Company: SDAWW
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036086
Chunk: 98

Company: SunCar Technology Group Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 4A
Chunk 98
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 iteratively upgrade our platform with new features and
better performance.

Regulations

Our auto eInsurance business,
like all insurance-related businesses in China, is extensively regulated by the China Banking and Insurance Regulatory Commission (“ CBIRC”),
and subject to regulations including but not limited to PRC Insurance Law and Regulatory Provisions on Professional Insurance Agencies.
Aspects of our auto eInsurance business which are regulated include terms and premium rates of the insurance products we distribute for
major insurance companies, the commission rates we earn, as well as the way we operate our auto eInsurance business in general. Regulations
or administrative measures further restricting or reducing insurance premiums or insurance agency commissions could have material adverse
impacts on the revenue and profitability of our auto eInsurance business. This is particularly the case if we are not able to increase
our policy volume and sales efficiency to compensate for the effect of such regulatory changes or pass on any downward impact on our revenue
to external participants in the insurance supply chain.

Impact of Global Inflationary Pressures

We face two types of possible
inflationary pressure: a general pressure from an inflation-related economic slowdown, and a specific pressure from inflation on the price
of fuel. First, we consider the impact of inflation on the business is immaterial as the operations are in China and China’s inflation
rates have been relatively stable in the last three and a half years: approximately 2.0%, 0.2% and0.2%for the years ended December 31, 2022, 2023 and 2024, respectively. Second, since the 2022 inflation episode was triggered by the conflict
in Ukraine and the resulting increase in fossil fuel prices, it specifically impacted the automobile industry which still primarily relies
on fossil fuel to power vehicles. Thus, with increasing fuel price, people may drive less and less people may choose to buy cars. As such,
automotive- related industries, including insurance, technology services, and auto service industries, where we operate, would also be
adversely impacted. However, we anticipate the pressure to be limited, since we have been working with car manufacturers directly and
indirectly require the insurance companies to develop insurance products designed for EVs. We believe that, as EVs become increasingly
popular, insurance for EVs can effectively increase our revenues and offset the adverse impact brought by the increased fuel prices.

Critical Accounting Estimates

We prepare our consolidated
financial statements in accordance with U. S. GAAP, which requires us to make