Introduction

The entry of Xiaomi and Huawei into the automotive sector has marked a significant transformation in China's entire automotive landscape.

"Xiaomi SU7 is stunning! I'd definitely buy it if I had the means."

"The M9's taillights light up with 'red lanterns' and the character 'xi' (meaning joy), isn't it super high-end?"

During the Spring Festival, the AITO M9, unveiled during the Spring Festival Gala, showcased Huawei's automotive prowess to families gathered around. Post-festival, Lei Jun recreated the spectacle of Xiaomi SU7 Ultra attracting crowds in the market using commemorative banknote red envelopes.

For over two decades, China's automotive market has adhered to the belief that under the control of joint ventures or strong independent automakers, it's nearly impossible for newcomers to rewrite the market narrative or muster the courage to bring about sweeping changes.

In 2024, as the ranks of new-energy vehicle makers dwindled to a select few, including NIO, XPeng, and Li Auto, and the growth rate of pure electric vehicle sales gradually slowed, it further reinforced the notion that China's automotive market is not easily disrupted.

However, as the emotional expressions at the outset suggest, consumers are now unhesitatingly favoring Xiaomi and Huawei for their car purchases. Who can still believe that China's automotive landscape will remain static?

If 2024's China auto market was fiercely competitive, bidding farewell to new forces like Geely and Hozon, forcing Hozon Auto to grapple with marketing another year after the success of its Nezha IP, then in the face of Huawei and Xiaomi's meteoric rise, I dare say it is precisely this market environment that has presented these smartphone makers with the opportunity to dethrone their predecessors.

From last year to now, if you thought this was merely a fleeting marketing frenzy, little did you know that the disrupted China auto sector has already provided them with ample fertile ground for survival.

Disrupted China Auto Sector

In 2024, the overall automotive market situation was that passenger vehicle retail sales in China totaled 22.894 million units. Cui Dongshu, Secretary-General of the China Passenger Car Association, also noted, "The national auto market trend in 2024 presents a U-shaped pattern. The trade-in and scrapping subsidy policies in the second half of the year were extremely potent, driving a 5.5% year-on-year increase in passenger vehicle retail sales for the entire year of 2024."

In terms of results, China's auto market's digestion capacity has remained high from previous years. However, the market's truly brutal side has also been vividly presented to us.

How arduous have automakers' struggles for survival been? The price war waged thus far is merely the most superficial maneuver. From public opinion attacks to systematic hunting, from poaching talent to technological confrontations, behind the endless chaos lies the hardcore tactics chosen by "everyone for everyone."

In other words, while China's auto market appears vibrant, it is actually a prosperity earned through enterprises' hard work.

After this battle, traditional automakers were nearly halved by BYD alone. Joint ventures cried out for a way out but remained frustrated, while weaker independent automakers could only cower in their respective regional markets to survive. In contrast, the tumultuous waves stirred up by emerging enterprises have directly shaken the entire China auto sector.

Yes, I'm referring to Xiaomi and Huawei, two companies with the seemingly unrelated label of "smartphone makers".

Early last year, the prolonged stagnation of HiPhi without finding a buyer led the industry to believe that, at this juncture, if new players ventured into carmaking, success would be like a dream. But who would have anticipated that Xiaomi's SU7, launched in March, would single-handedly slap everyone in the face.

Hot sales in terminals, heated discussions online... A series of subsequent events have made Lei Jun the "Thunder God" in the eyes of consumers.

Is this a "deification" movement? Relying on traffic, Xiaomi Automobile's success seems to have such an undertone. But as Xiaomi SU7 continues to garner a large number of users without resorting to behaviors like "replacing three generations in a year" or lowering prices when sales are sluggish, we should believe more that the inherent structure of China's auto sector will be completely shattered from this moment on.

What automotive industry development rules has "Lei Jun's carmaking" overturned? Is it the planning of the research, production, and sales system, or the product marketing tactics, or the maintenance of brand building and user stickiness? Now, it can be said that all of the above are included.

