On October 21, Xiaomi Group announced significant adjustments to its automobile sales system by merging the Automobile Sales, Delivery, and Service Department into its China Region, aiming to strengthen synergies with its mobile phone sales channels, further integrate automobile sales, delivery, and service operations, and create a new retail system centered around "people, cars, and homes".

Xiaomi Automobile's move undoubtedly signals preparations for the mass delivery of its upcoming vehicles.

In September, Xiaomi SU7 deliveries exceeded 10,000 units for the fourth consecutive month. Lei Jun previously revealed that Xiaomi Automobile was striving to deliver 20,000 vehicles in October and projected 100,000 deliveries in November, fulfilling this year's target. Additionally, Xiaomi's first SUV model, codenamed "MX11", will be launched for sale in 2025.

It is foreseeable that Xiaomi Automobile will experience a sustained peak in deliveries.

On one hand, Xiaomi Automobile is accelerating the construction of its dealerships. According to disclosed information, 128 dealerships have already opened in 38 cities nationwide, with plans to add 11 more in October. Furthermore, 17 Xiaomi Automobile service centers and authorized service centers are also operational. The current number of dealerships is clearly insufficient.

On the other hand, strengthening synergies with the existing Xiaomi Home mobile phone sales network has become an inevitable choice. Lu Weibing stated that the goal is to expand to 20,000 dealerships within three years. In the future, if these 20,000 sales networks can be synergized, it will significantly boost Xiaomi Automobile's reach in third- and fourth-tier cities.

This not only aligns with Xiaomi Automobile's consistent aggressive approach but also reflects the flexibility of its business strategy – similar to other leading new energy vehicle brands known for their operational agility.

Reaching Third- and Fourth-Tier Cities

As the top-selling new energy vehicle brand, Li Auto had 474 retail centers nationwide, covering 142 cities, as of January 31, 2024. In 2023, Li Auto delivered a total of 376,000 vehicles. Rough estimates suggest that Li Auto achieved close to 400,000 sales with fewer than 500 dealerships.

In comparison, Xiaomi Automobile's dealership count is far from sufficient, currently standing at just 128. To achieve larger sales volumes, expanding the network must accelerate.

Since its official launch on March 28, Xiaomi SU7 has maintained high market demand. By the end of September, cumulative sales of Xiaomi SU7 reached 69,790 units. Xiaomi Automobile's delivery target for the year is at least 100,000 units, with an ambitious goal of reaching 120,000. To achieve the 120,000-unit target, Xiaomi Automobile must deliver 50,000 units in the next three months.

This seemingly poses little challenge for Xiaomi. According to Lei Jun, if October's production and sales exceed 20,000 units and maintain this momentum, the target can be exceeded. However, the market capacity in first- and second-tier cities has an upper limit, and competition from numerous rivals is fierce. Therefore, Xiaomi must focus on the broader third- and fourth-tier cities.

How can Xiaomi reach consumers in third- and fourth-tier cities? It's impractical for Lei Jun to travel across cities like a movie star for roadshows. Besides the ineffectiveness of such an approach, it's also inefficient for an internet company. Hence, leveraging existing mobile phone sales channels, officially referred to as "synergy," is a smart strategy.

Of course, the specific synergy methods – whether through posters, large screens, in-store product introductions, or other formats – will depend on Xiaomi Automobile's plans, with incentives being a crucial aspect.

Adjusting Structures is Commonplace

In the first nine months of this year, Li Auto delivered a cumulative total of 340,000 vehicles; WENJIE Auto sold 316,713 vehicles, up 364.23% year-on-year; NIO, ZEEKR, and XPeng sold 21,181, 21,333, and 21,352 vehicles in September, respectively, entering the 20,000-unit monthly sales club.

While witnessing the rising sales of new energy vehicle brands, we must also recognize their swift organizational restructuring.

Taking Li Auto as an example, in April, the company adjusted multiple departments, including branding, product, commerce, strategy, and supply chain, affecting over 500 employees. Notably, Li Auto merged its retail and delivery departments into a single sales department to avoid internal friction and work together to boost sales.

NIO has also adjusted its structure based on business and organizational development needs. Its innovation business clusters have been renamed "Ledao Business Unit," "Chip Research and Development," "Firefly Business Unit," and "Mobile Phone Business." Additionally, NIO will establish 16 regional companies under the Ledao Business Unit, responsible for promoting the Ledao brand, channel layout, daily store management, and sales results within their respective regions, all reporting to Xia Qinghua.

XPeng has also been busy, merging its three sales departments – Channel Sales, Industry Sales, and Retail Management – into a single Sales Department, reporting to COO Xu Jun.

It is evident that structural adjustments played a significant role in the surging sales of Li Auto, NIO, and XPeng in the second half of the year. This underscores the fact that new energy vehicle companies tend to have flatter and more efficient management structures, enabling quick strategic adjustments in response to intense market competition and addressing issues promptly before they escalate.

Xiaomi Automobile is on the rise, and adjusting its sales system now may seem excessive to some. However, in my view, whether addressing existing or future challenges, the underlying logic remains the same: speed and efficiency are paramount. Even if adjustments go awry, they can be corrected swiftly.

This is the internet mindset, worthy of serious consideration by traditional manufacturers.

Public Reviews on Cars

Of course, new energy vehicle brands also have their own development flaws, namely their small scale and weak risk resistance. While they strive for diversification, their limited resources hinder progress. However, they excel in flexible decision-making, quickly acting on opportunities or changing course when necessary. Traditional manufacturers, on the other hand, possess stronger resource integration capabilities but suffer from bureaucratic inefficiencies and lengthy decision-making processes.

The transformation of China's new energy vehicle market tests both decision-making efficiency and corporate depth, requiring adaptation from all parties involved.