SHANGHAI (Reuters) -China’s Xiaomi is seeing a slump in new orders for its SU7 electric sedan, analysts said on Wednesday, as the company and its charismatic CEO grapple with a growing consumer backlash that now threatens its runaway sales success.
The sporty electric vehicle quickly became a hit among Chinese drivers after it was launched in March last year. By December, its sales had overtaken Tesla’s Model 3 in the world’s biggest auto market on monthly basis.
But Xiaomi is now facing a wave of consumer angst that began last month following a fatal accident involving an SU7.
The accident, which is still under investigation, prompted widespread public discussion over the safety of the kinds of smart driving features offered by Xiaomi. Chinese regulators have since further tightened regulatory oversight on the marketing and promotion of such features.
Xiaomi did not respond to a Reuters request for comment for this story.
New orders for the SU7 fell 55% in April from March and the trend continued in May, with a 13,500 orders placed in the first two weeks of the month, Deutsche Bank analysts said in a note on Wednesday.
That compared to 23,000 orders in the second week of March alone, a weekly all-time high.
Xiaomi was pulled into further controversy last week after it apologised for what it called “unclear communication” following complaints from customers.
SU7 owners said the company had falsely advertised the design of a dual-vent carbon fiber hood it offers at an additional charge of 42,000 yuan ($5,826) on its SU7 Ultra.
Nearly 400 owners of the SU7 Ultra had asked for refunds after finding the hood had no air ducts inside, which contradicted previous claims by Xiaomi and its CEO Lei Jun, Shanghai government-owned media the Paper reported on Tuesday.
“This crisis not only exposes the credibility crisis of Xiaomi SU7, but also the distortion of some values in the current new energy vehicle industry,” it wrote.
Lei, who is a social media star in China with 26 million followers on Weibo, said on Saturday the past month had been the most difficult period for him since he founded the electronics maker a decade ago.
Other customers and analysts told Reuters that Xiaomi’s delivery time estimates for SU7s were creating confusion.
Purchasers have often found the estimates greatly overestimate delivery times, and they receive their cars much sooner than expected.
That’s led some analysts to question whether Xiaomi is seeking to create an artificial sense of scarcity as a marketing tactic.
One Chinese blogger calling himself A Zu told Reuters he had created an app allowing buyers to submit their purchase and pick-up information in a bid to better understand Xiaomi’s delivery patterns.
When checked by Reuters on Wednesday, Xiaomi’s official app gave estimated delivery times ranging from 26 weeks to 11 months.
A SU7 owner himself, A Zu, who declined to share his real name, said he hoped Xiaomi could be more transparent with its delivery arrangements.
Xiaomi has long employed highly successful marketing tactics to sell electronic products such as smartphones, analysts at Chinese consulting firm LandRoads said.
“But unlike digital consumer products, the automobile involves longer purchase decision-making processes and bigger investment by consumers, who will have higher requirements on the brand’s capability in fulfilling promises and its long-term credibility,” it said.
($1 = 7.2083 Chinese yuan renminbi)
(Reporting by Zhang Yan, Qiaoyi Li, Brenda Goh; Editing by Miyoung Kim and Joe Bavier)
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