Xiaomi has sent red envelopes to distributors

Author | Zhou Zhiyu

Editor | Zhang Xiaoling

As the year-end approaches, Lei Jun has distributed over 100 million yuan in red envelopes.

Recently, it was reported that Xiaomi will provide financial subsidies to dealers, mainly targeting car integration stores, with the total amount expected to exceed 100 million yuan. In response, Xiaomi confirmed to Wall Street Insight that the news is accurate.

In the automotive industry, it is common for manufacturers to provide subsidies to dealers, but this is the first time for Xiaomi.

By providing subsidies to dealers, manufacturers can alleviate dealer pressure while also incentivizing them to boost sales. Car companies typically increase cash incentives for dealers during key sales periods, such as mid-year and year-end. In the first half of this year, BYD provided cash rewards of 666 yuan per vehicle to dealers who met sales targets for three consecutive years, with some stores receiving subsidies exceeding 500,000 yuan.

This time, Xiaomi will provide a subsidy of 100,000 yuan for each store established by 2024, and the subsidy amount for newly established stores before December 15, 2025, will increase to 500,000 yuan. Furthermore, there are no binding conditions for this financial subsidy.

A channel insider believes that some of Xiaomi's delivery centers have been transformed from traditional 4S stores, resulting in higher operating costs. Additionally, under recent public opinion pressure, some Xiaomi stores are also under strain. For Xiaomi, stabilizing the channel is essential to maintaining normal sales operations, and providing subsidies to dealers is the most feasible solution.

Currently, Xiaomi's monthly delivery volume of cars has surpassed 40,000 units, but there is still a pressing need to catch up in terms of channels and services.

Over the past year, Xiaomi has taken over traditional luxury car brand 4S store locations in places like Wuhu, Anhui, transforming them into delivery centers, while also accelerating the coverage of after-sales service channels by lowering entry barriers.

In February of this year, Xiaomi announced the launch of a recruitment plan for authorized after-sales service partners, opening up applications for pure after-sales service centers for the first time, rather than prioritizing "4S stores." Through a "store-in-store" model, partners are allowed to share areas for car washing, bodywork, and painting, further deepening Xiaomi's after-sales service centers.

Data shows that by the end of 2024, Xiaomi plans to open 200 stores in 58 cities nationwide. As of November 30, 2025, Xiaomi will have 441 stores in 131 cities across the country, with 249 national service outlets covering 144 cities. In December, there are plans to add 36 new stores, extending coverage to seven lower-tier market cities, including Hengyang and Mianyang.

However, the expansion of stores and service outlets has not kept pace with the growth in Xiaomi's car sales. As of the end of November, Xiaomi's car sales have exceeded 360,000 units this year, with cumulative deliveries surpassing 500,000 units. This is several times the figure from the end of last year.

Xiaomi faces short-term pressure. Since the end of September, Xiaomi's stock price has dropped over 30% from its peak. Some short-sellers are even concerned that Xiaomi's smart electric vehicle business may experience a downturn similar to that of Li Auto this year in 2026.

However, China International Capital Corporation believes this view is somewhat pessimistic, predicting that Xiaomi's automotive business will still be in a product growth cycle in 2026. Institutions like Goldman Sachs expect Xiaomi's sales to exceed 650,000 units in 2026, which is a downward adjustment from their previous estimate of 700,000 to 800,000 units Issuing red envelopes to dealers is one of Xiaomi's series of actions to stabilize morale.

Xiaomi has made it clear that its core development will shift from "scale expansion" to "quality improvement" by 2026. Recently, Xiaomi's China region has also initiated a series of personnel adjustments, involving core operational positions in mobile phones, automobiles, and major appliances. The position of General Manager of the Sales Operations Department has been personally taken over by Wang Xiaoyan. In addition, Xiaomi plans to orderly close over 1,000 inefficient and loss-making stores nationwide, focusing on handling the existing stores that were opened before January 1, 2025, which are "inefficient + loss-making." Xiaomi will bear a one-time loss of approximately 27.26 million yuan.

Currently, facing competitive pressures in mobile phones, automobiles, and major appliances, Xiaomi is implementing positive incentive policies to stabilize channels and solidify its "allies."

After the rapid expansion, Xiaomi also needs to make adjustments to effectively respond to challenges