conversion rights. All of our outstanding ordinary shares, which consist of Class A ordinary shares, arefully paid and non-assessable. Certificates representing the Class A ordinary shares are issued in registered form. Our shareholders who are non-residents ofthe Cayman Islands may freely hold and transfer their Class A ordinary shares.Class Rights of our Class A and Class B Ordinary SharesSubject to our fourth memorandum and articles of association and any resolution of the shareholders to the contrary and without prejudice to anyspecial rights conferred thereby on the holders of any other shares or class of shares, the Class A ordinary shares and Class B ordinary shares carry equal rightsand rank pari passu with one another other than as set out below.ConversionSubject to the provisions of our fourth amended and restated memorandum and articles of association and in compliance with all fiscal and other lawsand regulations applicable thereto, a holder of Class B ordinary shares shall have the right to convert all or any of its Class B ordinary shares into Class Aordinary shares on a one-for-one basis. We previously had Class B ordinary shares held by Telstra. As a result of the sale by Telstra to Yun Chen in June 2016,all of our then outstanding Class B ordinary shares were converted into Class A ordinary shares. As of the date of this annual report, we do not have anyClass B ordinary shares outstanding. 103Table of ContentsA holder of Class A ordinary shares has no rights of conversion in respect of each such Class A ordinary share into Class B ordinary shares.DividendsThe holders of our ordinary shares are entitled to such dividends as may be declared by us in general meeting or by our board of directors subject to theCompanies Law and to the fourth amended and restated memorandum and articles of association.Voting RightsSubject to any special rights or restrictions as to voting for the time being attached to any shares, at any general meeting every holder of Class Aordinary shares who is present in person or by proxy (or, in the case of a shareholder being a corporation, by its duly authorized representative) shall have onevote on a show of hands, and on a poll every shareholder holding Class A ordinary shares present in person or by proxy (or, in the case of a shareholder beinga corporation, by its duly appointed representative) shall have one vote for each fully paid Class A ordinary share of which such shareholder is the holder. Asa result of the sale by Telstra to Yun Chen in June 2016, all of our then outstanding Class B ordinary shares were converted into Class A ordinary shares.A quorum required for a meeting of shareholders consists of two shareholders entitled to vote and present in person or by proxy or, if a corporation orother non-natural person, by its duly authorized representative holding at least one third of the voting rights represented by the issued and outstandingordinary shares throughout the meeting. We may, but are not obligated to, hold a general meeting in each year as our annual general meeting. The annualgeneral meeting shall be held at such time and place as may be determined by the directors. Each general meeting, other than an annual general meeting,shall be an extraordinary general meeting. A majority of our board of directors or our chairman may call extraordinary general meetings. Advance notice of atleast ten clear days is required for the convening of our annual general meeting and other shareholders’ meetings. The agenda of any extraordinary generalmeeting will be set by a majority of the directors then in office.An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the ordinary sharescast in a general meeting, while a special resolution requires the affirmative vote of at least two-thirds of the votes cast attaching to the outstanding ordinaryshares. A special resolution will be required for important matters such as a change of name or making changes to our fourth amended and restatedmemorandum and articles of association.Transfer of Ordinary SharesSubject to the restrictions of our fourth amended and restated memorandum and articles of association, as applicable, any of our shareholders maytransfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which wehave a lien. Our board of directors may also decline to register any transfer of any ordinary share unless: • the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence asour board of directors may reasonably require to show the right of the transferor to make the transfer; • the instrument of transfer is in respect of only one class of ordinary shares; • the instrument of transfer is properly stamped, if required; and 104Table of Contents • in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four.If our directors refuse to register a transfer, they shall, within three months after the date on which the instrument of transfer was lodged, send to each ofthe transferor and the transferee notice of such refusal.The registration of transfers may, after compliance with any notice required of the Designated Stock Exchange (as defined in the fourth amended andrestated memorandum and articles of association), be suspended and the register closed at such times and for such periods as our board of directors may fromtime to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year.LiquidationOn a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of ordinary shares), assets available fordistribution among the holders of ordinary shares shall be distributed among the holders of the ordinary shares on a pro rata basis. The amount received byholders of Class A ordinary shares and Class B ordinary shares should be the same in any liquidation event. If our assets available for distribution areinsufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholders proportionately.Calls on Ordinary Shares and Forfeiture of Ordinary SharesOur board of directors may from time to time make calls upon shareholders for any amounts unpaid on their ordinary shares in a notice served to suchshareholders at least 14 days prior to the specified time of payment. The ordinary shares that have been called upon and remain unpaid are subject toforfeiture.Redemption of Ordinary SharesSubject to the provisions of the Companies Law, we may repurchase or redeem shares at our option or at the option of the holders of these shares, onsuch terms and in such manner, including out of capital, as may be determined by our board of directors.Variations of Rights of SharesAll or any of the special rights attached to any class of shares may, subject to the provisions of the Companies Law, be varied with the sanction of aspecial resolution passed at a general meeting of the holders of the shares of that class. The rights conferred upon the holders of the shares of any class issuedwith preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by thecreation or issue of further shares ranking pari passu with such existing class of shares.General Meetings of ShareholdersShareholders’ meetings may be convened by a majority of our board of directors or our chairman. Advance notice of at least ten clear days is requiredfor the convening of our annual general shareholders’ meeting and any other general meeting of our shareholders. In addition, general meetings will also beconvened on the requisition in writing of any shareholder or shareholders entitled to attend and vote at our general meetings holding at least one third of thevoting rights represented by our issued voting shares.Appointment of DirectorsOur shareholders may by ordinary resolution elect any person to fill a casual vacancy or as an addition to the existing board. 105Table of ContentsThe directors will also have the power from time to time and at any time to appoint any person as a director to fill a casual vacancy on the board or asan addition to the existing board.Inspection of Books and RecordsHolders of our ordinary shares have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporaterecords. However, we will allow our shareholders to inspect our register of members and provide our shareholders with annual audited financial statements.Pursuant to the investor’s rights agreement we have with the Yun Chen and other shareholders, Yun Chen has the right to access our books and recordsso long as it holds in aggregate at least 20% of our issued and outstanding share capital.Issuance of Additional Preferred SharesOur fourth amended and restated memorandum of association authorizes our board of directors to issue additional ordinary shares from time to time asour board of directors shall determine, to the extent of available authorized but unissued shares.Our fourth amended and restated memorandum of association authorizes our board of directors to establish from time to time one or more series ofpreferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that series, including: • the designation of the series; • the number of shares of the series; • the dividend rights, dividend rates, conversion rights, voting rights; and • the rights and terms of redemption and liquidation preferences.Our board of directors may issue preferred shares without action by our shareholders to the extent authorized but unissued. The issuance of preferredshares may be used as an anti-takeover device without further action on the part of the shareholders. Issuance of these shares may dilute the voting rights ofholders of ordinary shares. C.Material ContractsWe have not entered into any material contracts other than in the ordinary course of business and other than those described elsewhere in “Item 4.Information on the Company—B. Business Overview,” “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions,” orelsewhere in this annual report. D.Exchange ControlsSee “Item 4. Information on the Company—B. Business Overview—PRC Regulation—Regulations on Foreign Exchange.” 106Table of ContentsE.TaxationCayman Islands TaxationThe Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxationin the nature of inheritance tax or estate duty. There are no other taxes levied by the Government of the Cayman Islands that are likely to be material toholders of ADSs or Class A ordinary shares. The Cayman Islands is not party to any double tax treaties, except for a double tax treaty entered into with theUnited Kingdom in 2010. There are no exchange control regulations or currency restrictions in the Cayman Islands.Pursuant to Section 6 of the Tax Concessions Law (2018 Revision) of the Cayman Islands, we have obtained an undertaking from theGovernor-in-Cabinet:(a) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciation shall apply to us orour operations; and(b) that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on our shares, debentures or other obligations.The undertaking for us is for a period of 20 years from July 22, 2008.People’s Republic of China TaxationWe are a holding company incorporated in the Cayman Islands, which indirectly holds Autohome WFOE, Chezhiying WFOE and other subsidiaries inthe PRC. Our business operations are principally conducted through our PRC subsidiaries and VIEs. Although we believe we are not a PRC residententerprise for enterprise income tax purposes, substantial uncertainty exists. In the event that our company or any of our offshore entities, is considered to bea PRC resident enterprise: (a) our company or our offshore entities, as the case may be, would be subject to the PRC enterprise income tax at the rate of 25%on worldwide income; and (b) dividend income that our company or our offshore entities, as the case may be, receives from our PRC subsidiaries would beexempt from the PRC withholding tax since such income is exempted under the Enterprise Income Tax Law for PRC resident enterprise; and (c) anydividends we pay to our non-PRC shareholders or ADS holders as well as gains realized by such shareholders or ADS holders from the transfer of our shares orADSs may be regarded as China-sourced income and as a result become subject to PRC withholding tax at a rate of up to 10%, subject to reduction orexemption by an applicable treaty. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Our global income and thedividends that we may receive from our PRC subsidiaries, dividends distributed to our non-PRC shareholders and ADS holders, and gains recognized by suchshareholders or ADS holders, may be subject to PRC taxes under the Enterprise Income Tax Law, which would have a material adverse effect on our results ofoperations.”As uncertainties remain regarding the interpretation and implementation of the Enterprise Income Tax Law and its implementation rules, we cannotassure you that, if we are deemed a PRC resident enterprise, any dividends to be distributed by us to our non-PRC shareholders and ADS holders would not besubject to any PRC withholding tax. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Our global income and thedividends that we may receive from our PRC subsidiaries, dividends distributed to our non-PRC shareholders and ADS holders, and gains recognized by suchshareholders or ADS holders, may be subject to PRC taxes under the Enterprise Income Tax Law, which would have a material adverse effect on our results ofoperations.” 107Table of ContentsUnited States Federal Income Tax ConsiderationsThe following discussion is a summary of United States federal income tax considerations relating to the ownership and disposition of our ADSs orClass A ordinary shares by U.S. Holders (as defined below) that will hold ADSs or Class A ordinary shares as “capital assets” (generally, property held forinvestment) under the United States Internal Revenue Code of 1986, as amended (the “Code”). This discussion is based upon applicable provisions of theCode, Treasury regulations (proposed, temporary and final) promulgated thereunder, pertinent judicial decisions, interpretive rulings of the Internal RevenueService and such other authorities as we have considered relevant, which are subject to change, possibly with retroactive effect. This discussion does notaddress all aspects of United States federal income taxation that may be important to particular investors in light of their individual investmentcircumstances, including investors subject to special tax rules (for example, certain financial institutions, insurance companies, broker-dealers, pension plans,regulated investment companies, real estate investment trusts, cooperatives, and tax-exempt organizations (including private foundations), holders who arenot U.S. Holders, holders who own (directly, indirectly, or constructively) 10% or more of our stock, investors that will hold their ADSs or Class A ordinaryshares as part of a straddle, hedge, conversion, constructive sale, or other integrated transaction for United States federal income tax purposes, investors thatare traders in securities that have elected the mark-to-market method of accounting, or investors that have a functional currency other than the United Statesdollar), all of whom may be subject to tax rules that differ significantly from those discussed below. In addition, this discussion does not address UnitedStates federal estate, gift, Medicare, and alternative minimum tax considerations, or any non-United States, state, or local tax considerations. Each U.S. Holderis urged to consult its tax advisors regarding the United States federal, state, local, and non-United States income and other tax considerations of aninvestment in ADSs or Class A ordinary shares.GeneralFor purposes of this summary, a “U.S. Holder” is a beneficial owner of our ADSs or Class A ordinary shares that is, for United States federal income taxpurposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation, or other entity treated as a corporation for United States federalincome tax purposes, created in, or organized under the laws of the United States or any state thereof or the District of Columbia, or treated as such for UnitedStates federal income tax purposes, (iii) an estate the income of which is includible in gross income for United States federal income tax purposes regardlessof its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more UnitedStates persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a United Statesperson under the Code.If a partnership (or other entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of our ADSs or Class Aordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. If aU.S. Holder is a partner of a partnership holding our ADSs or Class A ordinary shares, the U.S. Holder is urged to consult its tax advisors regarding aninvestment in our ADSs or Class A ordinary shares.It is generally expected that a U.S. Holder of ADSs will be treated as the beneficial owner, for United States federal income tax purposes, of theunderlying shares represented by the ADSs. The remainder of this discussion assumes that a U.S. Holder of our ADSs will be treated in this manner.Accordingly, deposits or withdrawals of our Class A ordinary shares for our ADSs will not be subject to United States federal income tax.Passive Foreign Investment Company ConsiderationsA non-United States corporation, such as our company, will be classified as a “passive foreign investment company” (or a “PFIC”), for United Statesfederal income tax purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii)50% or more of the value of its assets (determined on the basis of a quarterly average) during such year produce or are held for the production of passiveincome (the “asset test”). Passive income generally includes dividends, interest, royalties, rents, annuities, net gains from the sale or exchange of propertyproducing such income and net foreign currency gains. For this purpose, cash is categorized as a passive asset and the company’s goodwill and otherunbooked intangibles associated with active business activity are taken into account as non-passive assets. We will be treated as owning our proportionateshare of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, more than 25% (byvalue) of the stock. 108Table of ContentsAlthough the law in this regard is unclear, we treat our VIEs as being owned by us for United States federal income tax purposes, not only because weexercise effective control over the operation of such entities but also because we are entitled to substantially all of their economic benefits, and, as a result,we consolidate their results of operation in our consolidated financial statements. If it were determined, however, that we are not the owner of our VIEs forUnited States federal income tax purposes, we would likely be treated as a PFIC for our current and any subsequent taxable year.Furthermore, the determination of whether we will be or become a PFIC will depend, in part, on the composition of our income and assets. Fluctuationsin the market price of our ADSs may cause us to become a PFIC for the current or subsequent taxable years because the value of assets for the purpose of theasset test may be determined by reference to the market price of our ADSs. The composition of our income and assets may also be affected by how, and howquickly, we use our liquid assets. Under circumstances where our revenue from activities that produce passive income significantly increase relative to ourrevenue from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash for active purposes, our risk ofbecoming classified as a PFIC may substantially increase. In addition, because there are uncertainties in the application of the relevant rules, it is possiblethat the Internal Revenue Service may challenge our classification of certain income and assets as non-passive or our valuation of our tangible and intangibleassets, each of which may result in our becoming a PFIC for the current or subsequent taxable years.Assuming we are the owner of our VIEs for U.S. federal income tax purposes, we believe that we primarily operate as an active provider of onlineautomotive advertising solutions in China. Based on our current income and assets, we do not believe that we were a PFIC for the taxable year endedDecember 31, 2017 and do not anticipate becoming a PFIC in future taxable years. While we do not believe that we were a PFIC for the taxable year endedDecember 31, 2017 and do not anticipate becoming a PFIC for the current taxable year or the foreseeable future, no assurance can be given in this regard.Because the determination of whether we will be or become a PFIC is a fact-intensive inquiry made on an annual basis, the determination of whether we willbe or become a PFIC will depend, in part, upon the value of our goodwill and other unbooked intangibles (which will depend upon the market value of ourADSs from time to time, which may be volatile). In estimating the value of our goodwill and other unbooked intangibles, we have taken into account ourcurrent market capitalization. If our market capitalization subsequently declines, we may be or become classified as a PFIC for the current taxable year orfuture taxable years. It is also possible that the Internal Revenue Service may challenge our classification or valuation of our goodwill and other unbookedintangibles, which may result in our company being or becoming a PFIC for the current taxable year or foreseeable future.If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our ADSs or Class A ordinary shares, the PFIC tax rules discussedbelow under “Passive Foreign Investment Company Rules” generally will apply to such U.S. Holder for such taxable year and, unless the U.S. Holder makescertain elections, will apply in future years even if we cease to be a PFIC in subsequent years. The discussion below under “Dividends” and “Sale or OtherDisposition of ADSs or Class A Ordinary Shares” is written on the basis that we will not be classified as a PFIC for United States federal income tax purposes.DividendsAny cash distributions (including the amount of any PRC tax withheld, if any) paid on ADSs or Class A ordinary shares out of our earnings and profits,as determined under United States federal income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend income on theday actually or constructively received by the U.S. Holder, in the case of Class A ordinary shares, or by the depositary bank, in the case of ADSs. Because wedo not intend to determine our earnings and profits on the basis of United States federal income tax principles, any distribution paid will generally be treatedas a “dividend” for United States federal income tax purposes. Non-corporate U.S. Holders receiving dividend income generally will be subject to tax on suchdividend income from a “qualified foreign corporation” at a lower applicable capital gains rate rather than the marginal tax rates generally applicable toordinary income provided that certain holding period and other requirements are met. A non-United States corporation (other than a corporation that isclassified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) generally will be considered to be a qualified foreigncorporation (i) with respect to any dividend it pays on stock (or ADSs in respect of such stock) which is readily tradable on an established securities market inthe United States, or (ii) if it is eligible for the benefits of a comprehensive tax treaty with the United States that the Secretary of Treasury of the United Statesdetermines is satisfactory for purposes of this provision and that includes an exchange of information program. Our ADSs are listed on the NYSE, which is anestablished securities market in the United States, and will be considered readily tradable on an established securities market for as long as the ADSs continueto be listed on such exchange. Thus, we believe that we will be a qualified foreign corporation with respect to dividends we pay on our ADSs, but there canbe no assurance that our ADSs will continue to be considered readily tradable on an established securities market in later years. 