According to Xiaomi’s report, EV plans are moving faster than planned due to the drop in sales
Chinese smartphone maker Xiaomi reported a 4 percent drop in sales in the second quarter, posting a decline in China’s mobile phone market. However, the entry into the production of electric vehicles was earlier than planned.
Revenue fell to CNY 67.4 billion (nearly Rs. 76,450 crore) from CNY 70.17 billion (nearly Rs. 80,650 crore) in the same quarter last year, but beat analyst estimates of CNY 65.13 billion (nearly Rs. 74,860 crore).
Net profit rose to CNY5.14 billion (nearly Rs.5,830 crore) for the period, up 147 percent from CNY2.08 billion (nearly Rs.2,390 crore) last year, also beating expectations. The company attributed the increase to cost cutting and efficiency gains, particularly at its physical stores.
“Despite the macroeconomic headwinds in the global market, we continue to expand our footprint,” Xiaomi President Lu Weibing said on a conference call on the results.
“Several of our competitors have already withdrawn from certain areas in this challenging environment, but no matter how difficult it will be, we will strengthen our presence in all regions and markets,” said Lu.
According to Canalys, a consulting firm that monitors the smartphone industry, consumer demand in China’s smartphone market continued to contract in the second quarter, falling 5 percent to 64.3 million units.
Xiaomi’s shipments fell 19 percent to 8.6 million, while shipments in key overseas market India fell 22 percent to 5.4 million units, Canalys said.
With cellphone sales declining, Xiaomi plans to move into electric vehicle (EV) manufacturing and has received approval from China’s state planning, Reuters reported this month.
The company has pledged to invest US$10 billion (almost Rs.82,600 crore) in the automotive industry over a decade.
Lu said the company’s plans to start mass production of electric vehicles in the first half of 2024 remain unchanged. “Our current progress is ahead of expectations and the original production schedule,” he said.
© Thomson Reuters 2023