During the hot sales of Xiaomi SU7, we saw that a plethora of automakers also launched similar skills. Unfortunately, the final result was only "trying to draw a tiger but ending up resembling a dog".

Do you understand? Xiaomi Automobile's success is unrepeatable. And under its stimulus, there is no longer fertile ground in China's auto market that must adhere to past game rules.

What's even more alarming is that while automaker executives are still trying to learn from Lei Jun how to become an "internet celebrity," Yu Chengdong of Huawei has erected another high wall around the auto sector with viral slogans like "far ahead" and "far beyond".

Don't overlook the rapid growth in overall sales of Hongmeng Intelligent Driving, aided by factors such as the extended range + pure electric dual technology route and the resources of various independent automakers. From the perspective of the entire industrial layout, Huawei, which advocates not making cars on its own, has clearly altered the future development direction of China's automotive industry.

Learning from Xiaomi and Huawei

For Xiaomi, as Steve Jobs once said: The ultimate goal of marketing is to create a unique and irreplaceable value in the minds of customers.

Today, Xiaomi Automobile is the epitome of new-era cars in the eyes of users. Choosing SU7 equates oneself with advancement and innovation. Ask yourself, who doesn't want to sever ties with the "stodgy" old image?

On the other hand, with the emergence of Huawei and the widespread success of Hongmeng Intelligent Driving, automakers have wavered in their souls until they chose to sacrifice an arm just to partner with Huawei. Standing in their shoes to look at the future development of the industry, we must admit that everything from the past will be forced to change.

Entering 2025, the sales data for the first month have already indicated that Xiaomi and Huawei's sales are no longer affected by holidays, further demonstrating that their energy to actively transform the market has been evident in the terminal market.

As we all know, after more than 20 years of iteration and evolution, China's auto market has become a market with mature business logic. Most industry insiders will subconsciously choose to continue the previous thinking to improve this industry.

But precisely because of this, in contrast to the emergence of Xiaomi and Huawei, 2024 was a painful year for traditional automakers, who were attacked from both front and rear, also leaving HiPhi unable to recover and Horizon Motors unable to break out of its own routine, ultimately laying the groundwork for the collapse of Geely Auto's EV brand Geometry.

Older generation automakers are often nostalgic for the past and try to analyze the current state of the industry from a rational perspective; traditional automakers led by joint ventures are still grappling with whether to abandon the global perspective and closely follow the pace of Chinese automakers to join the intensifying competition.

Today, as bystanders, it is challenging for us to give a definitive evaluation. But on the other hand, if we concur that the impact of Xiaomi and Huawei on China's automotive industry is positive, we must say that no automaker has the confidence to flaunt their seniority in front of others.

The industry transformation is too drastic. So drastic that even automaker giants like SAIC and GAC have to relinquish their voice under market impact. So drastic that even the new forces with the aura of "NIO, XPeng, Li Auto" need to be vigilant against being taught by latecomers to "start over".

Not surprisingly, with Xiaomi YU7, AITO M8, and Zenith S800 now poised to launch, this year's market will undoubtedly maintain the same competitive tone as last year. If no changes are made, most automakers will likely be ground into the dirt by these two smartphone makers.

And in terms of trends, since user minds have already been captured by them and all factors that dominate consumption changes are in their hands, I estimate that it is probably not feasible to attempt to carve out another path to win over potential consumers.

Sometimes, witnessing Xiaomi and Huawei shake up China's auto sector, and even having the intention to tear down the past and rebuild it, is truly uncomfortable for everyone in the industry. No one wants the kingdom they have built to become the stepping stone for others to rise to power in an instant. However, after more than a year of market baptism, any complaints at this juncture would seem a bit pretentious.

China's auto market is always progressing step by step amidst dynamic changes. At that time, we could accept the rise of Geely and Great Wall, which set back second-tier joint ventures. Now, facing the fierce competitiveness of Xiaomi and Huawei, it is worthwhile to actively confront them rather than secretly harbor jealousy.