109Table of ContentsSince we do not expect that our Class A ordinary shares be listed on established securities markets, it is unclear whether dividends that we pay on ourordinary shares that are not backed by ADSs currently meet the requirements for the reduced tax rate. However, in the event that we are deemed to be a PRCresident enterprise under the Enterprise Income Tax Law (see “People’s Republic of China Taxation”), we may be eligible for the benefits of the UnitedStates-PRC income tax treaty, which the United States Treasury Department has determined is satisfactory for this purpose, and be treated as a qualifiedforeign corporation with respect to dividends paid on our ADSs or Class A ordinary shares. Dividends received on our ADSs or Class A ordinary shares willnot be eligible for the dividends-received deduction allowed to corporations. Each U.S. Holder is advised to consult its tax advisors regarding the availabilityof the reduced tax rate applicable to qualified dividend income for any dividends we pay with respect to our ADSs or Class A ordinary shares.Dividends generally will be treated as income from foreign sources for United States foreign tax credit purposes. In the event that we are deemed to be aPRC resident enterprise under the Enterprise Income Tax Law, a U.S. Holder may be subject to PRC withholding taxes on dividends paid on our ADSs orClass A ordinary shares. A U.S. Holder may be eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any foreignwithholding taxes imposed on dividends received on ADSs or Class A ordinary shares. A U.S. Holder who does not elect to claim a foreign tax credit forforeign tax withheld may instead claim a deduction, for United States federal income tax purposes, in respect of such withholding taxes, but only for a year inwhich such U.S. Holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex and U.S. Holders areurged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.Sale or Other Disposition of ADSs or Class A Ordinary SharesA U.S. Holder will generally recognize capital gain or loss upon the sale or other disposition of ADSs or Class A ordinary shares in an amount equal tothe difference between the amount realized upon the disposition and the holder’s adjusted tax basis in such ADSs or Class A ordinary shares. Any capital gainor loss will be long-term gain or loss if the ADSs or Class A ordinary shares have been held for more than one year and will generally be United States-sourcegain or loss for United States foreign tax credit purposes. Long-term capital gain of non-corporate U.S. Holders is generally eligible for reduced rates oftaxation. In the event that gain from the disposition of the ADSs or Class A ordinary shares is subject to tax in the PRC, a U.S. Holder that is eligible for thebenefits of the United States-PRC income tax treaty may elect to treat the gain as PRC-source income. The deductibility of a capital loss may be subject tolimitations. U.S. Holders are urged to consult their tax advisors regarding the tax consequences if a foreign tax is imposed on a disposition of our ADSs orClass A ordinary shares, including the availability of the foreign tax credit under their particular circumstances.Passive Foreign Investment Company RulesIf we are classified as a PFIC for any taxable year during which a U.S. Holder holds our ADSs or Class A ordinary shares, and unless the U.S. Holdermakes a mark-to-market election with respect to ADSs (as described below), the U.S. Holder will generally be subject to special tax rules that have apenalizing effect, regardless of whether we remain a PFIC, on (i) any excess distribution that we make to the U.S. Holder (which generally means anydistribution paid during a taxable year that is greater than 125% of the average annual distributions paid in the three preceding taxable years or, if shorter, theU.S. Holder’s holding period for the ADSs or Class A ordinary shares), and (ii) any gain realized on the sale or other disposition, including a pledge, undercertain circumstances, of ADSs or Class A ordinary shares. Under these PFIC rules: • the U.S. Holder’s excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or Class A ordinaryshares; 110Table of Contents • the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in whichwe are classified as a PFIC (each, a “pre-PFIC year”) will be taxable as ordinary income; • the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect applicable toindividuals or corporations, as appropriate, for that year; • an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each priortaxable year, other than a pre-PFIC year.If we are a PFIC for any taxable year during which a U.S. Holder holds our ADSs or Class A ordinary shares and any of our non-United Statessubsidiaries is also a PFIC (i.e., a lower-tier PFIC), such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC and would be subject to the rules described above on certain distributions by a lower-tier PFIC and a disposition of shares of a lower-tier PFIC eventhough such U.S. Holder would not receive the proceeds of those distributions or dispositions. U.S. Holders are urged to consult their tax advisors regardingthe application of the PFIC rules to any of our subsidiaries.As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” in a PFIC may make a mark-to-market election with respect to our ADSs,provided that the ADSs are regularly traded on the NYSE. We anticipate that the ADSs should qualify as being regularly traded, but no assurances may begiven in this regard. If a U.S. Holder makes this election, the U.S. Holder will generally (i) include as ordinary income for each taxable year the excess, if any,of the fair market value of ADSs held at the end of the taxable year over the adjusted tax basis of such ADSs and (ii) deduct as an ordinary loss the excess, ifany, of the adjusted tax basis of such ADSs over the fair market value of such ADSs held at the end of the taxable year, but such deduction will be allowedonly to the extent of the amount previously included in income as a result of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the ADSswould be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes a mark-to-market election in respect of acorporation classified as a PFIC and such corporation ceases to be classified as a PFIC, the U.S. Holder will not be required to take into account the gain orloss described above during any year that such corporation is not classified as a PFIC. If a U.S. Holder makes a mark-to-market election, any gain such U.S.Holder recognizes upon the sale or other disposition of our ADSs in a year when we are a PFIC will be treated as ordinary income and any loss will be treatedas ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously included in income as a result of themark-to-market election. In the case of a U.S. Holder who has held ADSs or Class A ordinary shares during any taxable year in respect of which we wereclassified as a PFIC and continues to hold such ADSs or Class A ordinary shares (or any portion thereof) and has not previously made a mark-to-marketelection, and if such U.S. Holder makes a mark-to-market election, special tax rules may apply relating to purging the PFIC taint of such ADSs or Class Aordinary shares.Because, as a technical matter, a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to besubject to the PFIC rules with respect to its indirect interest in any investments held by us that are treated as an equity interest in a PFIC for United Statesfederal income tax purposes.We do not intend to provide information necessary for U.S. Holders to make “qualified electing fund” elections which, if available, would result in taxtreatment different from the general tax treatment for PFICs described above.Dividends that we pay on our ADSs or Class A ordinary shares will not be eligible for the reduced tax rate that applies to qualified dividend incomediscussed above under “Dividends” if we are classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year. If a U.S.Holder owns our ADSs or Class A ordinary shares during any taxable year that we are a PFIC, the U.S. Holder must generally file an annual report with theInternal Revenue Service, subject to certain limited exceptions. Each U.S. Holder is urged to consult its tax advisor concerning the United States federalincome tax consequences of owning and disposing of our ADSs or Class A ordinary shares if we are or become a PFIC, including filing requirements, thepossibility of making a mark-to-market election and the unavailability of the qualifying electing fund election. 111Table of ContentsInformation ReportingCertain U.S. Holders are required to report information to the Internal Revenue Service relating to an interest in “specified foreign financial assets,”including shares issued by a non-United States corporation, for any year in which the aggregate value of all specified foreign financial assets exceeds$50,000 (or a higher dollar amount prescribed by the Internal Revenue Service), subject to certain exceptions (including an exception for shares held incustodial accounts maintained with a U.S. financial institution). These rules also impose penalties if a U.S. Holder is required to submit such information tothe Internal Revenue Service and fails to do so.In addition, dividend payments with respect to our ADSs or Class A ordinary shares and proceeds from the sale or other disposition of our ADSs orClass A ordinary shares may be subject to information reporting to the Internal Revenue Service. U.S. Holders are urged to consult their tax advisorsregarding the application of the United States information reporting rules to their particular circumstances. F.Dividends and Paying AgentsNot applicable. G.Statement by ExpertsNot applicable. H.Documents on DisplayWe previously filed with the SEC registration statements on Form F-1 under the Securities Act with respect to our initial public offering and ourfollow-on offering of our Class A ordinary shares represented by ADSs.We are subject to the periodic reporting and other informational requirements of the Securities Exchange Act of 1934, or the Exchange Act. Under theExchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F within fourmonths after the end of each fiscal year, which is December 31. The SEC maintains a website at www.sec.gov that contains reports, proxy and informationstatements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system. Copies of reports and otherinformation, when filed, may also be inspected without charge, and may be obtained at prescribed rates at the public reference facilities maintained by theSEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The public may obtain information regarding the Washington, D.C. Public Reference Roomby calling the SEC at 1-800-SEC-0330. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing andcontent of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profitrecovery provisions contained in Section 16 of the Exchange Act.We will furnish Deutsche Bank Trust Company Americas, the depositary of our ADSs, with our annual reports, which will include a review ofoperations and annual audited consolidated financial statements prepared in conformity with U.S. GAAP, and all notices of shareholders’ meetings and otherreports and communications that are made generally available to our shareholders. The depositary will make such notices, reports and communicationsavailable to holders of ADSs and, upon our request, will mail to all record holders of ADSs the information contained in any notice of a shareholders’ meetingreceived by the depositary from us.In accordance with NYSE Rule 203.01, we will post this annual report on our website http://ir.autohome.com.cn. In addition, we will providehardcopies of our annual report to shareholders, including ADS holders, free of charge upon request. I.Subsidiary InformationNot applicable. 112Table of ContentsITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKInterest Rate RiskOur exposure to interest rate risk primarily relates to the interest income generated by excess cash, which is mostly held in interest-bearing bankdeposits, and adjustable-rate short-term investments. We have not used derivative financial instruments in our investment portfolio. Interest earninginstruments carry a degree of interest rate risk. We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in marketinterest rates. Based on our interest earning instruments during the year ended December 31, 2017, a 10% change in the interest rates would result in anincrease or decrease of RMB22.0 million (US$3.4 million) of our total amount of interest income for 2017. However, our future interest income may fluctuatedue to changes in market interest rates. See “Item 5.B. Operating and Financial Review and Prospects—Liquidity and Capital Resources.”Foreign Exchange RiskWe earn substantially all of our revenues and incur most of our expenses in RMB, and substantially all of our sales contracts are denominated in RMB.We do not believe that we currently have any significant direct foreign exchange risk and have not used any derivative financial instruments to hedge ourexposure to such risk. Although in general, our exposure to foreign exchange risks should be limited, the value of your investment in our ADSs will beaffected by the exchange rate between the U.S. dollar and the RMB because the value of our business is effectively denominated in RMB, while the ADSswill be traded in U.S. dollars. Based on the amount of our cash and cash equivalents and short-term investments as of December 31, 2017, a 1.0% change inthe exchange rate between the Renminbi and the U.S. dollar would result in an increase or decrease of approximately US$1.4 million to our cash and cashequivalents and short-term investments.Significant revaluation of RMB against U.S. dollar may materially affect our earnings and financial position, the conversion of RMB into foreigncurrencies, including U.S. dollars, is based on rates set by the PBOC. In July 2005, the PRC government changed its decades-old policy of pegging the valueof the RMB to the U.S. dollar, and the RMB appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June2010, this appreciation halted and the exchange rate between the RMB and the U.S. dollar remained within a narrow band. Since June 2010, the RMB hasfluctuated against the U.S. dollar, at times significantly and unpredictably. On November 30, 2015, the Executive Board of the International Monetary Fundcompleted the regular five-year review of the basket of currencies that make up the Special Drawing Right, or the SDR, and decided that with effect fromOctober 1, 2016, RMB is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, theEuro, the Japanese yen and the British pound. In the fourth quarter of 2016, the RMB has depreciated significantly in the backdrop of a surging U.S. dollarand persistent capital outflows of China. In 2017, the RMB has appreciated significantly in the backdrop of a weak U.S. dollar, robust Chinese economy in2017 and stringent foreign exchange regulation. With the development of the foreign exchange market and progress towards interest rate liberalization andRMB internationalization, the PRC government may in the future announce further changes to the exchange rate system. It is difficult to predict how marketforces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future.To the extent that we need to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation ofthe RMB against the U.S. dollar would have an adverse effect on the RMB amount we would receive from the conversion. Conversely, if we decide to convertRMB into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs, strategic acquisitions or investments or otherbusiness purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amount available to us.ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES A.Debt SecuritiesNot applicable. 113Table of ContentsB.Warrants and RightsNot applicable. C.Other SecuritiesNot applicable. D.American Depositary SharesFees and Charges Our ADS Holders May Have to PayDeutsche Bank Trust Company Americas, the depositary of our ADS program, collects its fees for delivery and surrender of ADSs directly frominvestors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The principal executive office of thedepositary is located at 60 Wall Street, New York, NY 1005, USA. As an ADS holder, you will be required to pay the following service fees to the depositarybank: Service Fees•   Issuance of ADSs, including issuances resulting from a distribution ofshares or rights or other property Up to US$0.05 per ADS issued•   Cancellation of ADSs, including in the case of termination of the depositagreement Up to US$0.05 per ADS cancelled•   Distribution of cash dividends or other cash distributions Up to US$0.05 per ADS held•   Distribution of ADSs pursuant to share dividends, free share distributions orexercise of rights Up to US$0.05 per ADS held•   Distribution of securities other than ADSs or rights to purchase additionalADSs A fee equivalent to the fee that would be payable if securities distributed toyou had been Class A ordinary shares and the Class A ordinary shares hadbeen deposited for issuance of ADSs•   Depositary services Up to US$0.05 per ADS held on the applicable record date(s) establishedby the depositary bank•   Transfer of ADRs US$1.50 per certificate presented for transferAs an ADS holder, you will also be responsible for paying certain fees and expenses incurred by the depositary bank and certain taxes andgovernmental charges (in addition to any applicable fees, expenses, taxes and other governmental charges payable on the deposited securities represented byany of your ADSs) such as: • Fees for the transfer and registration of Class A ordinary shares charged by the registrar and transfer agent for the Class A ordinary shares in theCayman Islands (i.e., upon deposit and withdrawal of Class A ordinary shares). • Expenses incurred for converting foreign currency into U.S. dollars. • Expenses for cable, telex and fax transmissions and for delivery of securities. 114Table of Contents • Taxes and duties upon the transfer of securities, including any applicable stamp duties, any stock transfer charges or withholding taxes (i.e.,when Class A ordinary shares are deposited or withdrawn from deposit). • Fees and expenses incurred in connection with the delivery or servicing of Class A ordinary shares on deposit. • Fees and expenses incurred in connection with complying with exchange control regulations and other regulatory requirements applicable toClass A ordinary shares, deposited securities, ADSs and ADRs. • Any applicable fees and penalties thereon.The depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary bank by the brokers (on behalf of theirclients) receiving the newly issued ADSs from the depositary bank and by the brokers (on behalf of their clients) delivering the ADSs to the depositary bankfor cancellation. The brokers in turn charge these fees to their clients. Depositary fees payable in connection with distributions of cash or securities to ADSholders and the depositary services fee are charged by the depositary bank to the holders of record of ADSs as of the applicable ADS record date.The depositary fees payable for cash distributions are generally deducted from the cash being distributed or by selling a portion of distributableproperty to pay the fees. In the case of distributions other than cash (i.e., share dividends, rights), the depositary bank charges the applicable fee to the ADSrecord date holders concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether certificated or uncertificated in directregistration), the depositary bank sends invoices to the applicable record date ADS holders. In the case of ADSs held in brokerage and custodian accounts(via DTC), the depositary bank generally collects its fees through the systems provided by DTC (whose nominee is the registered holder of the ADSs held inDTC) from the brokers and custodians holding ADSs in their DTC accounts. The brokers and custodians who hold their clients’ ADSs in DTC accounts inturn charge their clients’ accounts the amount of the fees paid to the depositary banks.In the event of refusal to pay the depositary fees, the depositary bank may, under the terms of the deposit agreement, refuse the requested service untilpayment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS holder.Fees and Other Payments Made by the Depositary to UsOur depositary has agreed to reimburse us for a portion of certain expenses we incur that are related to establishment and maintenance of the ADRprogram, including investor relations expenses. There are limits on the amount of expenses for which the depositary will reimburse us, but the amount ofreimbursement available to us is not related to the amounts of fees the depositary collects from investors. Further, the depositary has agreed to reimburse uscertain fees payable to the depositary by holders of ADSs. Neither we nor the depositary can determine the exact amount to be made available to us because(i) the number of ADSs that will be issued and outstanding, (ii) the level of service fees to be charged to holders of ADSs and (iii) our reimbursable expensesrelated to the program are not known at this time. In 2017, we have received from the depositary a reimbursement of approximately US$0.5 million.PART II.ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIESNone.ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDSSee “Item 10. Additional Information” for a description of the rights of securities holders, which remain unchanged. 115Table of ContentsThe following “Use of Proceeds” information relates to: • the registration statement on Form F-1, as amended (File Number 333-192085) for our initial public offering of 8,993,000 ADSs (reflecting thefull exercise of the over-allotment option by the underwriters to purchase an additional 1,173,000 ADSs), representing 8,993,000 Class Aordinary shares, which registration statement was declared effective by the SEC on December 10, 2013. Deutsche Bank Securities Inc. andGoldman Sachs (Asia) L.L.C. acted as the representatives of the underwriters in our initial public offering; and • the registration statement on Form F-1, as amended (File Number 333-199862) for our 2014 Offering of 9,645,659 ADSs (reflecting the partialexercise of the over-allotment option by the underwriters to purchase an additional 1,145,659 ADSs), representing 9,645,659 Class A ordinaryshares, which registration statement was declared effective by the SEC on November 19, 2014. Deutsche Bank Securities Inc. and Goldman Sachs(Asia) L.L.C. acted as the representatives of the underwriters in our 2014 Offering.We incurred expenses and paid to others US$12.8 million for underwriting discounts and commissions in connection with our initial public offeringfrom the effective date of the registration statement for the initial public offering to December 31, 2014. We incurred expenses and paid to othersUS$5.0 million for underwriting discounts and commissions in connection with our 2014 Offering from the effective date of the registration statement for the2014 Offering to December 31, 2014. We received net proceeds of approximately US$142.6 million and US$97.3 million from our initial public offering and2014 Offering, respectively.In 2015, 2016 and 2017, we used an aggregate of approximately US$31 million of the net proceeds from our initial public offering and the 2014Offering for payment of establishment of new subsidiaries, investment in joint venture, professional fees, insurance fees, compensation to directors andgeneral corporate purposes.We intend to use the remainder of the proceeds from the Offerings for general corporate purposes, including funding potential investments andacquisitions of complementary businesses, assets and technologies.ITEM 15. CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresOur management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectiveness ofour disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report, as requiredby Rule 13a-15(b) under the Exchange Act. Based on that evaluation, our management has concluded that, as of December 31, 2017, our disclosure controlsand procedures were effective.Management’s Annual Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of consolidated financial statements in accordance with U.S. GAAP and includes those policies and procedures that(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of a company’s assets,(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance withgenerally accepted accounting principles, and that a company’s receipts and expenditures are being made only in accordance with authorizations of acompany’s management and directors, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, ordisposition of a company’s assets that could have a material effect on the consolidated financial statements. Our management, with the participation of ourchief executive officer and chief financial officer, conducted an evaluation of the effectiveness of our company’s internal control over financial reporting asof December 31, 2017 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of theTreadway Commission (2013 Framework). Based on this evaluation, our management concluded that our internal control over financial reporting waseffective as of December 31, 2017. 116Table of ContentsBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, any evaluation ofeffectiveness as to future periods is subject to the risks that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate.Attestation Report of the Independent Registered Public Accounting FirmThe effectiveness of our internal control over financial reporting as of December 31, 2017 has been audited by PricewaterhouseCoopers Zhong TianLLP, our independent registered public accounting firm, as stated in its report included on page F-2 of this annual report.Changes in Internal Control Over Financial ReportingThere were no changes in our internal control over financial reporting that occurred during the year ended December 31, 2017 that have materiallyaffected, or are reasonably likely to materially affect, our internal control over financial reporting.AUDIT COMMITTEE FINANCIAL EXPERTOur board of directors has determined that Mr. Tianruo Pu is our audit committee financial expert, who is an independent director under the standardsset forth in Section 303A of the New York Stock Exchange Listed Company Manual and Rule 10A-3 of the Exchange Act. Mr. Pu is the chairman of our auditcommittee.CODE OF ETHICSOur board of directors has adopted a code of business conduct and ethics that applies to our directors, officers, employees and agents, including certainprovisions that specifically apply to our chairman, chief executive officer, chief financial officer, controller, vice presidents and any other persons whoperform similar functions for us. We filed our code of business conduct and ethics as Exhibit 99.1 to our registration statement on Form F-1, as amended,which was originally filed with the SEC on November 4, 2013. We subsequently amended the code of business conduct and ethics and filed it as exhibit 11.1to our annual report on Form 20-F. We have posted a copy of our code of business conduct and ethics on our website at http://ir.autohome.com.cn.PRINCIPAL ACCOUNTANT FEES AND SERVICESThe following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by Ernst &Young Hua Ming LLP, our former independent registered public accounting firm which we dismissed on November 11, 2016, and PricewaterhouseCoopersZhong Tian LLP, our current independent registered public accounting firm, for the periods indicated. We did not pay any other fees to our independentregistered public accounting firm during the periods other than those indicated below. For the Year Ended December 31, 2016 2017 (in RMB thousands) Audit fees(1) 10,251 8,646 Tax fees(2) 1,087 1,883 (1)“Audit fees” means the aggregate fees billed for professional services rendered by our independent registered public accounting firm for the audit ofour annual financial statements, the audit of our internal control over financial reporting and the review of our comparative interim financialinformation.(2)“Tax fees” represents the aggregated fees billed for professional services rendered by our independent registered public accounting firm for taxcompliance, tax advice and tax planning. 117Table of ContentsThe policy of our audit committee is to preapprove all audit and non-audit services provided by our independent registered public accounting firm,including audit services and tax services as described above, other than those for de minimis services which are approved by the audit committee prior to thecompletion of the audit. Our audit committee has approved all of our audit fees and tax fees for the year ended December 31, 2017.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEESNot applicable.