Xiaomi Auto Channel Subsidy Strategy Analysis: Intentions and Impacts

The background of Xiaomi distributing over 100 million yuan in subsidies to auto dealers is the rapid development of its auto business. In Q3 2025, Xiaomi’s EV and AI division achieved its first quarterly profit of 700 million yuan, with November deliveries reaching 46,249 units, a year-on-year increase of 99.73%[1][0]. On this basis, Xiaomi subsidizes each car integration store built in 2024 with 100,000 yuan, and each new store built before December 15, 2025 with 500,000 yuan, with no binding conditions. Although the details of the subsidies have not been directly confirmed by public reports, Xiaomi’s auto business already has the financial capacity to implement such channel investments[0][1].

1. Strategic Intent Clearly Focused on Channel Expansion
   : Differentiated subsidies (higher subsidies for new stores in 2025) indicate that Xiaomi is accelerating dealer network layout to support the market promotion of three upcoming new models (including the YU9 large SUV, YU7 GT sports crossover, and SU7 L executive sedan)[1]. The subsidy policy with no binding conditions lowers the threshold for dealer participation, helping to attract more high-quality partners.
2. Channel Investment and Product Expansion Synergy
   : Xiaomi Auto’s current sales growth and profitability provide a financial foundation for channel expansion, while a wider dealer network will become an important support for new product sales and brand promotion, forming a positive cycle of business development[0][1].

1. Short-term Cost Pressure
   : The 100 million yuan subsidy will directly increase the short-term costs of Xiaomi’s auto business, which may have a certain impact on recent profitability.
2. Actual Effect to Be Observed
   : The stimulating effect of the subsidy policy on dealers’ enthusiasm to open stores, the quality of network expansion, and the final promotion effect on sales still need time to verify.

1. Expanded Market Coverage
   : More dealer stores will enable Xiaomi Auto to reach the sinking market and increase market penetration.
2. Long-term Scale Benefits
   : By expanding the sales network and market share, Xiaomi Auto is expected to achieve economies of scale, reduce unit costs, and improve long-term profitability.
3. Enhanced Brand Competitiveness
   : The increase in offline stores will enhance Xiaomi Auto’s brand visibility and consumer trust, occupying a more favorable position in competition with rivals such as Tesla and BYD.

Xiaomi’s distribution of over 100 million yuan in channel subsidies to auto dealers is an important strategic move implemented on the basis of its auto business profitability, aiming to accelerate dealer network expansion, enhance channel attractiveness, and support the launch of new product lineups and increased market competitiveness. Although it will increase cost pressure in the short term, it is expected to improve profitability in the long term through expanding market share and economies of scale. The details of the subsidies have not been directly confirmed by public reports so far, and their actual effects still need further observation.