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERSNone.CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANTEffective from November 12, 2016, we engaged PricewaterhouseCoopers Zhong Tian LLP as our independent registered public accounting firm, anddismissed Ernst & Young Hua Ming LLP, or E&Y. The change of our independent registered public accounting firm was approved by the audit committee ofour board on November 11, 2016. The decision was not made due to any disagreements with E&Y. Details regarding this change in certifying accountantwere previously reported under Item 16F of our annual report on Form 20-F (File No. 001-36222), filed with the Securities and Exchange Commission onApril 25, 2017.CORPORATE GOVERNANCEBecause Yun Chen owns more than 50% of the total voting power of our ordinary shares, we are a “controlled company” under Section 303A of theNew York Stock Exchange Listed Company Manual. We intend to rely on certain exemptions that are available to controlled companies from NYSEcorporate governance requirements, including the requirements: • that the board of directors must have a majority of independent directors; • that the board of directors must have a compensation committee composed entirely of independent directors; and • that the board of directors must have a nominating/corporate governance committee composed entirely of independent directors.We availed ourselves of these controlled company exemptions. As a result, we did not have a majority of independent directors on our board, and eachof our compensation committee and our nominating and corporate governance committee did not consist entirely of independent directors. See “Item 3. KeyInformation — D. Risk Factors — Risks Related to Our Business and Industry—We are a “controlled company” within the meaning of the NYSE corporategovernance requirements, which may result in public investors not having as much protection as they would if we were not a controlled company.”MINE SAFETY DISCLOSURENot applicable.PART III.FINANCIAL STATEMENTSWe have elected to provide financial statements pursuant to Item 18. 118Table of ContentsFINANCIAL STATEMENTSThe consolidated financial statements of Autohome Inc. are included at the end of this annual report. EXHIBITS ExhibitNumber Description of Document 1.1 Fourth Amended and Restated Memorandum and Articles of Association of the Registrant, adopted on November 27, 2013 (incorporated hereinby reference to Exhibit 3.2 to the registration statement on Form F-1, as amended (File No. 333-192085), initially filed with the Securities andExchange Commission on November 4, 2013) 2.1 Registrant’s Specimen American Depositary Receipt (incorporated herein by reference to Exhibit 4.1 to the registration statement on Form F-1,as amended (File No. 333-192085), initially filed with the Securities and Exchange Commission on November 4, 2013) 2.2 Registrant’s Specimen Certificate for Ordinary Shares (incorporated herein by reference to Exhibit 4.2 to the registration statement on Form F-1,as amended (File No. 333-192085), initially filed with the Securities and Exchange Commission on November 4, 2013) 2.3 Deposit Agreement among the Registrant, the depositary and holders of the American Depositary Receipts dated as of December 10, 2013(incorporated herein by reference to Exhibit 4.3 to the registration statement on Form S-8 (File No. 333-196006), filed with the Securities andExchange Commission on May 16, 2014) 4.1 2011 Share Incentive Plan of the Registrant (incorporated herein by reference to Exhibit 10.1 to the registration statement on Form F-1, asamended (File No. 333-192085), initially filed with the Securities and Exchange Commission on November 4, 2013) 4.2 2013 Share Incentive Plan of the Registrant (incorporated herein by reference to Exhibit 10.2 to the registration statement on Form F-1, asamended (File No. 333-192085), initially filed with the Securities and Exchange Commission on November 4, 2013) 4.3 Form of Indemnification Agreement between the Registrant and its directors and officers (incorporated herein by reference to Exhibit 10.3 to theregistration statement on Form F-1, as amended (File No. 333-192085), initially filed with the Securities and Exchange Commission onNovember 4, 2013) 4.4 English translation of Form of Employment Agreement between a subsidiary of the Registrant and an executive officer of the Registrant(incorporated herein by reference to Exhibit 10.4 to the registration statement on Form F-1, as amended (File No. 333-192085), initially filedwith the Securities and Exchange Commission on November 4, 2013) 4.5 English translation of the Executed Form of the Equity Interest Purchase Agreement among Xiang Li, Zheng Fan, Zhi Qin as sellers and Min Lu,Haiyun Lei as buyers and Autohome Information as the target company dated March 25, 2017 (incorporated by reference to Exhibit 4.5 to ourannual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.6 English translation of the Executed Form of the Equity Interest Purchase Agreement among Xiang Li, Zheng Fan, Zhi Qin as sellers and Min Lu,Haiyun Lei as buyers and Shanghai Advertising as target company dated March 25, 2017 (incorporated by reference to Exhibit 4.6 to ourannual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.7 English translation of the Executed Form of the Equity Interest Purchase Agreement among Xiang Li, Zheng Fan, Zhi Qin as sellers and Min Lu,Haiyun Lei as buyers and Guangzhou Advertising as target company dated September 30, 2016 (incorporated by reference to Exhibit 4.7 to ourannual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 119Table of ContentsExhibitNumber Description of Document 4.8 English translation of the Executed Form of the Equity Interest Purchase Agreement among Zheng Fan, Zhi Qin as sellers and Min Lu, HaiyunLei as buyers and Shengtuo Hongyuan as the target company dated September 30, 2016 (incorporated by reference to Exhibit 4.8 to our annualreport on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.9 English translation of the Executed Form of the Debt Transfer and Offset Agreement among Autohome WFOE as creditor, Xiang Li, Zheng Fan,Zhi Qin as transferors, and Min Lu, Haiyun Lei as transferees dated March 25, 2017 (incorporated by reference to Exhibit 4.9 to our annual reporton Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.10 English translation of the Executed Form of Debt Transfer and Offset Agreement among Autohome WFOE as creditor, Xiang Li, Zheng Fan, ZhiQin as transferors, and Min Lu, Haiyun Lei as transferees dated March 25, 2017 (incorporated by reference to Exhibit 4.10 to our annual reporton Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.11 English translation of the Executed Form of Debt Transfer and Offset Agreement among Autohome WFOE as creditor, Xiang Li, Zheng Fan, ZhiQin as transferors, and Min Lu, Haiyun Lei as transferees dated September 30, 2016 (incorporated by reference to Exhibit 4.11 to our annualreport on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.12 English translation of the Executed Form of the Debt Transfer and Offset Agreement among Chezhiying WFOE as creditor, Zheng Fan, Zhi Qinas transferors, and Min Lu, Haiyun Lei as transferees dated September 30, 2016 (incorporated by reference to Exhibit 4.12 to our annual report onForm 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.13 English translation of the Executed Form of the Exclusive Technology Consulting and Service Agreement between Autohome WFOE andAutohome Information dated March 25, 2017 (incorporated by reference to Exhibit 4.13 to our annual report on Form 20-F (File No. 001-36222),filed with the SEC on April 25, 2017) 4.14 English translation of the Executed Form of the Exclusive Technology Consulting and Service Agreement between Autohome WFOE andShanghai Advertising dated March 25, 2017 (incorporated by reference to Exhibit 4.14 to our annual report on Form 20-F (File No. 001-36222),filed with the SEC on April 25, 2017) 4.15 English translation of the Executed Form of the Exclusive Technology Consulting and Service Agreement between Autohome WFOE andGuangzhou Advertising dated September 30, 2016 (incorporated by reference to Exhibit 4.15 to our annual report on Form 20-F (File No.001-36222), filed with the SEC on April 25, 2017) 4.16 English translation of the Executed Form of the Exclusive Technology Consulting and Service Agreement between Chezhiying WFOE andShengtuo Hongyuan dated September 30, 2016 (incorporated by reference to Exhibit 4.16 to our annual report on Form 20-F (File No.001-36222), filed with the SEC on April 25, 2017) 4.17 English translation of the Executed Form of the Exclusive Technology Consulting and Service Agreement between Autohome WFOE andAutohome Advertising dated September 30, 2016 (incorporated by reference to Exhibit 4.17 to our annual report on Form 20-F (File No.001-36222), filed with the SEC on April 25, 2017) 4.18 English translation of the Executed Form of the Exclusive Technology Consulting and Service Agreement between Autohome WFOE andChengshi Advertising dated September 30, 2016 (incorporated by reference to Exhibit 4.18 to our annual report on Form 20-F (File No.001-36222), filed with the SEC on April 25, 2017) 120Table of ContentsExhibitNumber Description of Document 4.19 English translation of the Executed Form of the Exclusive Technology Consulting and Service Agreement between Chezhiying WFOE andAutohome Used Car Appraisal dated September 30, 2016 (incorporated by reference to Exhibit 4.19 to our annual report on Form 20-F (File No.001-36222), filed with the SEC on April 25, 2017) 4.20 English translation of the Executed Form of the Exclusive Technology Consulting and Service Agreement between Chezhiying WFOE andAutohome Used Car Brokerage dated September 30, 2016 (incorporated by reference to Exhibit 4.20 to our annual report on Form 20-F (File No.001-36222), filed with the SEC on April 25, 2017) 4.21 English translation of the Executed Form of the Loan Agreement between Autohome WFOE and Min Lu dated March 25, 2017 (incorporated byreference to Exhibit 4.21 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.22 English translation of the Executed Form of the Loan Agreement between Autohome WFOE and Haiyun Lei dated March 25, 2017(incorporated by reference to Exhibit 4.22 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.23 English translation of the Executed Form of the Loan Agreement between Autohome WFOE and Min Lu dated March 25, 2017 (incorporated byreference to Exhibit 4.23 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.24 English translation of the Executed Form of the Loan Agreement between Autohome WFOE and Haiyun Lei dated March 25, 2017(incorporated by reference to Exhibit 4.24 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.25 English translation of the Executed Form of the Loan Agreement between Autohome WFOE and Min Lu dated September 30, 2016(incorporated by reference to Exhibit 4.25 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.26 English translation of the Executed Form of the Loan Agreement between Autohome WFOE and Haiyun Lei dated September 30, 2016(incorporated by reference to Exhibit 4.26 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.27 English translation of the Executed Form of the Loan Agreement between Chezhiying WFOE and Min Lu dated September 30, 2016(incorporated by reference to Exhibit 4.27 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.28 English translation of the Executed Form of the Loan Agreement between Chezhiying WFOE and Haiyun Lei dated September 30, 2016(incorporated by reference to Exhibit 4.28 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.29 English translation of the Executed Form of the Equity Option Agreement among Autohome WFOE, Autohome Information and Min Lu datedMarch 25, 2017 (incorporated by reference to Exhibit 4.29 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC onApril 25, 2017) 4.30 English translation of the Executed Form of the Equity Option Agreement among Autohome WFOE, Autohome Information and Haiyun Leidated March 25, 2017 (incorporated by reference to Exhibit 4.30 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC onApril 25, 2017) 4.31 English translation of the Executed Form of the Equity Option Agreement among Autohome WFOE, Shanghai Advertising and Min Lu datedMarch 25, 2017 (incorporated by reference to Exhibit 4.31 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC onApril 25, 2017) 121Table of ContentsExhibitNumber Description of Document 4.32 English translation of the Executed Form of the Equity Option Agreement among Autohome WFOE, Shanghai Advertising and Haiyun Lei datedMarch 25, 2017 (incorporated by reference to Exhibit 4.32 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC onApril 25, 2017) 4.33 English translation of the Executed Form of the Equity Option Agreement among Autohome WFOE, Guangzhou Advertising and Min Lu datedSeptember 30, 2016 (incorporated by reference to Exhibit 4.33 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC onApril 25, 2017) 4.34 English translation of the Executed Form of the Equity Option Agreement among Autohome WFOE, Guangzhou Advertising and Haiyun Leidated September 30, 2016 (incorporated by reference to Exhibit 4.34 to our annual report on Form 20-F (File No. 001-36222), filed with the SECon April 25, 2017) 4.35 English translation of the Executed Form of the Equity Option Agreement among Chezhiying WFOE, Shengtuo Hongyuan and Min Lu datedSeptember 30, 2016 (incorporated by reference to Exhibit 4.35 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC onApril 25, 2017) 4.36 English translation of the Executed Form of Equity Option Agreement among Chezhiying WFOE, Shengtuo Hongyuan and Haiyun Lei datedSeptember 30, 2016 (incorporated by reference to Exhibit 4.36 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC onApril 25, 2017) 4.37 English translation of the Executed Form of the Equity Option Agreement among Autohome WFOE, Autohome Information and AutohomeAdvertising dated September 30, 2016 (incorporated by reference to Exhibit 4.37 to our annual report on Form 20-F (File No. 001-36222), filedwith the SEC on April 25, 2017) 4.38 English translation of the Executed Form of the Equity Option Agreement among Autohome WFOE, Autohome Information and ChengshiAdvertising dated September 30, 2016 (incorporated by reference to Exhibit 4.38 to our annual report on Form 20-F (File No. 001-36222), filedwith the SEC on April 25, 2017) 4.39 English translation of the Executed Form of the Equity Option Agreement among Chezhiying WFOE, Shengtuo Hongyuan and Autohome UsedCar Appraisal dated September 30, 2016 (incorporated by reference to Exhibit 4.39 to our annual report on Form 20-F (File No. 001-36222), filedwith the SEC on April 25, 2017) 4.40 English translation of the Executed Form of the Equity Option Agreement among Chezhiying WFOE, Shengtuo Hongyuan and Autohome UsedCar Brokerage dated September 30, 2016 (incorporated by reference to Exhibit 4.40 to our annual report on Form 20-F (File No. 001-36222),filed with the SEC on April 25, 2017) 4.41 English translation of the Executed Form of the Equity Interest Pledge Agreement between Autohome WFOE and Min Lu dated March 25, 2017(incorporated by reference to Exhibit 4.41 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.42 English translation of the Executed Form of the Equity Interest Pledge Agreement between Autohome WFOE and Haiyun Lei dated March 25,2017 (incorporated by reference to Exhibit 4.42 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.43 English translation of the Executed Form of the Equity Interest Pledge Agreement between Autohome WFOE and Min Lu dated March 25, 2017(incorporated by reference to Exhibit 4.43 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.44 English translation of the Executed Form of the Equity Interest Pledge Agreement between Autohome WFOE and Haiyun Lei dated March 25,2017 (incorporated by reference to Exhibit 4.44 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 122Table of ContentsExhibitNumber Description of Document 4.45 English translation of the Executed Form of the Equity Interest Pledge Agreement between Autohome WFOE and Min Lu dated September 30,2016 (incorporated by reference to Exhibit 4.45 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.46 English translation of the Executed Form of the Equity Interest Pledge Agreement between Autohome WFOE and Haiyun Lei dated September 30, 2016 (incorporated by reference to Exhibit 4.46 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25,2017) 4.47 English translation of the Executed Form of the Equity Interest Pledge Agreement between Chezhiying WFOE and Min Lu dated September 30,2016 (incorporated by reference to Exhibit 4.47 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.48 English translation of the Executed Form of the Equity Interest Pledge Agreement between Chezhiying WFOE and Haiyun Lei datedSeptember 30, 2016 (incorporated by reference to Exhibit 4.48 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC onApril 25, 2017) 4.49 English translation of the Executed Form of the Equity Interest Pledge Agreement between Autohome WFOE and Autohome Information datedSeptember 30, 2016 (incorporated by reference to Exhibit 4.49 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC onApril 25, 2017) 4.50 English translation of the Executed Form of the Equity Interest Pledge Agreement between Autohome WFOE and Autohome Information datedSeptember 30, 2016 (incorporated by reference to Exhibit 4.50 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC onApril 25, 2017) 4.51 English translation of the Executed Form of the Equity Interest Pledge Agreement between Chezhiying WFOE and Shengtuo Hongyuan datedSeptember 30, 2016 (incorporated by reference to Exhibit 4.51 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC onApril 25, 2017) 4.52 English translation of the Executed Form of the Equity Interest Pledge Agreement between Chezhiying WFOE and Shengtuo Hongyuan datedSeptember 30, 2016 (incorporated by reference to Exhibit 4.52 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC onApril 25, 2017) 4.53 English translation of the Executed Form of the Power of Attorney by Min Lu dated March 25, 2017 (incorporated by reference to Exhibit 4.53to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.54 English translation of the Executed Form of the Power of Attorney by Haiyun Lei dated March 25, 2017 (incorporated by reference toExhibit 4.54 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.55 English translation of the Executed Form of the Power of Attorney by Min Lu dated March 25, 2017 (incorporated by reference to Exhibit 4.55to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.56 English translation of the Executed Form of the Power of Attorney by Haiyun Lei dated March 25, 2017 (incorporated by reference toExhibit 4.56 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.57 English translation of the Executed Form of the Power of Attorney by Min Lu dated September 30, 2016 (incorporated by reference toExhibit 4.57 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 123Table of ContentsExhibitNumber Description of Document 4.58 English translation of the Executed Form of the Power of Attorney by Haiyun Lei dated September 30, 2016 (incorporated by reference toExhibit 4.58 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.59 English translation of the Executed Form of the Power of Attorney by Min Lu dated September 30, 2016 (incorporated by reference toExhibit 4.59 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.60 English translation of the Executed Form of the Power of Attorney by Haiyun Lei dated September 30, 2016 (incorporated by reference toExhibit 4.60 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.61 English translation of the Executed Form of the Power of Attorney by Autohome Information dated September 30, 2016 (incorporated byreference to Exhibit 4.61 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.62 English translation of the Executed Form of the Power of Attorney by Autohome Information dated September 30, 2016 (incorporated byreference to Exhibit 4.62 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.63 English translation of the Executed Form of the Power of Attorney by Shengtuo Hongyuan dated September 30, 2016 (incorporated byreference to Exhibit 4.63 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.64 English translation of the Executed Form of the Power of Attorney by Shengtuo Hongyuan dated September 30, 2016 (incorporated byreference to Exhibit 4.64 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.65 Amended and Restated 2016 Share Incentive Plan of the Registrant, as amended on April 20, 2017 (incorporated by reference to Exhibit 4.65to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.66 2016 Share Incentive Plan II (as amended by Amendment No. 1 to the 2016 Share Incentive Plan II) of the Registrant (incorporated byreference to Exhibit 4.66 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.67 Investor’s Rights Agreement by and among the Registrant and Yun Chen Capital Cayman dated September 30, 2016 (incorporated byreference to Exhibit 4.67 to our annual report on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017) 4.68* English translation of termination agreement entered into among Autohome WFOE, Guangzhou Advertising and each of GuangzhouAdvertising’s shareholders 4.69* English translation of termination agreement entered into among Autohome WFOE, Shanghai Advertising and each of Shanghai Advertising’sshareholders 8.1* List of Principal Subsidiaries and VIEs 11.1 Amended and Restated Code of Business Conduct and Ethics of the Registrant (incorporated herein by reference to Exhibit 11.1 to the Form20-F (File No. 001-36222), filed with the Securities and Exchange Commission on March 31, 2014) 12.1* Certification by Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12.2* Certification by Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 13.1** Certification by Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 124Table of ContentsExhibitNumber Description of Document 13.2** Certification by Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 15.1* Consent of Ernst & Young Hua Ming LLP, independent registered public accounting firm 15.2* Consent of PricewaterhouseCoopers Zhong Tian LLP, independent registered public accounting firm 15.3* Consent of Commerce & Finance Law Offices 16.1 Letter from Ernst & Young Hua Ming LLP to the Securities and Exchange Commission (incorporated by reference to Exhibit 16.1 to our annualreport on Form 20-F (File No. 001-36222), filed with the SEC on April 25, 2017)101.INS* XBRL Instance Document101.SCH* XBRL Taxonomy Extension Schema Document101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document101.DEF* XBRL Taxonomy Extension Definition Linkbase Document101.LAB* XBRL Taxonomy Extension Label Linkbase Document101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document *Filed with this annual report on Form 20-F.**Furnished with this annual report on Form 20-F. 125Table of ContentsSIGNATURESThe registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned tosign this annual report on its behalf. AUTOHOME INC.By: /s/ Min Lu Name: Min Lu Title: Chairman of the Board and Chief ExecutiveOfficerDate: April 13, 2018 126Table of ContentsAUTOHOME INC.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of independent registered public accounting firm F-2-F-4 Consolidated balance sheets as of December 31, 2016 and 2017 F-5-F-6 Consolidated statements of comprehensive income for the years ended December 31, 2015, 2016 and 2017 F-7 Consolidated statements of cash flows for the years ended December 31, 2015, 2016 and 2017 F-8 Consolidated statements of changes in shareholders’ equity for the years ended December 31, 2015, 2016 and 2017 F-9 Notes to the consolidated financial statements F-10-F-42 F-1Table of ContentsReport of Independent Registered Public Accounting FirmTo the Board of Directors and Shareholders of Autohome Inc.:Opinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of Autohome Inc. and its subsidiaries as of December 31, 2017 and 2016, and the relatedconsolidated statements of comprehensive income, changes in shareholders’ equity and cash flows for each of the two years in the period ended December 31,2017, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal controlover financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committeeof Sponsoring Organizations of the Treadway Commission (COSO).In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2017 and 2016, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2017 inconformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all materialrespects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework(2013) issued by the COSO.Basis for OpinionsThe Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting,and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control overFinancial Reporting appearing under Item 15 of the accompanying Form 20-F. Our responsibility is to express opinions on the Company’s consolidatedfinancial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with thePublic Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordancewith the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internalcontrol over financial reporting was maintained in all material respects.Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financialstatements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles usedand significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internalcontrol over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performingsuch other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. F-2Table of Contents/s/ PricewaterhouseCoopers Zhong Tian LLPBeijing, the People’s Republic of ChinaApril 13, 2018We have served as the Company’s auditor since 2016. F-3Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and Shareholders of Autohome Inc.We have audited the accompanying consolidated balance sheets of Autohome Inc. (the “Company”) as of December 31, 2015 and 2014, and the relatedconsolidated statements of comprehensive income, cash flows and changes in shareholders’ equity for each of the three years in the period endedDecember 31, 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinionon these consolidated financial statements based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of AutohomeInc. at December 31, 2015 and 2014, and the consolidated results of its operations and its cash flows for each of the three years in the period endedDecember 31, 2015, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Autohome Inc.’s internal controlover financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 17, 2016 expressed an unqualified opinion thereon./s/ Ernst & Young Hua Ming LLPBeijing, the People’s Republic of ChinaMarch 17, 2016 F-4Table of ContentsAUTOHOME INC.CONSOLIDATED BALANCE SHEETSAS OF DECEMBER 31, 2016 AND 2017(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) Note 2016 2017 RMB RMB US$ ASSETS Current assets: Cash and cash equivalents 3,293,911 911,588 140,109 Restricted cash 3 9,319 — — Short-term investments 3 2,430,091 7,242,636 1,113,173 Accounts receivable (net of allowance for doubtful accounts of RMB512 and RMB1,408 (US$216) as ofDecember 31, 2016 and 2017, respectively) 4 1,205,924 1,893,737 291,062 Inventories, net 5 95,617 — — Amounts due from related parties, current 12 20,451 24,502 3,766 Prepaid expenses and other current assets 6 377,219 186,123 28,608 Total current assets 7,432,532 10,258,586 1,576,718 Non-current assets: Property and equipment, net 8 134,574 130,322 20,030 Intangible assets, net 9 29,667 50,923 7,827 Goodwill 1,504,278 1,504,278 231,203 Long-term investments 10 134,466 147,929 22,736 Amounts due from related parties, non-current 12 809 10,956 1,684 Deferred tax assets 7 121,663 174,620 26,839 Other non-current assets 34,037 17,361 2,668 Total non-current assets 1,959,494 2,036,389 312,987 Total assets 9,392,026 12,294,975 1,889,705 LIABILITIES AND EQUITY Current liabilities: Accrued expenses and other payables 11 1,151,547 1,658,934 254,973 Advance from customers 75,882 70,454 10,829 Deferred revenue 1,012,143 1,409,485 216,634 Notes payable 31,063 — — Income tax payable 256,775 144,379 22,191 Amounts due to related parties 12 16,630 10,285 1,581 Dividend payable — 595,779 91,570 Total current liabilities (including current liabilities of consolidated VIEs without recourse to AutohomeWFOE and Chezhiying WFOE of RMB291,685 and RMB259,986 (US$39,959) as of December 31, 2016 and2017, respectively) 2,544,040 3,889,316 597,778 Non-current liabilities: Other liabilities 7 34,977 32,122 4,937 Deferred tax liabilities 7 461,796 438,251 67,358 Total non-current liabilities (including non-current liabilities of consolidated VIEs without recourse toAutohome WFOE and Chezhiying WFOE of RMB28,531 and RMB32,718 (US$5,028) as of December 31,2016 and 2017, respectively) 496,773 470,373 72,295 Total liabilities (including total liabilities of consolidated VIEs without recourse to Autohome WFOE andChezhiying WFOE of RMB320,216 and RMB292,704 (US$44,987) as of December 31, 2016 and 2017,respectively) 3,040,813 4,359,689 670,073 Commitments and contingencies 13 The accompanying notes are an integral part of these consolidated financial statements F-5Table of ContentsAUTOHOME INC.CONSOLIDATED BALANCE SHEETSAS OF DECEMBER 31, 2016 AND 2017(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) Note 2016 2017 RMB RMB US$ Shareholders’ equity: Ordinary shares (par value of US$0.01 per share; 100,000,000,000 (including 99,931,211,060 Class A and68,788,940 Class B) shares authorized; 115,297,224 and 117,140,856 shares issued and outstanding, allcomprised of Class A, as of December 31, 2016 and 2017, respectively) 15 7,784 7,909 1,216 Additional paid-in capital 3,006,152 3,246,475 498,974 Accumulated other comprehensive income 125,009 69,954 10,752 Retained earnings 3,221,459 4,627,299 711,203 Total Autohome Inc. shareholders’ equity 6,360,404 7,951,637 1,222,145 Noncontrolling interests (9,191) (16,351) (2,513) Total equity 6,351,213 7,935,286 1,219,632 Total liabilities and equity 9,392,026 12,294,975 1,889,705 The accompanying notes are an integral part of these consolidated financial statements F-6Table of ContentsAUTOHOME INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) Note 2015 2016 2017 RMB RMB RMB US$ Net revenues: Media services 1,878,397 2,347,626 3,083,496 473,925 Leads generation services 1,403,892 1,916,445 2,616,009 402,073 Online marketplace 181,686 1,697,550 510,676 78,489 Total net revenues 3,463,975 5,961,621 6,210,181 954,487 Cost of revenues 14 (669,121) (2,393,165) (1,358,685) (208,826) Gross profit 2,794,854 3,568,456 4,851,496 745,661 Operating expenses: Sales and marketing expenses (1,127,484) (1,536,939) (1,647,519) (253,219) General and administrative expenses (193,655) (306,794) (281,951) (43,335) Product development expenses (273,908) (571,354) (878,773) (135,065) Operating profit 1,199,807 1,153,369 2,043,253 314,042 Interest income 63,218 88,168 220,282 33,857 Earnings/(loss) from equity method investments 102 (6,638) (10,571) (1,625) Other income, net 13,064 13,953 8,577 1,318 Income before income taxes 1,276,191 1,248,852 2,261,541 347,592 Income tax expense 7 (285,542) (32,629) (267,082) (41,050) Net income 990,649 1,216,223 1,994,459 306,542 Net loss attributable to noncontrolling interests — 11,691 7,160 1,100 Net income attributable to Autohome Inc. 990,649 1,227,914 2,001,619 307,642 Earnings per share for ordinary shares: Basic 17 8.83 10.75 17.20 2.64 Diluted 17 8.57 10.58 16.95 2.61 Weighted average number of shares used to compute earnings per share attributable toClass A and Class B common stockholders: Basic 17 112,227,405 114,237,600 116,379,846 116,379,846 Diluted 17 115,646,826 116,036,327 118,058,856 118,058,856 Net income 990,649 1,216,223 1,994,459 306,542 Other comprehensive income/(loss), net of tax of nil Foreign currency translation adjustments 56,821 62,256 (55,055) (8,462) Comprehensive income 1,047,470 1,278,479 1,939,404 298,080 Comprehensive loss attributable to noncontrolling interests — 11,691 7,160 1,100 Comprehensive income attributable to Autohome Inc. 1,047,470 1,290,170 1,946,564 299,180 The accompanying notes are an integral part of these consolidated financial statements F-7Table of ContentsAUTOHOME INC.CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 2015 2016 2017 RMB RMB RMB US$ CASH FLOWS FROM OPERATING ACTIVITIES Net income 990,649 1,216,223 1,994,459 306,542 Adjustments to reconcile net income to net cash from operating activities: Depreciation of property and equipment 51,337 65,246 81,915 12,590 Amortization of intangible assets 5,247 4,558 6,923 1,064 Loss on disposal of property and equipment 570 227 2,909 447 Provision for doubtful accounts 2,179 2,303 1,110 170 (Earnings)/loss from equity method investments (102) 6,638 10,571 1,625 Fair value change of short-term investments — (5,883) (29,042) (4,464) Write-down of inventories and prepayment for vehicle purchase cost — 50,190 1,483 228 Share-based compensation 107,945 195,393 177,786 27,325 Deferred income taxes (6,475) (103,800) 12,279 1,887 Changes in operating assets and liabilities: Accounts receivable (340,940) (132,771) (688,923) (105,885) Amounts due from related parties, current (1,645) (18,806) (4,051) (623) Prepaid expenses and other current assets (264,391) (77,587) 191,348 29,411 Inventories (111,667) 4,418 94,134 14,468 Restricted cash (61,091) 51,772 9,319 1,432 Amounts due from related parties, non-current — (809) (10,147) (1,560) Other non-current assets (1,965) (12,090) 16,386 2,518 Accrued expenses and other payables 316,714 308,861 425,306 65,369 Advance from customers (15,316) 48,668 (5,428) (834) Notes payable 174,943 (143,880) (31,063) (4,774) Deferred revenue 433,690 139,656 397,342 61,071 Income tax payable 150,210 31,802 (172,398) (26,497) Amounts due to related parties 23,411 (6,814) (6,345) (975) Other liabilities 8,538 2,381 (2,855) (439) Net cash generated from operating activities 1,461,841 1,625,896 2,473,018 380,096 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (89,161) (88,837) (86,422) (13,283) Proceeds from disposal of property and equipment 595 539 811 125 Acquisition of intangible assets — — (21,100) (3,243) Purchase of long-term investments (124,000) (17,000) (30,000) (4,611) Proceeds from and cash advanced from disposal of long-term investments — — 57,500 8,838 Purchase of short-term investments (3,715,074) (4,212,594) (19,613,774) (3,014,582) Maturity of short-term investments 3,519,983 3,802,986 14,779,158 2,271,515 Net cash used in investing activities (407,657) (514,906) (4,913,827) (755,241) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from exercise of share options 30,200 25,420 61,070 9,386 Capital injection from noncontrolling interests shareholder — 2,500 — — Net cash generated from financing activities 30,200 27,920 61,070 9,386 Effect of exchange rate changes on cash and cash equivalents 13,847 2,354 (2,584) (397) Net increase/(decrease) in cash and cash equivalents 1,098,231 1,141,264 (2,382,323) (366,156) Cash and cash equivalents at beginning of year 1,054,416 2,152,647 3,293,911 506,265 Cash and cash equivalents at end of year 2,152,647 3,293,911 911,588 140,109 Supplemental disclosures of cash flow information: Income taxes paid 133,265 102,443 430,136 66,111 Purchase of fixed assets included in accrued expenses and other payables 2,612 12,200 6,303 969 Dividends declared but not paid — — 595,779 91,570 The accompanying notes are an integral part of these consolidated financial statements F-8Table of ContentsAUTOHOME INC.CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) Ordinary shares Additionalpaid-in Accumulatedothercomprehensive Retained Noncontrolling Total Shares Amount capital income Earnings interests Equity Number RMB RMB RMB RMB RMB RMB Balance as of December 31, 2014 110,602,163 7,484 2,649,111 5,932 1,002,896 — 3,665,423 Net income — — — — 990,649 — 990,649 Other comprehensive income: Foreign currency translation adjustments — — — 56,821 — — 56,821 Exercise and vesting of share-based awards 2,452,407 151 30,047 — — — 30,198 Share-based compensation — — 107,945 — — — 107,945 Balance as of December 31, 2015 113,054,570 7,635 2,787,103 62,753 1,993,545 — 4,851,036 Net income / (loss) — — — — 1,227,914 (11,691) 1,216,223 Other comprehensive income: Foreign currency translation adjustments — — — 62,256 — — 62,256 Capital injection from noncontrolling interests shareholder — — — — — 2,500 2,500 Exercise and vesting of share-based awards 2,242,654 149 23,656 — — — 23,805 Share-based compensation — — 195,393 — — — 195,393 Balance as of December 31, 2016 115,297,224 7,784 3,006,152 125,009 3,221,459 (9,191) 6,351,213 Net income / (loss) — — — — 2,001,619 (7,160) 1,994,459 Other comprehensive income: Foreign currency translation adjustments — — — (55,055) — — (55,055) Dividends declared (RMB5.08 (US$0.76) per Class Aordinary share; RMB595,779 (US$91,570) to Class Aordinary shareholders) — — — — (595,779) — (595,779) Exercise and vesting of share-based awards 1,843,632 125 62,537 — — — 62,662 Share-based compensation — — 177,786 — — — 177,786 Balance as of December 31, 2017 117,140,856 7,909 3,246,475 69,954 4,627,299 (16,351) 7,935,286 Balance as of December 31, 2017, in US$ 1,216 498,974 10,752 711,203 (2,513) 1,219,632 The accompanying notes are an integral part of these consolidated financial statements F-9Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 1.ORGANIZATIONAutohome Inc., formerly known as Sequel Limited (the “Company”), was incorporated under the laws of the Cayman Islands on June 23, 2008. Uponincorporation, the Company was 100% owned by Telstra Holdings Pty Ltd. (“Telstra”). On June 27, 2008 (the “Acquisition date”), the Company acquiredCheerbright International Holdings Limited (“Cheerbright”), China Topside Co., Ltd. (“China Topside”), and Norstar Advertising Media Holdings Co., Ltd.(“Norstar”), and their respective wholly foreign-owned enterprises and variable interest entities (“VIEs”). Subsequent to the acquisition, the Company wasowned 55% by Telstra, and 45% by the selling shareholders of Cheerbright, China Topside and Norstar. In May 2012, Telstra acquired additional ordinaryshares of the Company from other shareholders. In June 2016, Telstra completed the sale of approximately 47.4% of the total issued shares in the Company toPing An Insurance (Group) Company of China Ltd. (“Ping An”) and on February 22, 2017, Ping An further acquired from Telstra approximately 6.5% of thetotal issued shares in the Company. After the consummation of the sale, Ping An became the Company’s controlling shareholder.The Company successfully completed its IPO and listing of 8,993,000 American Depositary Shares (“ADSs”) on the New York Stock Exchange in December,2013, and raised net proceeds of US$142,590 from the offering. Each ADS represents one ordinary share. Upon the completion of IPO in December, 2013, theCompany’s dual-class ordinary share structure came into effect (Note 15). Upon the completion of follow-on offering in November 2014, 2,424,801 ADSswere issued by the Company and 6,964,612 Class B ordinary shares were converted into Class A ordinary shares. The net proceeds from the follow-onoffering amounted to US$97,344 net of issuance cost. Upon the transfer of 47.4% share ownership by Telstra to Ping An in June 2016, all the Class Bordinary shares were converted into Class A ordinary shares. As of December 31, 2017, the Company had ordinary shares outstanding, all comprised of117,140,856 Class A ordinary shares. Ping An became the Company’s controlling shareholder holding 52.8% of the total equity interest and voting rights,respectively in the Company as of December 31, 2017.The Company, through its subsidiaries and VIEs (as disclosed in the table below), is engaged in the provision of media services, leads generation services andonline marketplace in the People’s Republic of China (the “PRC”).As of December 31, 2017, the Company’s principal subsidiaries and VIEs where Autohome WFOE and Chezhiying WFOE are the primary beneficiariesinclude the following entities: Entity Date ofincorporation oracquisition Place of incorporation Percentage ofdirectownership bythe Company Subsidiaries Cheerbright International Holdings, Limited(“Cheerbright”) June 13, 2006 British Virgin Islands 100% Autohome E-commerce Inc. February 6, 2015 Cayman Islands 100% Autohome Link Inc. January 29, 2015 Cayman Islands 100% Autohome Financing Limited March 23, 2015 Cayman Islands 100% Autohome (Hong Kong) Limited (“Autohome HK”) March 16, 2012 Hong Kong 100% Autohome Media Limited (“Autohome Media”,formerly known as Prbrownies Marketing Limited) October 18, 2013 Hong Kong 100% Autohome E-commerce Hong Kong Limited February 18, 2015 Hong Kong 100% Autohome Link Hong Kong Limited February 16, 2015 Hong Kong 100% Autohome Financing Hong Kong Limited April 15, 2015 Hong Kong 100% Beijing Cheerbright Technologies Co., Ltd.(“Autohome WFOE”) September 1, 2006 PRC 100% Autohome Shanghai Advertising Co., Ltd. September 29, 2013 PRC 100% Beijing Prbrownies Software Co., Ltd. (formerly knownas “Beijing Autohome Software Co., Ltd.”) November 12, 2013 PRC 100% F-10Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 1.ORGANIZATION (CONTINUED) Entity Date ofincorporation oracquisition Place of incorporation Percentage ofdirectownership bythe Company Beijing Autohome Technologies Co., Ltd. November 12, 2013 PRC 100% Beijing Autohome Advertising Co., Ltd. November 13, 2013 PRC 100% Guangzhou Autohome Advertising Co., Ltd. November 25, 2013 PRC 100% Autohome (Tianjin) Automobile Sales Co., Ltd. October 20, 2014 PRC 100% Beijing Chezhiying Technology Co., Ltd.(“Chezhiying WFOE”) May 26, 2015 PRC 100% Beijing Chezhiying Software Co., Ltd.(“Chezhiying Software”) December 9, 2015 PRC 100% Beijing Kemoshijie Technology Co., Ltd. September 11, 2015 PRC 100% Beijing Haochezhijia E-commerce Co., Ltd. April 25, 2016 PRC 75% Huai’an Prbrownies Software Co., Ltd. September 13, 2016 PRC 100% Chengdu Prbrownies Software Co., Ltd. September 30, 2016 PRC 100% VIEs Beijing Autohome Information Technology Co., Ltd. (“AutohomeInformation”) August 28, 2006 PRC — Beijing Shengtuo Autohome Advertising Co., Ltd. September 21, 2010 PRC — Beijing Shengtuo Hongyuan Information Technology Co., Ltd.(“Shengtuo Hongyuan”) November 8, 2010 PRC — Beijing Shengtuo Chengshi Advertising Co., Ltd. November 12, 2010 PRC — Shanghai You Che You Jia Advertising Co., Ltd. (“ShanghaiAdvertising”) December 31, 2011 PRC — Guangzhou You Che You Jia Advertising Co., Ltd. (“GuangzhouAdvertising”) May 8, 2012 PRC — Beijing Autohome Used Car Appraisal Co., Ltd. January 30, 2015 PRC — Beijing Autohome Used Car Brokerage Co., Ltd. June 10, 2015 PRC — Shanghai Tianhe Insurance Brokerage Co., Ltd. September 21, 2017 PRC — The Company, its subsidiaries and VIEs are hereinafter collectively referred to as the “Group”. The Group provides media services, leads generation servicesand online marketplace through its websites and mobile applications. These services are offered to automakers and dealers, and advertising agencies thatrepresent automakers and dealers in the automobile industry, and financial institutions. The Group’s principal geographic market is in the PRC. TheCompany does not conduct any substantive operations of its own but conducts its primary business operations through its wholly-owned subsidiaries andVIEs in the PRC.PRC laws and regulations prohibit or restrict foreign ownership of internet content businesses. To comply with these foreign ownership restrictions, theCompany and its subsidiaries operate websites and mobile applications and conduct its business related to internet content services through VIEs. The paid-in capital of the VIEs was funded by the Company’s PRC subsidiaries, Autohome WFOE and Chezhiying WFOE, through loans extended to the VIEs’shareholders (“Nominee Shareholders”). The effective control of the VIEs is held by WFOEs, through a series of contractual agreements (the “ContractualAgreements”). As a result of the Contractual Agreements, the WFOEs maintain the ability to control the VIEs, are entitled to substantially all of the economicbenefits from the VIEs and are obligated to absorb all of the VIE’s expected losses. F-11Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 1.ORGANIZATION (CONTINUED) In September 2016 and March 2017, the then individual nominee shareholders of Shengtuo Hongyuan, Guangzhou Advertising, Autohome Information andShanghai Advertising, entered into Equity Interest Purchase Agreements and Debt Transfer and Offset Agreements with Min Lu and Haiyun Lei, pursuant towhich the then individual nominee shareholders transferred all of their equity interest in each of the entities to Min Lu and Haiyun Lei. In September 2016and in March 2017, each of Autohome WFOE and Chezhiying WFOE, and each of Shengtuo Hongyuan and its two subsidiaries, Guangzhou Advertising,Autohome Information and its two subsidiaries and Shanghai Advertising, and each of Min Lu and Haiyun Lei, as the individual nominee shareholder ofVIEs, entered into contractual agreements.Despite the lack of technical majority ownership, there exists a parent-subsidiary relationship between the Company and the VIEs through the irrevocablepower of attorney agreement, whereby the Nominee Shareholders effectively assigned all of their voting rights underlying their equity interest in the VIEs tothe WFOEs. In addition, through the Contractual Agreements the Company demonstrates its ability and intention to continue to exercise the ability to absorbsubstantially all of the expected losses and majority of the profits of the VIEs through the WFOEs.Thus, the Company is also considered the primary beneficiary of the VIEs through the WFOEs. As a result of the above, the Company consolidates the VIEsin accordance with SEC Regulation SX-3A-02 and Accounting Standards Codification (“ASC”) 810-10 (“ASC 810-10”) Consolidation: Overall.The following is a summary of the Contractual Agreements:Exclusive technical consulting and service agreementsPursuant to the exclusive technical consulting and service agreements that have been entered into by the WFOEs and the VIEs, the VIEs have engaged theWFOEs as their exclusive provider of technical support and management consulting services. The VIEs shall pay to the WFOEs service fees calculated basedon such VIE’s revenues reduced by its value-added taxes and surcharges, operating expenses and an appropriate amount of retained profit that is determinedpursuant to our tax planning strategies and relevant tax laws. The service fees can be adjusted by the WFOEs unilaterally. The WFOEs shall exclusively ownany intellectual property arising from the performance of this agreement. This agreement has a 30 year term that can be automatically extended for another 10years at the option of the WFOEs. The agreement can only be terminated mutually by the parties in writing. During the term of the agreement, the VIEs maynot enter into any agreement with third parties for the provision of any technical or management consulting services without prior consent of the WFOEs.Loan agreementPursuant to the loan agreements between the Nominee Shareholders of the VIEs and the WFOEs, the WFOEs granted interest-free loans for the NomineeShareholders’ contributions to the VIEs. The term of the loan is indefinite until the WFOEs requests repayment. The manner and timing of the repaymentshall be at the sole discretion of the WFOEs and at the WFOEs’ option may be in the form of transferring the VIEs’ equity interest to the WFOEs or theirdesignated persons.Exclusive equity option agreementsPursuant to the exclusive equity option agreements entered into among the Nominee Shareholders of the VIEs, VIEs and the WFOEs, the NomineeShareholders jointly and severally granted to the WFOEs an option to purchase their equity interests in the VIEs. The purchase price will be offset against theloan repayments under the loan agreements. If the transfer price of the equity interest is greater than the loan amount, the Nominee Shareholders are requiredto immediately return the received transfer price in excess of the loan amount to the WFOEs or any person designated by the WFOEs. The WFOEs mayexercise such option at any time until it has acquired all equity interests of the VIEs or freely transfer the option to any third party and such third party mayassume the right and obligations of the option agreement. The exclusive equity option agreements have an indefinite term and will terminate at the earlier ofi) the date on which all of the equity interests have been transferred to the WFOEs or any person designated by the WFOEs; or ii) the unilateral termination bythe WFOEs. F-12Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 1.ORGANIZATION (CONTINUED) Equity interest pledge agreementsPursuant to the equity interest pledge agreements entered into between the Nominee Shareholders of the VIEs and the WFOEs, the Nominee Shareholderspledged all of their equity interests in the VIEs to the WFOEs as collateral for all of their payments due to the WFOEs and to secure their obligations underthe above agreements. The Nominee Shareholders may not transfer or assign the shares, the rights and obligations in the share pledge agreement or create orpermit to create any pledges which may have an adverse effect on the rights or benefits of the VIEs without the WFOE’s preapproval. The WFOE is entitled totransfer or assign in full or in part the shares pledged. In the event of default, the WFOE as the pledgee will be entitled to request immediate repayment of theloan or to dispose of the pledged equity interests through transfer or assignment. There have been no dividends or distributions from inception to date. Theequity interest pledge agreements have an indefinite term and will terminate after all the obligations under these agreements have been satisfied in full or thepledged equity interests have been transferred to the WFOEs or their designees.Power of attorney agreementsPursuant to the power of attorney agreements, shareholders of the VIEs have given the WFOEs an irrevocable proxy to act on their behalf on all matterspertaining to the VIEs and to exercise all of their rights as shareholders of the VIEs, including the right to attend shareholders’ meetings, to exercise votingrights and to transfer all or a part of his equity interests in the VIEs.In June 2011, the Contractual Agreements were supplemented with the following terms: • With respect to the exclusive equity option agreements, in the event of liquidation or dissolution of the VIEs, all assets shall be sold to theWFOEs at the lowest selling price permitted by applicable PRC law, and any proceeds from the transfer and any residual interests in the VIEsshall be remitted to the WFOEs immediately; • With respect to the exclusive equity option agreements, dividends and distributions are not permitted without the prior consent of the WFOEs, tothe extent there is a dividend or distribution, the Nominee Shareholders will remit the amounts in full to the WFOEs immediately; • With respect to the exclusive technical consulting and service agreements and loan agreements, the WFOEs shall provide the necessary financialsupport to the VIEs whether or not the VIEs incur any losses, and not request for repayment if the VIEs are unable to do so.Risk in relation to the VIE StructureInternet content related businesses are subject to significant restrictions under current PRC laws and regulations. Specifically, foreign investors are notallowed to own more than 50% equity interest in any Internet Content Provider (“ICP”) business.The Group conducts its operations in China through Contractual Agreements entered into between the WFOEs and VIEs. In 2014, the Group began graduallymigrating the advertising service business from the VIEs to the subsidiaries of Autohome Media, a transition that was completed to a substantial extent. If theCompany or any of its current or future VIEs or subsidiaries are found in violation of any existing or future laws or regulations, or fail to obtain or maintainany of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion in dealing with such violations, includinglevying fines, confiscating the income of Autohome WFOE, Chezhiying WFOE and VIEs, revoking their business licenses or operating licenses, shuttingdown the Group’s servers or blocking the Group’s websites and mobile applications, discontinuing or placing restrictions or onerous conditions on theGroup’s operations, requiring the Group to undergo a costly and disruptive restructuring, restricting the Group’s rights to use the proceeds from the offeringto finance the Group’s business and operations in China, or enforcement actions that could be harmful to the Group’s business. Any of these actions couldcause significant disruption to the Group’s business operations and severely damage the Group’s reputation, which would in turn materially and adverselyaffect the Group’s business and results of operations. In addition, if the imposition of any of these penalties causes the Company to lose the rights to directthe activities of VIEs or the Company’s right to receive their economic benefits, the Company would no longer be able to consolidate the VIEs. F-13Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 1.ORGANIZATION (CONTINUED) In addition, if Shanghai Advertising, Guangzhou Advertising, Autohome Information and its subsidiaries, Shengtuo Hongyuan and its subsidiaries or theirshareholders fail to perform their obligations under the Contractual Agreements, the Company may have to incur substantial costs and expend resources toenforce the Company’s rights under the contracts. The Company may have to rely on legal remedies under PRC law, including seeking specific performanceor injunctive relief and claiming damages, which may not be effective. All of these Contractual Agreements are governed by PRC law and provide for theresolution of disputes through arbitration in the PRC. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes wouldbe resolved in accordance with PRC legal procedures. The legal system in PRC is not as developed as in other jurisdictions, such as United States. As a result,uncertainties in the PRC legal system could limit the Company’s ability to enforce these Contractual Agreements. Under PRC law, rulings by arbitrators arefinal, parties cannot appeal the arbitration results in courts, and prevailing parties may only enforce the arbitration awards in PRC courts through arbitrationaward recognition proceedings, which would incur additional expenses and delay. In the event the Company is unable to enforce these ContractualAgreements, the Company may not be able to exert effective control over its VIEs, and the Company’s ability to conduct its business may be negativelyaffected.Based on the advice of the Company’s PRC legal counsel, the corporate structure and Contractual Agreements of the Company’s VIEs and WFOEs in Chinaare in compliance with all existing PRC laws and regulations. Therefore, in the opinion of management, (i) the ownership structure of the Company and theVIEs are in compliance with existing PRC laws and regulations; (ii) the Contractual Agreements with VIEs and their nominee shareholders are valid andbinding, and will not result in any violation of PRC laws or regulations currently in effect; and (iii) the Group’s business operations are in compliance withexisting PRC law and regulations in all material respects.VIEs contributed an aggregate of 7.8%, 5.5% and 4.4% of the consolidated net revenues for the years ended December 31, 2015, 2016 and 2017,respectively, after elimination of inter-company transactions. As of December 31, 2016 and 2017, the VIEs accounted for an aggregate of 19.3% and 21.1%,respectively, of the consolidated total assets, and 10.5% and 6.7%, respectively, of the consolidated total liabilities after elimination of inter-companybalances.Relevant PRC laws and regulations restrict the VIE from transferring a portion of its net assets to the Company in the form of loans and advances or cashdividends. Please refer to Note 16 for disclosure of restricted net assets.The following table sets forth the assets, liabilities, results of operations and cash flows of the VIEs included in the Company’s consolidated balance sheets,consolidated statements of comprehensive income and consolidated statements of cash flows: December 31, 2016 2017 RMB RMB US$ Current assets 1,059,117 1,326,075 203,814 Non-current assets 1,643,467 1,645,183 252,860 Total assets 2,702,584 2,971,258 456,674 Accrued expenses and other payables 191,942 162,423 24,964 Advance from customers 15,452 45,747 7,031 Deferred revenue 40,115 47,507 7,302 Income tax payable 42,746 — — Amounts due to related parties 1,430 4,309 662 Inter-company payables 761,583 1,031,877 158,597 Total current liabilities 1,053,268 1,291,863 198,556 Other liabilities 21,131 20,010 3,075 Deferred tax liabilities 7,400 12,708 1,953 Total non-current liabilities 28,531 32,718 5,028 Total liabilities 1,081,799 1,324,581 203,584 Net assets 1,620,785 1,646,677 253,090 F-14Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 1.ORGANIZATION (CONTINUED) Year ended December 31, 2015 2016 2017 RMB RMB RMB US$ Net revenues 271,198 328,618 274,774 42,232 Net (loss)/income (68,272) (71,931) 20,380 3,132 Year ended December 31, 2015 2016 2017 RMB RMB RMB US$ Net cash (used in)/generated from operating activities (23,630) 20,337 851,872 130,930 Net cash used in investing activities (73,318) (33,204) (802,710) (123,374) Net cash generated from financing activities — — — — The revenue-producing assets that are held by the VIEs comprise of customer relationships, trademarks, websites, domain names, operating license andservers.The current assets of the VIEs included amounts due from PRC subsidiaries of RMB887,932 and RMB381,388 (US$58,618), as of December 31, 2016 and2017, respectively, which were eliminated upon consolidation by the Company. The current liabilities of the VIEs included amounts due to PRC subsidiariesof RMB761,583 and RMB1,031,877(US$158,597), as of December 31, 2016 and 2017, respectively, which were eliminated upon consolidation by theCompany. There was no pledge or collateralization of the VIEs’ assets and the WFOEs have not provided any financial support that they were not previouslycontractually required to provide to the VIEs. There were no assets of the VIEs that can only be used to settle their own obligations. Creditors of the VIEshave no recourse to the general credit of the WFOEs, which are the primary beneficiaries of the VIEs. 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a)Basis of accountingThe accompanying consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). (b)Principles of ConsolidationThe consolidated financial statements include the financial statements of the Company, its subsidiaries, and the VIEs for which the Company or subsidiariesof the Company are the primary beneficiaries. All significant inter-company transactions and balances between the Company, its subsidiaries, and the VIEsare eliminated upon consolidation. Results of acquired subsidiaries and VIEs are consolidated from the date on which control is transferred to the Company. (c)Use of EstimatesThe preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and thereported amounts of revenues and expenses during the year. Areas where management uses subjective judgment include, but are not limited to, estimating theuseful lives of long-lived assets and intangible assets, identifying separate accounting units and estimating rebates related to revenue transactions, assessingthe initial valuation of the assets acquired and liabilities assumed in a business combination and the subsequent impairment assessment of long-lived assets,intangible assets and goodwill, long-term investments, determining the provision for accounts receivable, inventories and prepayment for vehicle purchasecost, accounting for deferred income taxes and accounting for the share-based compensation. Changes in facts and circumstances may result in revisedestimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements. F-15Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d)Foreign CurrencyThe functional currency of the Company, its Cayman subsidiaries and Cheerbright, is the United States dollar (“US$”), whereas the functional currency ofHong Kong subsidiaries is the Hong Kong dollar (“HK$”), and the functional currency of the PRC subsidiaries and VIEs is the Chinese Renminbi (“RMB”) asdetermined based on the criteria of ASC 830, Foreign Currency Matters. The Company uses the RMB as its reporting currency. Transactions denominated inforeign currencies are re-measured into the functional currency at the exchange rates prevailing on the transaction dates. Foreign currency denominatedfinancial assets and liabilities are re-measured at the balance sheet date exchange rate. Exchange gains and losses are included in other income, net in theconsolidated statements of comprehensive income.Assets and liabilities of the Company, its Cayman subsidiaries, Cheerbright and Hong Kong subsidiaries are translated into RMB at fiscal year-end exchangerates. Income and expense items are translated at average exchange rates prevailing during the fiscal year. (e)Convenience TranslationAmounts in United States dollars (“US$”) are presented for the convenience of the reader and are translated at the noon buying rate of US$1.00 toRMB6.5063 on December 29, 2017 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of NewYork. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate. (f)Cash and Cash EquivalentsCash and cash equivalents consist of cash on hand, demand deposits, time deposits and money market funds placed with banks or other financial institutionswhich are unrestricted as to withdrawal and use and have original maturities of three months or less. (g)Short-term InvestmentsShort-term investments represent bank deposits, adjustable-rate financial products with original maturities of greater than 3 months but less than 1 year andmoney market funds that are measured at fair value. In accordance with ASC 825, Financial Instruments, for adjustable-rate financial products with theinterest rate indexed to performance of underlying assets and money market funds, the Group elected the fair value method at the date of initial recognitionand carried these investments at fair value. Changes in the fair value are reflected in the consolidated statements of comprehensive income as interest income. (h)Fair Value Measurements of Financial InstrumentsFinancial instruments of the Group primarily comprise of cash and cash equivalents, restricted cash, short-term investments, accounts receivable, amounts duefrom related parties, prepaid expenses and other current assets, other non-current assets, accrued expenses and other payables, notes payable, and amounts dueto related parties. The carrying values of these financial instruments approximated their fair values due to the short-term maturity of these instruments.ASC topic 820 (“ASC 820”), Fair Value Measurements and Disclosures, establishes a three-tier fair value hierarchy, which prioritizes the inputs used inmeasuring fair value as follows:Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active marketsLevel 2 – Include other inputs that are directly or indirectly observable in the marketplaceLevel 3 – Unobservable inputs which are supported by little or no market activityASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) costapproach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets orliabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on thevalue indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required toreplace an asset. (i)Accounts Receivable and Allowance for Doubtful AccountsAccounts receivable are carried at net realizable value. An allowance for doubtful accounts is recorded in the period when a loss is probable based on anassessment of specific evidence indicating troubled collection, historical experience, accounts aging and other factors. An accounts receivable balance iswritten off after all collection effort has ceased. F-16Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (j)Inventories, netInventories consist of new vehicles held for sale, stated at the lower of cost or net realizable value. Cost is determined using the specific identificationmethod. The Company’s purchase arrangements with certain automakers entitle the Company to receive a specified amount of cash rebates if certainconditions are met during the stated rebate periods. The Company accounts for these rebates in accordance with ASC 605-50, Revenue Recognition:Customer Payments and Incentives. Rebates relating to new vehicles purchased but still held by the Company as of the balance sheet date are recorded as areduction to cost of inventories while rebates relating to new vehicles purchased and sold during the reporting period are recorded as a reduction to cost ofrevenues.Adjustments are recorded to write down the cost of inventory to the estimated market value for slow-moving and damaged goods, which is dependent uponfactors such as inventory aging, historical and forecasted consumer demand, and promotional environment. Write-downs are recorded in cost of revenues inthe consolidated statements of comprehensive income. (k)Property and EquipmentProperty and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the assets, as follows: Category Estimated useful lifeElectronic equipment 3 – 5 yearsOffice equipment 3 – 5 yearsMotor vehicles 4 – 5 yearsSoftware 3 – 5 yearsLeasehold improvements Shorter of lease term or the estimated useful lives ofthe assetsRepair and maintenance costs are charged to expense as incurred, whereas the costs of betterments that extend the useful life of property and equipment arecapitalized as additions to the related assets. Retirements, sale and disposals of assets are recorded by removing the cost and accumulated depreciation withany resulting gain or loss reflected in the consolidated statements of comprehensive income. (l)Intangible AssetsIntangible assets are carried at cost less accumulated amortization and any recorded impairment. Intangible assets acquired in a business combination wererecognized initially at fair value at the date of acquisition. Intangible assets acquired in asset acquisitions are measured based on the cost to the acquiringentity, which generally includes transaction costs. Intangible assets with finite useful lives are amortized using a straight-line method of amortization thatreflects the estimated pattern in which the economic benefits of the intangible asset are to be consumed. The estimated useful life for the intangible assets isas follows: Category Estimated useful lifeTrademark 3-15 yearsCustomer relationship 5 yearsWebsites 4 yearsDomain names 4-10 yearsLicensing agreements 1.75 yearsInsurance brokerage license 4 years (m)Long-term InvestmentsThe Company’s long-term investments consist of equity method investments. Investments in entities in which the Company can exercise significantinfluence and holds an investment in voting common stock or in-substance common stock (or both) of the investee but does not own a majority equityinterest or control are accounted for using the equity method of accounting in accordance with ASC topic 323 (“ASC 323”), Investments-Equity Method andJoint Ventures. Under the equity method, the Company initially records its investments at cost. The Company subsequently adjusts the carrying amount ofthe investments to recognize the Company’s proportionate share of each equity investee’s net income or loss into earnings after the date of investments. TheCompany evaluates the equity method investments for impairment under ASC 323. An impairment loss on the equity method investments is recognized inearnings when the decline in value is determined to be other-than-temporary. F-17Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (n)GoodwillGoodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of anacquired business. The Group’s goodwill at December 31, 2016 and 2017 were related to its acquisition of Cheerbright, China Topside and Norstar. Inaccordance with ASC 350, Goodwill and Other Intangible Assets, recorded goodwill amounts are not amortized, but rather are tested for impairment annuallyor more frequently if there are indicators of impairment present.Goodwill is tested for impairment at the reporting unit level on an annual basis (December 31 for the Company) and between annual tests if an event occursor circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. These events or circumstancesinclude a significant change in stock prices, business environment, legal factors, financial performances, competition, or events affecting the reporting unit.Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities toreporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The estimation of fair value of reportingunit using a discounted cash flow methodology also requires significant judgments, including estimation of future cash flows, which is dependent on internalforecasts, estimation of the long-term rate of growth for the Company’s business, estimation of the useful life over which cash flows will occur, anddetermination of the Company’s weighted average cost of capital. The estimates used to calculate the fair value of a reporting unit change from year to yearbased on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value andgoodwill impairment for the reporting unit.Management has determined that the Group represents the lowest level within the entity at which goodwill is monitored for internal management purposes.Management evaluated the recoverability of goodwill by performing a qualitative assessment before using a two-step impairment test approach at thereporting unit level. Based on an assessment of the qualitative factors, management determined that it is more-likely-than-not that the fair value of thereporting unit is in excess of its carrying amount. Therefore, management concluded that it was not necessary to proceed to the two-step goodwill impairmenttest. At December 31, 2016 and 2017, goodwill was RMB1,504,278 and RMB1,504,278 (US$231,203), respectively. No impairment loss was recorded forany of the years presented.If the Group reorganizes its reporting structure in a manner that changes the composition of one or more of its reporting units, goodwill is reassigned based onthe relative fair value of each of the affected reporting units. (o)Impairment of Long-Lived Assets and IntangiblesThe Group evaluates its long-lived assets or asset group, including intangible assets with finite lives, for impairment whenever events or changes incircumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount of anasset or a group of long-lived assets may not be recoverable. When these events occur, the Group evaluates impairment by comparing the carrying amount ofthe assets to future undiscounted net cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expectedundiscounted cash flow is less than the carrying amount of the assets, the Group would recognize an impairment loss based on the excess of the carryingamount of the asset group over its fair value. No impairment charge was recorded for any of the years presented. (p)Revenue RecognitionThe Group’s revenue is derived from media services, leads generation services and online marketplace. Revenue is recognized only when the price is fixed ordeterminable, persuasive evidence of an arrangement exists, the service is performed and collectability of the related fee is reasonably assured based on theguidance in ASC 605, Revenue Recognition.Contracts are signed to establish significant terms such as the price and services to be provided. The Group considers the price for its services to be fixed ordeterminable when the Group and its customers have signed the contracts. The Group assesses the creditworthiness of its customers prior to signing thecontracts to ensure collectability is reasonably assured. Non-refundable payments received before all of the relevant criteria for revenue recognition aresatisfied and are to be recognized ratably over a period are recorded as deferred revenue. F-18Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (p)Revenue Recognition (continued) Media servicesMedia services revenues mainly include revenues from automaker advertising services and regional marketing campaigns conducted by certain automobilebrands’ regional offices. The majority of the Group’s online advertising service arrangements involve multiple deliverables such as banner advertisements,links and logos, other media insertions and promotional activities that are delivered over different periods of time.In determining its best estimated selling price for each deliverable, the Group considered its overall pricing model and objectives, as well as market orcompetitive conditions that may impact the price at which the Group would transact if the deliverable were sold regularly on a standalone basis. The Groupmonitors the conditions that affect its determination of selling price for each deliverable and reassesses such estimates periodically. Revenue is recognizedratably when the advertisements are published over the stated display period in the case of websites and mobile applications or when the services have beenrendered in the case of promotional activities. The amount recognized is limited to the amount that is not contingent upon the delivery of additionaldeliverables or meeting other specified performance conditions.Leads generation servicesLeads generation services primarily include revenues from (i) dealer subscription services, (ii) advertising services sold to individual dealer advertisers, andother value-added services. Under the dealer subscription services, the Group makes available throughout the subscription period a webpage linked to itswebsites and mobile applications where the dealers can publish information such as the pricing of their products, locations and addresses and other relatedinformation. Revenue is recognized ratably as services are provided over the subscription period.Online marketplaceOnline marketplace revenues mainly include revenues from the new vehicle transaction business, which is composed of direct vehicle sales and platform-based services on the Autohome Mall platform, and auto-financing business. For direct vehicle sales, the Company recognizes revenue on a gross basis as itacts as the principal, is the primary obligor of the sales arrangements and is subject to inventory risk. Revenue from direct vehicle sales are recognized when asales contract has been executed and the vehicle has been delivered. Under the platform-based service arrangements, the Company earns service fee for thenew vehicle display and transactions facilitated through the Autohome Mall platform. The service fee is recognized ratably over the display period orrecognized as the vehicles are delivered to customers. For the auto-financing business, the Company earns service fee for the generation of sales leads or thefacilitation of financial products transactions through the platform. The service fee is recognized when the sales leads are delivered or upon the completion oftransaction facilitation.Rebates and cash incentives provided to customersThe Group provides rebates to agency companies based on cumulative annual advertising and service volume. The Group estimates its obligations undersuch agreements based on an evaluation of the likelihood of the agency companies’ achievement of the advertising and service volume targets andevaluation of the agency companies’ purchase trends and history.The Group also provides cash incentives to automakers and dealers who participated in various incentive programs on the Group’s online transactionplatform. The cash incentives are accounted for as a reduction of revenue in accordance with ASC 605-50, “Revenue Recognition: Customer Payments andIncentives”. However, for the cash incentives not within the scope of ASC 605-50 and provided to the end users for the promotional purpose, they arerecognized as expense.The Group has estimated and recorded rebates and cash incentives to agency companies, dealers and automakers cumulatively amounting to RMB578,548,RMB653,481 and RMB886,907 (US$136,315) for the years ended December 31, 2015, 2016 and 2017, as a reduction of revenue, respectively. F-19Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (q)Cost of RevenuesCost of revenues consist primarily of bandwidth and internet data center fees, depreciation of the Group’s long-lived assets, amortization of acquiredintangible assets, value-added tax (“VAT”) and surcharges, content-related costs, cost of sales and write-downs of inventories and prepayment for vehiclepurchase cost. Content-related costs primarily comprise of salaries and benefits for employees directly involved in revenue generation activities, cost relatedto content generation and acquisition and execution cost and other overhead expenses directly attributable to the provision of the media services, leadsgeneration services and online marketplace. Cost of sales include vehicle purchase cost and other directly attributable costs. Rebates relating to new vehiclespurchased and sold during the reporting period are recorded as a reduction to cost of revenues.The Group’s business is subject to VAT, surcharges and cultural construction fees levied on advertising related revenue in China. Pursuant to ASC 605-45,Revenue Recognition—Principal Agent Considerations, the group elected to present VAT, surcharges and cultural construction fees as cost of revenues onthe consolidated statements of comprehensive income. For the years ended December 31, 2015, 2016 and 2017, the Company’s PRC subsidiaries and its VIEsexcluding Beijing Prbrownies Software Co., Ltd. and Chengdu Prbrownies Software Co., Ltd. are subject to a 6% VAT for the media services, leads generationservices and platform-based and auto-financing services under online marketplace and 17% for the direct vehicle sales under online marketplace. For BeijingPrbrownies Software Co., Ltd. and Chengdu Prbrownies Software Co., Ltd., they are subject to 17% VAT for the dealer subscription services under leadsgeneration services. Since November 2014 and December 2016, respectively, Beijing Prbrownies Software Co., Ltd. and Chengdu Prbrownies Software Co.,Ltd. were entitled to a 14% VAT refund on the total VAT payable at the rate of 17% after being certified as software resolutions by the relevant authority. (r)Advertising ExpendituresAdvertising expenditures which amounted to RMB533,632, RMB756,073 and RMB767,528 (US$117,967) for the years ended December 31, 2015, 2016and 2017, respectively, are expensed as incurred and are included in sales and marketing expenses. (s)Product Development ExpensesProduct development expenses consist primarily of employee costs related to personnel involved in the development and enhancement of the Group’sservice offerings on its websites and mobile applications. The Group recognizes these costs as expenses when incurred, unless they result in significantadditional functionality or are related to application development stage, in which case they are capitalized. (t)LeasesLeases are classified at the inception date as either a capital lease or an operating lease. The Group assesses a lease to be a capital lease if any of the followingconditions exist: a) ownership is transferred to the lessee by the end of the lease term, b) there is a bargain purchase option, c) the lease term is at least 75% ofthe property’s estimated remaining economic life or d) the present value of the minimum lease payments at the beginning of the lease term is 90% or more ofthe fair value of the leased property to the lessor at the inception date. A capital lease is accounted for as if there was an acquisition of an asset and anincurrence of an obligation at the inception of the lease. The Group has no capital leases for the years presented.All other leases are accounted for as operating leases wherein rental payments are expensed on a straight-line basis over the periods of their respective leaseterms. The Group leases office space under operating lease agreements. Certain of the lease agreements contain rent holidays. Rent holidays are considered indetermining the straight-line rental expense to be recorded over the lease term. The lease term begins on the date of initial possession of the lease property forpurposes of recognizing lease expense on straight-line basis over the term of the lease. (u)Notes payableNotes payable represents short-term bank acceptance notes issued by financial institutions that entitle the holder to receive the stated amount from thefinancial institutions at the maturity date of the notes. The Group has utilized notes payable to settle amounts owed to the automakers. F-20Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (v)Income TaxesThe Group accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on thedifference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which thedifferences are expected to reverse. The Group records a valuation allowance against deferred tax assets if, based on the weight of available evidence, it ismore-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognizedin income in the period that includes the enactment date.The Group applies ASC 740, Accounting for Income Taxes, to account for uncertainty in income taxes. ASC 740 prescribes a recognition threshold a taxposition is required to meet before being recognized in the financial statements. The Group has recorded unrecognized tax benefits in the other liabilities lineitem in the accompanying consolidated balance sheets. The Group has elected to classify interest and penalties related to unrecognized tax benefits, if andwhen required, as part of “income tax expense”, in the consolidated statements of comprehensive income.The Group’s estimated liability for unrecognized tax benefits and the related interest and penalties are periodically assessed for adequacy and may beaffected by changing interpretations of laws, rulings by tax authorities, changes and/or developments with respect to tax audits, and expiration of the statuteof limitations. The actual benefits ultimately realized may differ from the Group’s estimates. As each audit is concluded, adjustments, if any, are recorded inthe Company’s consolidated financial statements. Additionally, in future periods, changes in facts and circumstances, and new information may require theGroup to adjust the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates arerecognized in the period in which they occur.The Group adopted ASU No. 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes, which simplifies the presentation ofdeferred income taxes by requiring deferred tax assets and liabilities be classified as non-current on the balance sheet, starting from the first quarter of 2017on a retrospective basis. After adoption of this ASU, current deferred tax assets of RMB99,228 as of December 31, 2016 on consolidated balance sheet wasreclassified as non-current. (w)Earnings Per ShareEarnings per share are calculated in accordance with ASC 260-10, Earnings per Share: Overall. Basic earnings per share are computed by dividing netincome attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the year using the two-class method.Under the two-class method, net income is allocated between the Class A and Class B ordinary shares based on their participating rights in undistributedearnings as if all the earnings for the reporting period had been distributed.Diluted earnings per ordinary share reflects the potential dilution that could occur if securities to issue ordinary shares were exercised. The dilutive effect ofoutstanding share-based awards is reflected in the diluted earnings per share by application of the treasury stock method. The computation of the diluted netincome per share of Class A ordinary share assumes the conversion of Class B ordinary shares, while the diluted net income per share of Class B ordinaryshare does not assume the conversion of those shares.The participating rights (liquidation and dividend rights) of the holders of the Company’s Class A and Class B ordinary shares are identical, except withrespect to voting and conversion. As a result, and in accordance with ASC 260, the undistributed income for 2015 is allocated based on the contractualparticipating rights of the Class A and Class B ordinary shares as if the income for the year had been distributed. As the participating rights are identical, theundistributed income is allocated on a proportionate basis. (x)Comprehensive IncomeComprehensive income is defined to include all changes in shareholders’ equity except those resulting from investments by owners and distributions toowners. Among other disclosures, ASC 220-10, Comprehensive Income: Overall requires that all items that are required to be recognized under currentaccounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as otherfinancial statements. For each of the periods presented, the Company’s comprehensive income includes foreign currency translation adjustments and ispresented in the consolidated statement of comprehensive income. There have been no reclassifications out of accumulated other comprehensive income tonet income for the years presented. F-21Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (y)Noncontrolling interestsNoncontrolling interests are recognized to reflect the portion of the equity of majority-owned subsidiary which is not attributable, directly or indirectly, tothe controlling shareholder. Non-controlling interests are classified as a separate line item in the equity section of the Group’s consolidated balance sheetsand have been separately disclosed in the Group’s consolidated statements of comprehensive income to distinguish the interests from that of the Company. (z)Segment ReportingIn accordance with ASC 280-10, Segment Reporting: Overall, the Group’s chief operating decision maker has been identified as the Chief Executive Officerwho reviews the consolidated results of operations when making decisions about allocating resources and assessing performance of the Group as a whole;hence, the Group has only one operating segment. The Group does not distinguish between markets or segments for the purpose of internal reporting. As theGroup’s long-lived assets and revenue are substantially located in and derived from the PRC, no geographical segments are presented. (aa)Employee BenefitsThe full-time employees of the Company’s PRC subsidiaries and VIEs are entitled to staff welfare benefits including medical care, housing fund, pensionbenefits and unemployment insurance, which are governmental mandated defined contribution plans. These entities are required to accrue for these benefitsbased on certain percentages of the employees’ respective salaries, subject to certain ceilings, in accordance with the relevant PRC regulations, and makecash contributions to the state-sponsored plans out of the amounts accrued. The total expenses for the employee benefits plans were RMB134,125,RMB214,596 and RMB270,794 (US$41,620 ) for the years ended December 31, 2015, 2016 and 2017, respectively. (bb)Share-based CompensationShare-based awards granted to employees are accounted for under ASC 718, Compensation—Stock Compensation, which requires that share-based awardsgranted to employees be measured based on the grant date fair value and recognized as compensation expense over the requisite service period (which isgenerally the vesting period) in the consolidated statements of comprehensive income. The Company has elected to recognize compensation expense usingthe straight-line method for all share-based awards granted with service conditions that have a graded vesting schedule. Under ASC 718, an entity can makean accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The Company haselected to estimate the forfeiture rate at the time of grant and revise, if necessary, in subsequent periods if actual forfeitures differ from initial estimates.Forfeiture rates are estimated based on historical and future expectations of employee turnover rates and are adjusted to reflect future changes incircumstances and facts, if any. Share-based compensation expense is recorded net of estimated forfeitures such that expense is recorded only for those share-based awards that are expected to vest. To the extent the Company revises these estimates in the future, the share-based payments could be materiallyimpacted in the period of revision, as well as in following periods. The Company, with the assistance of an independent third-party valuation firm,determined the fair value of the stock options granted to employees. The binomial option pricing model was applied in determining the estimated fair valueof the options granted to employees. Subsequent to the IPO, fair value of the ordinary shares is the price of the Company’s publicly traded shares.The Company accounts for a change in any of the terms or conditions of share-based awards as a modification in accordance with ASC subtopic 718-20,Compensation-Stock Compensation: Awards Classified as Equity, whereby the incremental fair value, if any, of a modified award, is recorded ascompensation cost on the date of modification for vested awards or over the remaining vesting period for unvested awards. The incremental compensationcost is the excess of the fair value of the modified award on the date of modification over the fair value of the original award immediately before themodification. (cc)Government GrantsGovernment grants primarily represent tax refunds for operating a business in certain jurisdictions and fulfilment of specified tax payment obligations, andsubsidies. These grants are not subject to any specific requirements and are recorded when received in “other income, net” in the Company’s consolidatedstatements of comprehensive income. For the years ended December 31, 2015, 2016 and 2017, RMB11,281, RMB12,576 and RMB25,657 (US$3,943) ofgovernment grants were recorded as other income, net. F-22Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (dd)Recent Accounting PronouncementsIn August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers-Deferral of the effective date (“ASU 2015-14”). Theamendments in ASU 2015-14 defer the effective date of ASU No. 2014-09, Revenue from Contracts with Customers issued in May 2014. Further in 2016 and2017, as a clarification of the new revenue guidance, the FASB issued several amendments and updates to the new revenue guidance. All the aboveamendments regarding the new revenue guidance are effective for annual reporting periods beginning after December 15, 2017, including interim reportingperiods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, includinginterim reporting periods within that reporting period. The Company will adopt the new revenue guidance beginning January 1, 2018 by applying themodified retrospective method with the cumulative effect of initially applying the guidance recognized at the date of initial application. The Company hasfinalized our analysis and the most significant impact will be the change from presentation of value-added tax on gross basis to net basis.In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). Further, as a clarification of the new guidance, the FASB issued severalamendments and updates. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for allleases with the exception of those leases with a term of 12 months or less. All other leases will fall into one of two categories: (i) financing leases, similar tocapital leases, which will require the recognition of an asset and liability, measured at the present value of the lease payments and (ii) operating leases whichwill require the recognition of an asset and liability measured at the present value of the lease payments. Lessor accounting remains substantially unchangedwith the exception that no leases entered into after the effective date will be classified as leveraged leases. For sale leaseback transactions, the sale will onlybe recognized if the criteria in the new revenue recognition standard are met. It is expected to be effective for fiscal years and interim periods beginning afterDecember 15, 2018 for public entities. Early application is permitted. The Company is currently evaluating the impact of adopting this guidance.In August 2016, the FASB issued ASU No. 2016-15 “Statement of Cash Flows—Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”), which clarifies the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. The amendments in ASU2016-15 are effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The amendments in thisUpdate should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively forsome of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. Early adoption is permitted. Theadoption of the guidance is not expected to have significant impact on the Company’s consolidated financial statements.In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 320): Restricted Cash (“ASU 2016-18”). The amendments in ASU2016-18 require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described asrestricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be includedwith cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Theamendments in ASU 2016-18 are effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Theamendments in this Update should be applied using a retrospective transition method to each period presented. The adoption of the guidance is not expectedto have significant impact on the Company’s consolidated financial statements.In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). The amendments in ASU 2017-04removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount bywhich a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The amendments in ASU 2017-04 are effectivefor annual or any interim goodwill impairment tests beginning after December 15, 2019 and should be applied on a prospective basis. Early adoption ispermitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of the guidance is not expected tohave significant impact on the Company’s consolidated financial statements. F-23Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (ee)Concentration of RiskCredit riskFinancial instruments that potentially subject the Group to significant concentrations of credit risk consist primarily of cash and cash equivalents, restrictedcash, short-term investments and accounts receivable. As of December 31, 2016 and 2017, cash and cash equivalents, restricted cash and short-terminvestments altogether amounting to RMB5,733,321 and RMB8,154,224 (US$1,253,282), respectively, were deposited with various major reputablefinancial institutions located in the PRC and international financial institutions outside of the PRC. Management believes that these financial institutions areof high credit quality and continually monitors the creditworthiness of these financial institutions. Historically, deposits in Chinese banks are secure due tothe state policy on protecting depositors’ interests. However, China promulgated a new Bankruptcy Law in August 2006 that came into effect on June 1,2007, which contains a separate article expressly stating that the State Council may promulgate implementation measures for the bankruptcy of Chinesebanks based on the Bankruptcy Law. Under the new Bankruptcy Law, a Chinese bank may go into bankruptcy. In the event of bankruptcy of one of the bankswhich holds the Group’s deposits, it is unlikely to claim its deposits back in full since it is unlikely to be classified as a secured creditor based on PRC laws.The Group continues to monitor the financial strength of these financial institutions.Accounts receivable are typically unsecured and derived from revenue earned from customers in the PRC, which are exposed to credit risk. The risk ismitigated by the Group’s assessment of its customers’ creditworthiness and its ongoing monitoring process of outstanding balances. The Group maintainsreserves for estimated credit losses and these losses have generally been within expectations. There were two customers and one customer that individuallyrepresented greater than 10% of the total accounts receivable as of December 31, 2016 and 2017.Business, customer, political, social and economic risksThe Group participates in a dynamic high technology industry and believes that changes in any of the following areas could have a material adverse effect onthe Group’s future financial position, results of operations or cash flows; changes in the overall demand for services and products; changes in businessofferings; competitive pressures due to new entrants; acceptance of the Internet as an effective marketing platform by China’s automotive industry; changesin certain strategic relationships or customer relationships; growth in China’s automotive industry, regulatory considerations; and risks associated with theGroup’s ability to attract and retain employees necessary to support its growth.There were no customers that individually represented greater than 10% of the total net revenues for the years ended December 31, 2015, 2016 and 2017,respectively.Currency convertibility riskThe Group transacts substantially all its business in RMB, which is not freely convertible into foreign currencies. According to the relevant regulations in thePRC, all foreign exchange transactions are required to take place either through the People’s Bank of China (“PBOC”) or other banks authorized to buy andsell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutions requiressubmitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts.As of December 31, 2017, cash and cash equivalents and short-term investments in PRC were held by PRC subsidiaries and the VIEs. Cash and cashequivalents and short-term investments of PRC subsidiaries and VIEs are all denominated in RMB and altogether amounted to RMB6,399,234 (US$983,544)and RMB862,215 (US$132,520), respectively. Cash distributed outside of the PRC by PRC subsidiaries and the VIEs may be subject to PRC dividendwithholding tax. F-24Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (ee)Concentration of Risk (continued) Foreign Currency exchange rate riskSince July 21, 2005, the RMB was permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. There wasdepreciation of 4.2% and 6.7%, and appreciation of 6.7% for the years ended December 31, 2015, 2016 and 2017, respectively. Any significant appreciationor depreciation of the RMB may materially and adversely affect the Group’s earnings and financial position, and the value of, and any dividends payable on,the Company’s ADSs in U.S. dollars. For example, to the extent that the Group need to convert U.S. dollars it received from our initial public offering intoRMB to pay its operating expenses, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount it would receive fromthe conversion. Conversely, a significant depreciation of the RMB against the U.S. dollar may significantly reduce the U.S. dollar equivalent of the Group’searnings, which in turn could adversely affect the price of ADSs. 3.FAIR VALUE MEASUREMENTAssets measured at fair value on a recurring basis are summarized below: Fair Value Measurement atDecember 31, 2017 Using Quoted Pricesin Active Marketfor IdenticalAssets (Level 1) Significant OtherObservableInputs (Level 2) Unobservableinputs(Level 3) Fair Value at December 31, 2017 RMB RMB RMB RMB US$ Cash equivalents Time deposits — 694,500 — 694,500 106,743 Money market fund 34,105 — — 34,105 5,242 Short-term investments Term deposits — 842,912 — 842,912 129,554 Money market fund — 10,042 — 10,042 1,543 Adjustable-rate financial products — 6,389,682 — 6,389,682 982,076 34,105 7,937,136 — 7,971,241 1,225,158 Fair Value Measurement atDecember 31, 2016 Using Quoted Pricesin Active Marketfor IdenticalAssets (Level 1) Significant OtherObservableInputs (Level 2) Unobservableinputs(Level 3) Fair Value at December 31, 2016 RMB RMB RMB RMB Cash equivalents Time deposits — 2,099,200 — 2,099,200 Money market fund 225,848 — — 225,848 Restricted cash — 9,319 — 9,319 Short-term investments Term deposits — 1,804,208 — 1,804,208 Adjustable-rate financial products — 625,883 — 625,883 225,848 4,538,610 — 4,764,458 F-25Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 3.FAIR VALUE MEASUREMENT (CONTINUED) Other financial instrumentsThe followings are other financial instruments not measured at fair value in the consolidated balance sheets, but for which the fair value is estimated fordisclosure purposes.Financial assets including accounts receivable, amounts due from related parties, prepaid expenses and other current assets, and other non-current assets arenot measured at fair value in the consolidated balance sheets, and the carrying values approximated fair value due to their short-term maturity. Financialliabilities including notes payable, accrued expense and other payables, and amounts due to related parties are also not measured at fair value in theconsolidated balance sheets, and the carrying values approximated fair value due to their short-term maturity.Assets and liabilities measured at fair value on a nonrecurring basisThe Group measures certain assets, including long-term investments, goodwill and intangible assets, at fair value on a nonrecurring basis when they aredeemed to be impaired (Level 3). The fair values of these assets are determined based on valuation techniques using the best information available, and mayinclude management judgments, future performance projections, etc. An impairment charge to these investments is recorded when the cost of the investmentexceeds its fair value and this condition is determined to be other-than-temporary. 4.ACCOUNTS RECEIVABLE, NETAccounts receivable and allowance for doubtful accounts consist of the following: December 31, 2016 2017 RMB RMB US$ Accounts receivable 1,206,436 1,895,145 291,278 Allowance for doubtful accounts (512) (1,408) (216) Total 1,205,924 1,893,737 291,062 As of December 31, 2016 and 2017, all accounts receivable were due from third party customers.An analysis of the allowance for doubtful accounts is as follows: December 31, 2016 2017 RMB RMB US$ Beginning balance 2,315 512 79 Additions charged to bad debt expense 2,792 1,854 284 Reversal (489) (744) (114) Write off (4,106) (214) (33) Ending balance 512 1,408 216 The Group recognized additions to allowance for doubtful accounts amounting to RMB2,179, RMB2,303 and RMB1,110 (US$170) within general andadministrative expenses, for the years ended December 31, 2015, 2016 and 2017, respectively. 5.INVENTORIES, NETInventories consist of new vehicles held for sale amounting to RMB95,617 and nil, net of write-down of RMB9,201 and nil as of December 31, 2016 and2017, respectively. F-26Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 6.PREPAID EXPENSES AND OTHER CURRENT ASSETSPrepaid expenses and other current assets consist of the following: December 31, 2016 2017 RMB RMB US$ Prepayments 317,262 125,317 19,262 Rental deposits 1,494 11,918 1,832 Interest receivable 11,690 3,462 532 Staff advances 7,712 7,496 1,152 Receivables from third-party payment platform 12,327 14,757 2,268 Other receivables 26,734 23,173 3,562 377,219 186,123 28,608 Prepayments primarily include prepaid purchase cost for new vehicles, prepaid VAT and surcharges, prepaid promotional expenses and service fee. As ofDecember 31, 2016 and 2017, prepaid purchase cost for new vehicles were RMB226,419 and nil, respectively. 7.TAXATIONEnterprise income taxCayman IslandsThe Company is incorporated in the Cayman Islands and conducts substantially all of its business through its PRC subsidiaries and VIEs. Under the currentlaws of the Cayman Islands, the Company is not subject to tax on income or capital gains. In addition, upon payments of dividends by these entities to theirshareholders, no Cayman Islands withholding tax will be imposed.British Virgin IslandsCheerbright is incorporated in the British Virgin Islands and conducts substantially all of its businesses through its PRC subsidiary and VIEs. Under thecurrent laws of the British Virgin Islands, Cheerbright is not subject to tax on income or capital gains. In addition, upon payments of dividends by theseentities to their shareholders, no British Virgin Islands withholding tax will be imposed.Hong KongAutohome HK is incorporated in Hong Kong on March 16, 2012. In October 2013, Autohome HK acquired Autohome Media, a Hong Kong advertising andmarketing company. Also in 2015, three new entities are established in Hong Kong. Companies registered in Hong Kong are subject to Hong Kong ProfitsTax on the taxable income as reported in their respective statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. Theapplicable tax rate is 16.5% in Hong Kong. For the years ended December 31, 2015, 2016 and 2017, the Company did not make any provisions for HongKong profit tax as there were no assessable profits derived from or earned in Hong Kong during this period. Under the Hong Kong tax law, subsidiaries inHong Kong are exempted from income tax on its foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends. F-27Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 7.TAXATION (CONTINUED) The PRCIn September 2010, Autohome WFOE was recognized as a “High-New Technology Enterprise” (“HNTE”), and is eligible for a 15% preferential tax rateeffective through 2018. In July 2015, Beijing Autohome Technologies Co., Ltd. obtained the certificate of HNTE and is eligible for a 15% preferential taxrate from 2015 to 2017. Beijing Prbrownies was recognized as an HNTE in February 2016, qualifying it for the preferential 15% enterprise income tax ratefrom 2015 to 2017. Besides being an HNTE, Beijing Prbrownies was also a software enterprise. Pursuant to the Circular on Issues concerning PreferentialEnterprise Income Tax Policies for Software and Integrated Circuit Industries in May 2016, the eligible software enterprises would enjoy preferential tax ratepolicy, whereby the enterprise will be entitled to two-year enterprise income tax exemption and reduced enterprise income tax rate of 12.5% for the threeyears thereafter, depending on the results of annual tax filing and examination afterwards instead of pre-approval process. Beijing Prbrownies started to makeprofit since 2015, and it passed the tax filing and examination as an eligible software enterprise by the relevant tax authorities in 2016 and 2017, qualifyingit for the exemption of enterprise income tax for the tax year 2015 and 2016. A reversal of RMB173,557 and RMB158,995 (US$24,437) was recorded in2016 and 2017 for the change in enacted tax rate, each composed of current income tax expense of RMB181,586 and deferred income tax expense ofRMB8,029 and current income tax expense of RMB163,651 (US$25,153) and deferred income tax expense of RMB4,656 (US$716 ). For the tax year of2017, 15% preferential tax rate of HNTE was applied for Beijing Prbrownies in accrual of income tax expense, considering that the uncertainty in the resultsof tax filing and examination was not eliminated yet. The aggregate effects of the preferential tax rate were RMB56,389, RMB330,198 and RMB383,039(US$58,872) for the years ended December 31, 2015, 2016 and 2017, respectively. The basic earnings per share effects related to the preferential tax rate wereRMB0.50, RMB2.89 and RMB3.29 (US$0.51) for the years ended December 31, 2015, 2016 and 2017, respectively.The Company’s remaining PRC subsidiaries and all the VIEs were subject to Enterprise Income Tax (“EIT”) at a rate of 25% for the years ended December 31,2015, 2016 and 2017.Under the New EIT Law, dividends paid by PRC enterprises out of profits earned post-2007 to non-PRC tax resident investors are subject to PRC withholdingtax of 10%. A lower withholding tax rate may be applied based on applicable tax treaty with certain countries.The New EIT Law also provides that enterprises established under the laws of foreign countries or regions and whose “place of effective management” islocated within the PRC are considered PRC tax resident enterprises and subject to PRC income tax at the rate of 25% on worldwide income. The definition of“place of effective management” refers to an establishment that exercises, in substance, overall management and control over the production and business,personnel, accounting, properties, and other aspects of an enterprise. If the Company is deemed as a PRC tax resident, it would be subject to PRC tax underthe New EIT Law. The Company has analyzed the applicability of this law and believes that the chance of being recognized as a tax resident enterprise isremote for PRC tax purposes.The Group had minimal operations in jurisdictions other than the PRC. Income/(loss) before income tax expense consists of: Year ended December 31, 2015 2016 2017 RMB RMB RMB US$ PRC 1,292,104 1,263,223 2,266,075 348,289 Non PRC (15,913) (14,371) (4,534) (697) 1,276,191 1,248,852 2,261,541 347,592 The income tax expense is comprised of: Year ended December 31, 2015 2016 2017 RMB RMB RMB US$ Current 292,017 136,429 254,803 39,163 Deferred (6,475) (103,800) 12,279 1,887 285,542 32,629 267,082 41,050 F-28Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 7.TAXATION (CONTINUED) The reconciliation of income tax expense for the years ended December 31, 2015, 2016 and 2017 is as follows: Year ended December 31, 2015 2016 2017 RMB RMB RMB US$ Income before income tax expense 1,276,191 1,248,852 2,261,541 347,592 Income tax expense computed at applicable tax rates (25%) 319,047 312,213 565,385 86,898 Non-deductible expenses 16,372 25,798 32,417 4,983 Change in valuation allowances 16,054 47,006 (15,510) (2,384) Outside basis difference (17,329) (28,265) 7,360 1,131 Effect of international tax rate difference 3,978 3,593 1,133 174 Interest expense relating to unrecognized tax benefits 3,809 2,482 — — Effect of preferential tax rate (56,389) (330,198) (383,039) (58,872) Effect of withholding tax — — 59,336 9,120 Income tax expense 285,542 32,629 267,082 41,050 Deferred taxThe significant components of deferred taxes are as follows: December 31, 2016 2017 RMB RMB US$ Deferred tax assets Allowance for doubtful accounts 7,066 352 53 Accrued staff cost 3,166 1,563 240 Accrued expenses 52,497 73,500 11,297 Revenue recognition 42,062 48,774 7,497 Tax losses 83,941 101,746 15,638 VAT refund 3,598 3,842 591 Less: Valuation allowances (70,667) (55,157) (8,477) Total deferred tax assets 121,663 174,620 26,839 Deferred tax liabilities Intangible assets and internally-developed software 8,690 14,262 2,192 Outside basis difference 453,106 423,989 65,166 Total deferred tax liabilities 461,796 438,251 67,358 In assessing the realizability of deferred tax assets, the Group has considered whether it is more-likely-than-not that some portion or all of the deferred taxassets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods inwhich those temporary differences become deductible. The Group records a valuation allowance to reduce deferred tax assets to a net amount thatmanagement believes is more-likely-than-not of being realizable based on the weight of all available evidence. The Company recorded valuation allowancesagainst the deferred tax assets of thirteen and fourteen PRC subsidiaries and VIEs as of December 31, 2016 and 2017, respectively, due to the cumulative taxloss positions and insufficient forecasted future taxable income.As of December 31, 2017, the Group had net operating losses of approximately RMB406,984 (US$62,552), which can be carried forward to offset taxableincome. The net operating loss will start to expire in 2018 if not utilized. F-29Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 7.TAXATION (CONTINUED) Deferred tax liabilities arising from undistributed earningsThe Enterprise Income Tax Law also imposes a withholding income tax of 10% on dividends distributed by a Foreign Invested Enterprises (“FIEs”) to itsimmediate holding company outside of China. A lower withholding income tax rate of 5% is applied if the FIE’s immediate holding company is registered inHong Kong or other jurisdictions that have a tax treaty arrangement with China.On November 6, 2017, the board of directors of the Company declared a special cash dividend of approximately RMB5.08 (US$0.76) per ordinary share. TheCompany does not have present plan to pay additional dividends in the foreseeable future and the board of directors of the Company currently intends toretain the remaining available funds and earnings to operate and expand the business. In 2017, The Company accrued RMB59,336 (US$9,120) of deferredincome tax expenses associated with the expected cash dividend payment. As of December 31, 2016 and 2017, the total amount of undistributed earningsfrom the Company’s PRC subsidiaries and VIEs that are considered to be permanently reinvested was RMB3,616,426 and RMB5,318,555 (US$817,447),respectively. As of December 31, 2016 and 2017, determination of the amount of unrecognized deferred tax liability related to the earnings that areindefinitely reinvested is not practical.Unrecognized tax benefitsAs of December 31, 2016 and 2017, the Company recorded an unrecognized tax benefit of RMB34,977 and RMB32,122 (US$4,937), respectively, of whichnil and nil, respectively, are presented on a net basis against the deferred tax assets related to tax loss carry forwards on the consolidated balance sheets. Thisrepresents the difference between the amount of benefit recognized in the statement of financial position and the amount taken or expected to be taken in atax return. It is possible that the amount of uncertain tax position will change in the next twelve months, however, an estimate of the range of the possibleoutcomes cannot be made at this time. As of December 31, 2016 and 2017, unrecognized tax benefits of RMB19,850 and RMB16,995 (US$2,612),respectively, if ultimately recognized, will impact the effective tax rate.A roll-forward of unrecognized tax benefits is as follows: December 31, 2016 2017 RMB RMB US$ Beginning balance 22,003 21,902 3,366 Additions based on tax positions related to current year — — — Decreases based on tax positions related to prior years (101) (2,855) (439) Ending balance 21,902 19,047 2,927 During the years ended December 31, 2015, 2016 and 2017, the Company recorded late payment interest expense of RMB3,809, RMB2,482 and nil, andpenalties of nil, nil and nil, respectively, as part of income tax expense. As of December 31, 2016 and 2017, the Company recorded RMB13,075 andRMB13,075 (US$2,010) for late payment interest expense, and nil and nil for penalties.The tax years ended December 31, 2013 through 2017 for the Company’s PRC subsidiaries and VIEs remain subject to examination by the PRC taxauthorities. F-30Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 8.PROPERTY AND EQUIPMENT, NETProperty and equipment consist of the following: December 31, 2016 2017 RMB RMB US$ At cost: Electronic equipment 234,360 301,783 46,383 Office equipment 1,024 1,361 209 Motor vehicles 3,418 2,855 439 Software 26,480 34,310 5,273 Leasehold improvements 42,364 40,408 6,211 307,646 380,717 58,515 Less: Accumulated depreciation (173,072) (250,395) (38,485) 134,574 130,322 20,030 Depreciation expense was RMB51,337, RMB65,246 and RMB81,915 (US$12,590) for the years ended December 31, 2015, 2016 and 2017, respectively. 9.INTANGIBLE ASSETS, NETThe following tables present the Group’s intangible assets with definite lives as of the respective balance sheet dates: December 31, 2017 GrossCarryingValue AccumulatedAmortization Net CarryingValue RMB RMB RMB US$ Trademarks 68,380 (43,292) 25,088 3,856 Customer relationship 9,050 (9,050) — — Websites 27,000 (27,000) — — Domain names 1,917 (1,870) 47 7 Licensing agreements 2,492 (2,492) — — Insurance brokerage license 28,133 (2,345) 25,788 3,964 136,972 (86,049) 50,923 7,827 December 31, 2016 GrossCarryingValue AccumulatedAmortization NetCarryingValue RMB RMB RMB Trademarks 68,380 (38,713) 29,667 Customer relationship 9,050 (9,050) — Websites 27,000 (27,000) — Domain names 1,870 (1,870) — Licensing agreements 2,667 (2,667) — 108,967 (79,300) 29,667 F-31Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 9.INTANGIBLE ASSETS, NET (CONTINUED) The Company obtained insurance brokerage license in 2017 through acquisition of Shanghai Tianhe Insurance Brokerage Co., Ltd., which was accounted foras asset acquisition. The intangible assets are amortized using the straight-line method, which is the Group’s best estimate of how these assets will beeconomically consumed over their respective estimated useful lives ranging from approximately 1.75 to 15 years. Amortization expense was RMB5,247,RMB4,558 and RMB6,923 (US$1,064) for the years ended December 31, 2015, 2016 and 2017, respectively.The annual estimated amortization expenses for the acquired intangible assets for each of the next five years are as follows: 2018 2019 2020 2021 2022 RMB RMB RMB RMB RMB Amortization expenses 11,615 11,611 11,592 9,247 4,559 10.LONG-TERM INVESTMENTSAs of December 31, 2016 and 2017, the Company holds several equity investments through its subsidiaries or VIEs, all of which were accounted for under theequity method since the Company can exercise significant influence but does not own a majority equity interest in or control them.Hunan Mango Autohome Automobile Sales Co., Ltd. (“Mango JV”)In May 2015, the Group entered into a shareholder agreement with HappiGo Home Shopping Co. (“HappiGo”) to establish a strategic joint venture, MangoJV, with total capital contribution of RMB100,000, of which the Company subscribed for RMB49,000 or 49% of the ordinary shares.Shanghai Youcheyoujia Financing Co., Ltd. (“Financing JV”)In September 2015, the Group signed a memorandum of understanding to establish a joint venture with three parties. In 2015, the Group made a full paymentof RMB75,000, for a 25% equity interest of the Financing JV. In September 2017, the Group entered into a definitive agreement to transfer all its equityinterests in Financing JV to an unaffiliated party. As of December 31, 2017, the equity transfer is still in process.Visionstar Information Technology (Shanghai) Co., Ltd. (“Shanghai Visionstar”)In July 2017, the Group acquired a 10% interest in Shanghai Visionstar, which primarily engages in augmented reality technology and related operations inthe PRC, with a total cash consideration of RMB30,000. The investment was accounted for using equity method as the Group determined that it can exercisesignificant influence over Shanghai Visionstar.Other investmentsThe company also holds several other investments in equity investees.The carrying amount of all of the equity method investments was RMB134,466 and RMB147,929 (US$22,736) as of December 31, 2016 and 2017,respectively. The Company excluded the summarized information for these equity method investees as they were insignificant either individually or on anaggregated basis for all the years presented.No impairment charges associated with the equity method investments were recognized during any of the years presented. F-32Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 11.ACCRUED EXPENSES AND OTHER PAYABLESThe components of accrued expenses and other payables are as follows: December 31, 2016 2017 RMB RMB US$ VAT and surcharges payable 82,759 88,435 13,592 Payroll and welfare payable 302,006 409,691 62,968 Accrued rebates and cash incentives 473,271 646,922 99,430 Deposit from customers 66,526 46,321 7,119 Accrued expenses 128,489 328,315 50,461 Payable for purchase of fixed assets 12,200 6,303 969 Professional service fees 12,570 5,236 805 Payable for exercise of share-based awards 10,464 5,735 881 Others 63,262 121,976 18,748 1,151,547 1,658,934 254,973 12.RELATED PARTY TRANSACTIONS Name of related parties Relationship with the GroupPing An and its subsidiaries (“Ping An Group”) The Company’s controlling shareholder and its subsidiariesMango JV An equity-method investee of the Company’s subsidiaryPing An became the Company’s controlling shareholder in June 2016 and therefore Ping An Group became the Company’s related party since then. Thefollowing related party transactions represent the transactions occurred afterwards.During the years ended December 31, 2015, 2016 and 2017, significant related party transactions were as follows: Year ended December 31, 2015 2016 2017 RMB RMB RMB US$ Sales of new vehicles to Ping An Group — 21,938 — — Services provided by Ping An Group (a) — 21,594 55,220 8,487 Services provided to Ping An Group (b) — — 21,171 3,254 Interest income from Ping An Group — 3,564 35,049 5,387 F-33Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 12.RELATED PARTY TRANSACTIONS (CONTINUED) As of December 31, 2016 and December 31, 2017, balances with related parties were as follows: December 31, 2016 December 31, 2017 RMB RMB US$ Amounts due from related parties, current Ping An Group (c) 14,120 21,014 3,230 Mango JV (d) 6,331 3,425 526 Other related parties — 63 10 20,451 24,502 3,766 Amounts due from related parties, non-current Ping An Group (c) 809 10,956 1,684 809 10,956 1,684 Amounts due to related parties Ping An Group 1,312 1,101 169 Mango JV (e) 15,158 9,049 1,391 Other related parties 160 135 21 16,630 10,285 1,581 (a)The amount represents rental and property management services and other miscellaneous services provided by Ping An Group.(b)The amount represents the commission fee for facilitating transactions and advertising service provided to Ping An Group.(c)Receivable from Ping An Group primarily consists of interest receivable from cash and cash equivalents and short-term investments held at Ping AnGroup, service fee receivable and deposit in relation to the operating lease agreement and others. As of December 31, 2016 and 2017, the Group hadcash and cash equivalents and short-term investments of RMB541,218 and RMB1,374,574 (US$211,268) at Ping An Group, respectively.(d)The amount represents unsettled portion of fulfilment cost paid by the Group to dealers on behalf of Mango JV and commission fee receivable forfacilitating the sale of Mango JV’s vehicles through the Autohome Mall platform.(e)The outstanding payable to Mango JV represents proceeds from vehicle sales on the Autohome Mall platform collected by the Group on behalf ofMango JV. 13.COMMITMENTS AND CONTINGENCIESOperating lease commitmentsThe Group leases office space and employee accommodation in the PRC under non-cancellable operating leases expiring on various dates. Payments underoperating leases are expensed on a straight-line basis, after considering rent holidays, over the periods of the respective lease terms. The terms of the leases donot contain rent escalation or contingent rents, and for the years ended December 31, 2015, 2016 and 2017, total rental expenses for all operating leasesamounted to RMB49,892, RMB84,673 and RMB95,654 (US$14,702) respectively.As of December 31, 2017, the Group has future minimum lease payments under non-cancellable operating leases, with initial terms in excess of one year, foroffice premises consisting of the following: RMB US$ 2018 82,360 12,659 2019 48,982 7,528 2020 and thereafter — — 131,342 20,187 F-34Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 13.COMMITMENTS AND CONTINGENCIES (CONTINUED) Legal proceedingsFrom time to time, the Group is subject to legal proceedings and claims in the ordinary course of business. The Group does not believe that any currentlypending legal proceeding to which the Group is a party will have a material effect on its business, balance sheets, and results of operations or cash flows. 14.COST OF REVENUES Year ended December 31, 2015 2016 2017 RMB RMB RMB US$ Content-related costs 184,635 269,313 390,885 60,078 Depreciation and amortization 43,160 42,570 41,579 6,391 Bandwidth and internet data center 38,893 51,766 89,889 13,816 VAT and surcharges 269,491 349,373 484,811 74,513 Cost of sales, including tax 132,942 1,680,143 351,521 54,028 669,121 2,393,165 1,358,685 208,826 Write-down of inventories and prepayment for vehicle purchase cost of nil, RMB50,190 and RMB1,483 (US$228) was included in cost of sales, includingtax for the years ended December 31, 2015, 2016 and 2017, respectively. 15.ORDINARY SHARESUpon the effectiveness of the IPO registration statement, the Company’s ordinary shares were redeemed and cancelled in consideration for the issuance of anequivalent number of Class A ordinary shares and Class B ordinary shares to the holders of former ordinary shares, respectively. Holders of Class A ordinaryshares and Class B ordinary shares have the same rights except for conversion and voting rights. Each Class B ordinary share is convertible into one Class Aordinary share at any time, while Class A ordinary shares cannot be converted into Class B ordinary shares under any circumstances. Each Class A ordinaryshare is entitled to one vote.Immediately prior to the completion of the IPO in December 2013, the Company had 27,354,496 Class A ordinary shares and 68,788,940 Class B ordinaryshares outstanding. During the IPO, the Company issued 8,993,000 Class A ordinary shares. As of December 31, 2013, the Company had ordinary sharesoutstanding comprised of 36,347,496 Class A ordinary shares and 68,788,940 Class B ordinary shares.Upon the completion of follow-on offering in November, 2014, 2,424,801 ADSs were issued by the Company and 6,964,612 Class B ordinary shares wereconverted into Class A ordinary shares, and the net proceeds from the follow-on offering amounts to US$97,344 net of issuance costs. Each ADS representsone ordinary share. In June 2016, Telstra completed the sale of approximately 47.4% of the Company’s total issued and outstanding shares to Yun ChenCapital Cayman, a wholly owned subsidiary of Ping An. Upon the completion of sale, all of the Company’s remaining Class B ordinary shares were convertedinto Class A ordinary shares. There were nil, 61,824,328 and nil class B ordinary shares converted into Class A ordinary shares for the years endedDecember 31, 2015, 2016 and 2017, respectively. On February 22, 2017, Ping An further acquired from Telstra approximately 6.5% of the total issued sharesin the Company. As of December 31, 2017, the Company had ordinary shares outstanding, all comprised of 117,140,856 Class A ordinary shares. F-35Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 16.RESTRICTED NET ASSETSThe Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries. Relevant PRCstatutory laws and regulations permit payments of dividends by the Company’s PRC subsidiaries only out of its retained earnings, if any, as determined inaccordance with PRC accounting standards and regulations. The results of operations reflected in the consolidated financial statements prepared inaccordance with U.S.GAAP differ from those reflected in the statutory financial statements of the Company’s PRC subsidiaries.Under PRC law, the Company’s PRC subsidiaries are required to provide for certain statutory reserves, namely a general reserve, an enterprise expansion fundand a staff welfare and bonus fund. The subsidiary is required to allocate at least 10% of their after tax profits on an individual company basis as determinedunder PRC accounting standards to the general reserve and has the right to discontinue allocations to the general reserve if such reserve has reached 50% ofregistered capital on an individual company basis. In addition, the registered capital of the Company’s PRC subsidiaries and VIEs is also restricted.Appropriations to the enterprise expansion fund and staff welfare and bonus fund are at the discretion of the Board of Directors of the subsidiary. TheCompany’s VIEs in the PRC are also subject to similar statutory reserve requirements. These reserves can only be used for specific purposes and are nottransferable to the Group in the form of loans, advances or cash dividends. As of December 31, 2015, 2016 and 2017, the Company’s PRC subsidiaries andVIEs had appropriated RMB19,175, RMB36,000 and RMB51,847 (US$7,969), respectively, of retained earnings for its statutory reserves.As a result of these PRC laws and regulations subject to the limit discussed above that require annual appropriations of 10% of after-tax income to be setaside, prior to payment of dividends as general reserve fund, the Company’s PRC subsidiaries and VIEs are restricted in their ability to transfer a portion oftheir net assets to the Company. Foreign exchange and other regulations in the PRC may further restrict the Company’s PRC subsidiaries and VIEs fromtransferring funds to the Company in the form of dividends, loans and advances. As of December 31, 2016 and 2017, amounts restricted are the net assets ofthe Company’s PRC subsidiaries and VIEs, which amounted to RMB5,165,673 and RMB6,789,409 (US$1,043,513), respectively.The Company performed a test on the restricted net assets of its consolidated subsidiaries and VIEs in accordance with Securities and Exchange CommissionRegulation S-X Rule 4-08 (e)(3), “General Notes to the Financial Statements” and concluded that it was applicable for the Company to disclose thecondensed financial information for the parent company (Note 19) for the year ended December 31, 2017. For the purposes of presenting parent onlyfinancial information, the Company records its investments in its subsidiaries and VIEs under the equity method of accounting. Such investments arepresented on the separate condensed balance sheets of the Company as “Investments in subsidiaries and VIEs” and the profit of the subsidiaries and VIEs isincluded in “Share of income of subsidiaries and VIEs” in the condensed statements of comprehensive income. F-36Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 17.EARNINGS PER SHAREBasic and diluted earnings per share for each of the years presented are calculated as follows: Year ended December 31, 2015 2016 2017 Class A Class B Ordinary shares Ordinary shares Ordinary shares RMB RMB RMB RMB US$ Basic earnings per share: Numerator: Net income attributable to Autohome Inc. 444,916 545,733 1,227,914 2,001,619 307,642 Denominator: Weighted average ordinary shares outstanding 50,403,077 61,824,328 114,237,600 116,379,846 116,379,846 Basic earnings per share 8.83 8.83 10.75 17.20 2.64 Diluted earnings per share: Numerator: Net income attributable to Autohome Inc. 461,052 529,597 1,227,914 2,001,619 307,642 Reallocation of net income as a result of conversion of Class B into Class Aordinary shares (Note 15) 529,597 — — — — Net income attributable to Autohome Inc. 990,649 529,597 1,227,914 2,001,619 307,642 Denominator: Weighted average ordinary shares outstanding 50,403,077 61,824,328 114,237,600 116,379,846 116,379,846 Conversion of Class B into Class A ordinary shares(Note 15) 61,824,328 — — — — Dilutive effect of share-based awards 3,419,421 — 1,798,727 1,679,010 1,679,010 Weighted average number of shares outstanding-diluted 115,646,826 61,824,328 116,036,327 118,058,856 118,058,856 Diluted earnings per share 8.57 8.57 10.58 16.95 2.61 The effects of nil, 831,042 and 272,421 stock options were excluded from the calculation of diluted earnings per share as their effect would have been anti-dilutive during the years ended December 31, 2015, 2016 and 2017, respectively. The effects of 256,165, 354,423 and 201,432 restricted shares wereexcluded from the calculation of diluted earnings per share as their effect would have been anti-dilutive during the years ended December 31, 2015, 2016 and2017, respectively. F-37Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 18.SHARE-BASED COMPENSATIONIn order to provide additional incentives to employees and to promote the success of the Company’s business, the Company adopted a share incentive planin 2011 (the “2011 Plan”) and a share incentive plan in 2013 (the “2013 Plan”), Amended and Restated 2016 Share Incentive Plan (the “2016 Plan”) and2016 share incentive plan II (the “2016 Plan II”) in 2016, collectively “the Plans”. The Company may grant share-based awards to its employees, directorsand consultants to purchase an aggregate of no more than 7,843,100, 3,350,000, 4,890,000 and 3,000,000 ordinary shares of the Company under the 2011Plan, 2013 Plan, 2016 Plan and 2016 Plan II, respectively. 2011 Plan, 2013 Plan, 2016 Plan and 2016 Plan II were approved by the Board of Directors in May2011, November 2013, March 2017 and December 2016, respectively. The Plans are administered by the Board of Directors or any of its committees as setforth in the Plans. For share options and restricted shares granted under the Plans, majority are subject to vesting schedules of approximately four years with25% of the awards vesting each year and have a contractual term of ten years.Share optionsThe following table summarizes the Company’s employee share option activity under the share option plans: Number ofoptions Weightedaverageexerciseprice Weightedaveragegrantdate fairvalue Weightedaverageremainingcontractualterm Aggregateintrinsicvalue US$ US$ Years US$ Outstanding, January 1, 2017 2,821,592 16.66 11.87 8.15 24,329 Granted 775,458 32.17 30.23 Exercised (1,060,830) 8.86 Forfeited (948,606) 24.30 Outstanding, December 31, 2017 1,587,614 24.88 19.67 8.53 63,190 Vested and expected to vest at December 31, 2017 1,533,724 24.84 19.67 8.52 61,103 Exercisable as of December 31, 2017 292,352 13.85 11.65 6.53 14,857 The aggregate intrinsic value in the table above is calculated as the difference between the exercise price of the underlying awards and US$64.67, the closingstock price of the Company’s ordinary shares on December 29, 2017. The weighted-average grant-date fair value of options granted during the years endedDecember 31, 2015, 2016 and 2017 was nil, US$14.62 and US$30.23, respectively. The total grant date fair value of options vested during the years endedDecember 31, 2015, 2016 and 2017 was RMB37,582, RMB25,168 and RMB64,334 (US$9,888), respectively. Total intrinsic value of options exercisedduring the years ended December 31, 2015, 2016 and 2017 was RMB623,605, RMB246,754 and RMB257,025 (US$39,504), respectively.The aggregate fair value of the outstanding options at the grant dates were determined to be RMB203,146 (US$31,223) and such amount shall be recognizedas compensation expenses using the straight-line method for all employee share options granted with graded vesting. As of December 31, 2017, there wasRMB148,513 (US$22,826) of total unrecognized share-based compensation expenses, net of estimated forfeitures, related to unvested share-based awardswhich are expected to be recognized over a weighted-average period of 2.95 years. Total unrecognized compensation expenses may be adjusted for futurechanges in estimated forfeitures. F-38Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 18.SHARE-BASED COMPENSATION (CONTINUED) Restricted sharesRestricted shares activity for the year ended December 31, 2017 was as follows: Numberof shares Weightedaverage grantdate fairvalue US$ Outstanding, January 1, 2017 2,087,392 26.61 Granted 934,518 34.63 Vested (782,802) 27.66 Forfeited (588,100) 26.38 Outstanding, December 31, 2017 1,651,008 29.95 Expected to vest, December 31, 2017 1,572,618 29.98 The weighted average grant-date fair value of restricted shares granted during the years ended December 31, 2015, 2016 and 2017 was US$34.70, US$22.30and US$34.63, respectively, which was derived from the fair value of the underlying ordinary shares. The total grant date fair value of restricted shares vestedduring the years ended December 31, 2015, 2016 and 2017 was RMB38,104, RMB131,861 and RMB140,887 (US$21,654). The aggregate fair value of theoutstanding restricted shares at the grant dates were determined to be RMB321,724 (US$49,448) and such amount shall be recognized as compensationexpense using the straight-line method for all restricted shares granted with graded vesting. As of December 31, 2017, there was RMB241,950 (US$37,187) oftotal unrecognized share-based compensation expenses, net of estimated forfeitures, related to unvested restricted shares which are expected to be recognizedover a weighted-average period of 2.91 years. Total unrecognized compensation expenses may be adjusted for future changes in estimated forfeitures.The binomial option pricing model was applied in determining the estimated fair value of the options granted to employees. The model requires the input ofhighly subjective assumptions including the estimated expected stock price volatility and the exercise multiple for which employees are likely to exerciseshare options. For expected volatilities, the Company has made reference to the historical price volatilities of ordinary shares of several comparablecompanies in the same industry as the Company. The exercise multiple is estimated as the ratio of fair value of underlying shares over the exercise price as atthe time the option is exercised and is based on a consideration of research study regarding exercise pattern based on historical statistical data. The risk-freerate for periods within the contractual life of the option is based on the U.S. Treasury Bills yield curve in effect at the time of grant. The estimated fair value ofthe ordinary shares, at the option grant dates prior to the IPO, was determined with assistance from an independent third party valuation firm. The Company’smanagement is ultimately responsible for the determination of the estimated fair value of its ordinary shares. Subsequent to the IPO, fair value of the ordinaryshares was the price of the Company’s publicly traded shares.In November 2016, the Company approved the vesting acceleration plan of options and restricted shares for certain employees and incrementalcompensation cost of RMB53,896 occurred as a result of the modification.The Company calculated the estimated fair value of the share-based awards on the respective grant dates using the binomial option pricing model with thefollowing assumptions: 2016 2017Fair value of ordinary share US$23.76-US$24.88 US$45.36-US$54.84Risk-free interest rates 1.70%-1.75% 2.30%-2.44%Expected exercise multiple 2.2-2.8 2.2-2.8Expected volatility 63% 57%-60%Expected dividend yield 0.00% 0.00%Weighted average fair value per option granted US$14.12-US$15.26 US$27.05-US$33.73 F-39Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 18.SHARE-BASED COMPENSATION (CONTINUED) Share-based compensation expenses relating to options and restricted shares granted to employees recognized for the year ended December 31, 2015, 2016and 2017 is as follows: Year ended December 31, 2015 2016 2017 RMB RMB RMB US$ Cost of revenues 6,939 12,310 15,166 2,331 Sales and marketing expenses 36,584 50,814 53,064 8,155 General and administrative expenses 40,142 77,965 59,954 9,215 Product development expenses 24,280 54,304 49,602 7,624 107,945 195,393 177,786 27,325 F-40Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 19.CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANYCONDENSED BALANCE SHEETS December 31, 2016 2017 RMB RMB US$ ASSETS Current assets: Cash and cash equivalents 57,505 31,781 4,885 Short-term investments 486,341 699,159 107,459 Prepaid expenses and other current assets 26,113 23,315 3,583 Total current assets 569,959 754,255 115,927 Non-current assets: Other non-current assets 5,936 3,816 587 Investment in subsidiaries and VIEs 5,807,841 7,798,858 1,198,663 Total non-current assets 5,813,777 7,802,674 1,199,250 Total assets 6,383,736 8,556,929 1,315,177 LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities: Accrued expenses and other payables 20,660 6,932 1,065 Dividend payable — 595,779 91,570 Due to subsidiaries 2,672 2,581 397 Total current liabilities 23,332 605,292 93,032 Total liabilities 23,332 605,292 93,032 Commitments and Contingencies Shareholders’ equity: Ordinary shares (par value of US$0.01 per share; 100,000,000,000 (including 99,931,211,060 Class A and 68,788,940Class B ) shares authorized; 115,297,224 and 117,140,856 shares issued and outstanding, all comprised of Class A,as of December 31, 2016 and 2017, respectively) 7,784 7,909 1,216 Additional paid-in capital 3,006,152 3,246,475 498,974 Accumulated other comprehensive income 125,009 69,954 10,752 Retained earnings 3,221,459 4,627,299 711,203 Total shareholders’ equity 6,360,404 7,951,637 1,222,145 Total liabilities and shareholders’ equity 6,383,736 8,556,929 1,315,177 F-41Table of ContentsAUTOHOME INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) 19.CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (CONTINUED) CONDENSED STATEMENTS OF COMPREHENSIVE INCOME Year ended December 31, 2015 2016 2017 RMB RMB RMB US$ Operating expenses: General and administrative expenses (24,235) (20,533) (13,334) (2,049) Operating losses (24,235) (20,533) (13,334) (2,049) Interest income 11,526 7,492 13,441 2,066 Share of income of subsidiaries and VIEs 1,003,358 1,240,955 2,001,512 307,625 Income before income taxes 990,649 1,227,914 2,001,619 307,642 Income tax expense — — — — Net income 990,649 1,227,914 2,001,619 307,642 Other comprehensive income/(loss), net of tax of nil Foreign currency translation adjustments 56,821 62,256 (55,055) (8,462) Comprehensive income 1,047,470 1,290,170 1,946,564 299,180 CONDENSED STATEMENTS OF CASH FLOWS Year ended December 31, 2015 2016 2017 RMB RMB RMB US$ Net cash used in operating activities (2,017) (23,846) (8,303) (1,276) Net cash used in investing activities (132,976) (86,743) (77,005) (11,835) Net cash generated from financing activities 30,200 25,420 61,070 9,386 Effect of exchange rate changes on cash and cash equivalents 7,569 5,864 (1,486) (228) Net decrease in cash and cash equivalents (97,224) (79,305) (25,724) (3,953) Cash and cash equivalents at beginning of year 234,034 136,810 57,505 8,838 Cash and cash equivalents at end of year 136,810 57,505 31,781 4,885 (a)Basis of accountingFor the Company only condensed financial information, the Company records its investment in its subsidiaries and VIEs under the equity method ofaccounting as prescribed in ASC 323-10, Investments-Equity Method and Joint Ventures: Overall. Such investment is presented on the condensed balancesheets as “Investment in subsidiaries and VIEs” and share of their income as “Share of income of subsidiaries and VIEs” on the condensed statements ofcomprehensive income. The parent company’s condensed financial statements should be read in conjunction with the Company’s consolidated financialstatements. (b)CommitmentsThe Company does not have any significant commitments or long-term obligations as of any of the years presented. F-42Exhibit 4.68Termination AgreementThis Termination Agreement (“this Agreement”) is made and entered into on April 1, 2018 in Beijing, the People’s Republic of China (hereinafter referred toas “China”, for the purpose of this Agreement, excludes the Hong Kong Special Administrative Region, the Macau Special Administrative Region andTaiwan) by the following parties:Beijing Cheerbright Technologies Co., Ltd. (“Cheerbright”), a wholly foreign-owned enterprise established in China with its registered address at 1010,Tower B, No. 3, Danling Street, Haidian District, Beijing 100080, China. Its uniform social credit code is 91110108791607588Y;Guangzhou You Che You Jia Advertising Co., Ltd. (“Guangzhou Advertising”), a company duly organized and existing in China with its legal address atUnit 05, Room 3101, No.85 Huacheng Avenue, Tianhe District, Guangzhou, China. Its uniform social credit code is 91440106589501085P;Lei Haiyun, whose identification card number is ******************;Lu Min, whose identification card number is ******************.Each of Cheerbright, Guangzhou Advertising, Lei Haiyun and Lu Min is referred to as “the Party” and together as “the Parties”. 1 / 7Recitals: 1Cheerbright, Guangzhou Advertising and its shareholders Lei Haiyun and Lu Min entered into the following agreements (collectively referred to as“Control Documents”): (1)On September 30, 2016, Cheerbright and Guangzhou Advertising entered into the Exclusive Technical Consulting and Services Agreement; (2)On September 30, 2016, Cheerbright, Guangzhou Advertising and Lei Haiyun entered into the Equity Option Agreement; (3)On September 30, 2016, Cheerbright and Lei Haiyun entered into the Equity Interest Pledge Agreement; (4)On September 30, 2016, Cheerbright and Lei Haiyun entered into the Loan Agreement; (5)On September 30, 2016, Lei Haiyun signed the Power of Attorney; (6)On September 30, 2016, Cheerbright, Guangzhou Advertising and Lu Min entered into the Equity Option Agreement; (7)On September 30, 2016, Cheerbright and Lu Min entered into the Equity Interest Pledge Agreement; (8)On September 30, 2016, Cheerbright and Lu Min entered into the Loan Agreement; (9)On September 30, 2016, Lu Min signed the Power of Attorney. 2Guangzhou Advertising is currently in the process of liquidation and dissolution which is estimated to be completed around December 2018. 3The Parties agree to terminate the Control Documents in accordance with the terms and conditions set forth in this Agreement.The Parties agree as follows: 1From the date of the issuance of an approval notice for the deregistration by the competent Bureau of Industry and Commerce in charge of GuangzhouAdvertising, the Control Documents shall be terminated, and the rights and obligations of the Parties thereunder shall be terminated immediately,unconditionally and irrevocably. Upon the termination of the Control Documents, the Parties shall not undertake any rights, obligations orresponsibilities arising from the Control Documents. 2 / 72The Parties undertake that, except for the above-mentioned Control Documents, there is no agreement or unilaterally issued document or arrangementin any other form among the Parties or held by any Party that results in or may result in a controlling relationship in Guangzhou Advertising among theParties or a Party holding a controlling relationship in Guangzhou Advertising. If such agreements, documents or arrangements do exist, the Partiesshall automatically waive any of their rights and obligations under such agreements, documents or arrangements from the date of this Agreement. 3The execution, validity, interpretation, modification, implementation and termination of this Agreement and the resolution of disputes hereunder shallbe governed by the PRC laws. If any dispute arises in the process of the interpretation or implementation of this Agreement, the Parties shall attempt inthe first instance to resolve such dispute through amicable consultation. If a dispute cannot be resolved in the above manner within 30 days after aParty sends a written notice to the other Party requesting for a consultation to resolve the dispute, any Party can submit the dispute to the ChinaInternational Economic and Trade Arbitration Commission located in Beijing for arbitration in accordance with its then-current rules. The place ofarbitration shall be in Beijing and the arbitral award shall be final and binding to the Parties. 4This Agreement is written and executed in both English and Chinese, and both language versions have the same legal effect. This Agreement shall beexecuted in 4 originals, each with the same legal effect.[The space below is intentionally left blank.] 3 / 7(Signature Page of the Termination Agreement)Beijing Cheerbright Technologies Co., Ltd. (Seal) 4 / 7(Signature Page of the Termination Agreement)Guangzhou You Che You Jia Advertising Co., Ltd. (Seal) 5 / 7(Signature Page of the Termination Agreement)Lei Haiyun (signature):/s/ Lei Haiyun 6 / 7(Signature Page of the Termination Agreement)Lu Min (signature):/s/ Lu Min 7 / 7Exhibit 4.69Termination AgreementThis Termination Agreement (“this Agreement”) is made and entered into on April 1, 2018 in Beijing, the People’s Republic of China (hereinafter referred toas “China”, for the purpose of this Agreement, excludes the Hong Kong Special Administrative Region, the Macau Special Administrative Region andTaiwan) by the following parties:Beijing Cheerbright Technologies Co., Ltd. (“Cheerbright”), a wholly foreign-owned enterprise established in China with its registered address at 1010,Tower B, No. 3, Danling Street, Haidian District, Beijing 100080, China. Its uniform social credit code is 91110108791607588Y;Shanghai You Che You Jia Advertising Co., Ltd. (“Shanghai Advertising”), a company duly organized and existing in China with its legal address at RoomJ2206, Building 4, District B, Yecheng Road, Jiading Industry District, Shanghai, China. Its uniform social credit code is 9131011458868123X2;Lei Haiyun, whose identification card number is ******************;Lu Min, whose identification card number is ******************.Each of Cheerbright, Shanghai Advertising, Lei Haiyun and Lu Min is referred to as “the Party” and together as “the Parties”. 1 / 7Recitals: 1Cheerbright, Shanghai Advertising and its shareholders, Lei Haiyun and Lu Min, entered into the following agreements (collectively referred to as“Control Documents”): (1)On March 25, 2017, Cheerbright and Shanghai Advertising entered into the Exclusive Technical Consulting and Services Agreement; (2)On March 25, 2017, Cheerbright, Shanghai Advertising and Lei Haiyun entered into the Equity Option Agreement; (3)On March 25, 2017, Cheerbright and Lei Haiyun entered into the Equity Interest Pledge Agreement; (4)On March 25, 2017, Cheerbright and Lei Haiyun entered into the Loan Agreement; (5)On March 25, 2017, Lei Haiyun signed the Power of Attorney; (6)On March 25, 2017, Cheerbright, Shanghai Advertising and Lu Min entered into the Equity Option Agreement; (7)On March 25, 2017, Cheerbright and Lu Min entered into the Equity Interest Pledge Agreement; (8)On March 25, 2017, Cheerbright and Lu Min entered into the Loan Agreement; (9)On March 25, 2017, Lu Min signed the Power of Attorney. 2Shanghai Advertising is currently in the process of liquidation and dissolution, which is estimated to be completed around December 2018. 3The Parties agree to terminate the Control Documents in accordance with the terms and conditions set forth in this Agreement.The Parties agree as follows: 1From the date of the issuance of an approval notice for the deregistration by the competent Bureau of Industry and Commerce in charge of ShanghaiAdvertising, the Control Documents shall be terminated, and the rights and obligations of the Parties thereunder shall be terminated immediately,unconditionally and irrevocably. Upon the termination of the Control Documents, the Parties shall not undertake any rights, obligations orresponsibilities arising from the Control Documents. 2 / 72The Parties undertake that, except for the above-mentioned Control Documents, there is no agreement or unilaterally issued document or arrangementin any other form among the Parties or held by any Party that results in or may result in a controlling relationship in Shanghai Advertising among theParties or a Party holding a controlling relationship in Shanghai Advertising. If such agreements, documents or arrangements do exist, the Parties shallautomatically waive any of their rights and obligations under such agreements, documents or arrangements from the date of this Agreement. 3The execution, validity, interpretation, modification, implementation, and termination of this Agreement and the resolution of disputes hereunder shallbe governed by the PRC laws. If any dispute arises in the process of the interpretation or implementation of this Agreement, the Parties shall attempt inthe first instance to resolve such dispute through amicable consultation. If a dispute cannot be resolved in the above manner within 30 days after aParty sends a written notice to the other Party requesting for a consultation to resolve the dispute, any Party can submit the dispute to the ChinaInternational Economic and Trade Arbitration Commission located in Beijing for arbitration in accordance with its then-current rules. The place ofarbitration shall be in Beijing and the arbitral award shall be final and binding to the Parties. 4This Agreement is written and executed in both English and Chinese, and both language versions have the same legal effect. This Agreement shall beexecuted in 4 originals, each with the same legal effect.[The space below is intentionally left blank.] 3 / 7(Signature Page of the Termination Agreement)Beijing Cheerbright Technologies Co., Ltd. (Seal) 4 / 7(Signature Page of the Termination Agreement)Shanghai You Che You Jia Advertising Co., Ltd. (Seal) 5 / 7(Signature Page of the Termination Agreement)Lei Haiyun (signature):/s/ Lei Haiyun 6 / 7(Signature Page of the Termination Agreement)Lu Min (signature):/s/ Lu Min 7 / 7Exhibit 8.1Principal Subsidiaries and VIEs of Autohome Inc.Subsidiaries:Cheerbright International Holdings, Limited, a British Virgin Islands companyAutohome E-commerce Inc., a Cayman Islands companyAutohome Link Inc., a Cayman Islands companyAutohome Financing Limited, a Cayman Islands companyAutohome (Hong Kong) Limited, a Hong Kong companyAutohome Media Limited, a Hong Kong companyAutohome E-commerce Hong Kong Limited, a Hong Kong companyAutohome Link Hong Kong Limited, a Hong Kong companyAutohome Financing Hong Kong Limited, a Hong Kong companyBeijing Cheerbright Technologies Co., Ltd., a PRC companyAutohome Shanghai Advertising Co., Ltd., a PRC companyBeijing Prbrownies Software Co., Ltd., a PRC companyBeijing Autohome Technologies Co., Ltd., a PRC companyBeijing Autohome Advertising Co., Ltd., a PRC companyGuangzhou Autohome Advertising Co., Ltd., a PRC companyAutohome (Tianjin) Automobile Sales Co., Ltd., a PRC companyBeijing Chezhiying Technology Co., Ltd., a PRC companyBeijing Chezhiying Software Co., Ltd., a PRC companyBeijing Kemoshijie Technology Co., Ltd., a PRC companyBeijing Haochezhijia E-commerce Co., Ltd., a PRC companyHuai’an Prbrownies Software Co., Ltd., a PRC companyChengdu Prbrownies Software Co., Ltd., a PRC companyVariable Interest Entities:Beijing Autohome Information Technology Co., Ltd., a PRC companyBeijing Shengtuo Autohome Advertising Co., Ltd., a PRC companyBeijing Shengtuo Hongyuan Information Technology Co., Ltd., a PRC companyBeijing Shengtuo Chengshi Advertising Co., Ltd., a PRC companyShanghai You Che You Jia Advertising Co., Ltd., a PRC companyGuangzhou You Che You Jia Advertising Co., Ltd., a PRC companyBeijing Autohome Used Car Appraisal Co., Ltd., a PRC companyBeijing Autohome Used Car Brokerage Co., Ltd., a PRC companyShanghai Tianhe Insurance Brokerage Co., Ltd., a PRC companyExhibit 12.1Certification by the Principal Executive OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002I, Min Lu, certify that:1. I have reviewed this annual report on Form 20-F of Autohome Inc. (the “Company”);2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles;(c) evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by thisannual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent function):(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the Company’s ability to record, process, summarize and report financial information; and(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controlover financial reporting. Date: April 13, 2018By: /s/ Min LuName: Min LuTitle: Chairman of the Board and Chief Executive OfficerExhibit 12.2Certification by the Principal Financial OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002I, Jun Zou, certify that:1. I have reviewed this annual report on Form 20-F of Autohome Inc. (the “Company”);2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles;(c) evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by thisannual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent function):(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the Company’s ability to record, process, summarize and report financial information; and(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controlover financial reporting. Date: April 13, 2018By: /s/ Jun ZouName: Jun ZouTitle: Chief Financial OfficerExhibit 13.1Certification by the Principal Executive OfficerPursuant to Section 906 of the Sarbanes-Oxley Act of 2002In connection with the annual report of Autohome Inc. (the “Company”) on Form 20-F for the year ended December 31, 2017 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Min Lu, Chief Executive Officer of the Company, hereby certify, pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: April 13, 2018By: /s/ Min LuName: Min LuTitle: Chairman of the Board and Chief Executive OfficerExhibit 13.2Certification by the Principal Financial OfficerPursuant to Section 906 of the Sarbanes-Oxley Act of 2002In connection with the annual report of Autohome Inc. (the “Company”) on Form 20-F for the year ended December 31, 2017 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Jun Zou, chief financial officer of the Company, certify, pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: April 13, 2018By: /s/ Jun ZouName: Jun ZouTitle: Chief Financial OfficerExhibit 15.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-196006) pertaining to the 2011 Share Incentive Plan and 2013Share Incentive Plan of Autohome Inc. of our reports dated March 17, 2016, with respect to the consolidated financial statements of Autohome Inc., and theeffectiveness of internal control over financial reporting of Autohome Inc. included in its Annual Report (Form 20-F) for the year ended December 31, 2017./s/ Ernst & Young Hua Ming LLPBeijing, the People’s Republic of ChinaApril 13, 2018Exhibit 15.2CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-196006 and No. 333-219032) of Autohome Inc. ofour report dated April 13, 2018 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in thisForm 20-F./s/ PricewaterhouseCoopers Zhong Tian LLPBeijing, the People’s Republic of ChinaApril 13, 2018Exhibit 15.3通 商 律 師 事 務 所Commerce & Finance Law Offices中國北京市朝阳区建国门外大街甲12号新华保险大厦6层 邮编: 100022電話: 8610-65693399 傳真: 8610-65693838, 65693836, 65693837, 65693839电子邮件: beijing@tongshang.com 网址: www.tongshang.com.cnApril 13, 2018Autohome Inc.10th Floor Tower B, CEC Plaza3 Dan Ling StreetHaidian District, BeijingThe People’s Republic of ChinaDear Sir/Madam:We consent to the reference to our firm under the captions of “Item 3.D—Risk Factors” in Autohome Inc.’s annual report on Form 20-F for the year endedDecember 31, 2017, which will be filed with the Securities and Exchange Commission in the month of April 2018, and further consent to the incorporationby reference of the summaries of our opinions under these captions into Autohome Inc.’s registration statement on Form S-8 (File No. 333-196006) that wasfiled on May 16, 2014.Yours faithfully,/s/ Commerce & Finance Law OfficesCommerce & Finance Law Offices

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