Produced by ZhiNeng Auto
On September 17, news spread that "AITO will withdraw from Harmony Intelligent Solutions Alliance (HIMA) and Huawei exclusive stores starting January 1 next year." The immediate reaction was: Can the brand hold its ground? Will sales drop?
SERES subsequently responded that AITO will not completely withdraw from HIMA and Huawei exclusive stores; instead, the existing channels will be separated into different networks starting January 1, 2027.
One type of store will exclusively sell AITO, while the other will sell Maextro, Stelato, Luxeed, and Shangjie, and some Huawei supermarket stores will continue to sell AITO.
AITO will remain within the HIMA ecosystem, and Huawei's technology supply, commercial cooperation, and equity ties will all remain intact.
The operational leadership of AITO is shifting from Huawei to SERES. In the first half of 2026, SERES's revenue dropped by 7.87% year-on-year, and its net profit attributable to shareholders shifted from a profit of CNY 2.941 billion in the same period last year to a loss of CNY 1.717 billion. Operating cash flow changed from an inflow of CNY 14.437 billion to an outflow of CNY 12.376 billion. The channel network separation is occurring precisely at this juncture.
Part 1: Huawei's Sales System Can Support a Sales Network for 400,000 Vehicles
Behind the Stores Stands an Entire Sales Team
◎ The value of automotive channels cannot be measured solely by the number of stores. Consumers originally visit Huawei stores to buy smartphones and tablets. They happen to see AITO, leave their contact information, and schedule a test drive. Natural foot traffic is only the visible part.
◎ The weight of brand endorsement is equally significant. A considerable number of consumers are unfamiliar with SERES but are willing to trust "a car deeply involved by Huawei." This saves the time it would take for a new brand to build trust from scratch.
◎ The sales organization is even harder to replace than the stores themselves. Huawei provides not just the space, but also personnel training, retail processes, and sales service settlements. How to hold launch events, distribute leads, and set promotion rules are also their responsibilities. Selling points like the HarmonyOS Cockpit and Intelligent Driving can be directly demonstrated within Huawei's consumer electronics scenarios.
Building such a system usually takes traditional automakers several years. AITO bypassed this process.
As of May 2026, HIMA has 1,951 sales stores and 957 service stores, with a national city coverage rate of approximately 90%. SERES has built over 390 user centers, covering 218 cities. Some HIMA stores will be converted into AITO exclusive stores, and some Huawei supermarket stores will continue to sell AITO.
◎ The channel touchpoints provided to AITO by the Huawei system are far denser than the network built by SERES itself. After taking sole charge of AITO, SERES will have to take over a sales network capable of selling 400,000 high-end vehicles.
The Operating Cost of This Network Approaches CNY 8 Billion in Half a Year
AITO has never been a brand that could rely solely on natural product sales; it is backed by an entire system of marketing, stores, and sales services.
The growth rate of sales expenses has consistently outpaced revenue.
◎ In 2025, SERES's sales expenses increased by approximately 26.1% year-on-year, with an additional expenditure of about CNY 5 billion.
◎ By the first half of 2026, sales expenses dropped by 5.26% year-on-year, while revenue fell by 7.87%. The gross profit margin decreased from approximately 28.9% in the same period last year to 23.3%. The proportion of sales expenses to gross profit rose from about 50% to 63%.
For every CNY 100 of gross profit earned, CNY 63 is taken by sales expenses first, leaving the rest for R&D, management, and shareholders.
Of this CNY 8.471 billion, advertising, image store construction, and service fees accounted for CNY 7.894 billion, employee compensation was CNY 374 million, depreciation, amortization, and low-value consumables were CNY 47 million, and office and entertainment expenses were CNY 65 million, with the remaining items being minimal.
Just the "advertising, image store construction, and service fees" item alone accounts for approximately 93% of sales expenses, equivalent to 13.7% of operating revenue for the same period.
When discussing the independence of AITO's channels, it is this exact expenditure that needs to be rearranged.
Approaching CNY 8 billion in half a year, this covers brand communication, store construction, and sales services. This account is a broad expense package that includes advertising, store image construction, and various sales services.
The financial scale of AITO's sales system is laid out right here.
Part 2: The Contracting Entity Has Changed, and So Have the Responsibilities
Customers, Brand, and Customer Acquisition Costs Are All Handed Over to SERES
Starting September 16, 2026, the contracting entity for the comprehensive service cooperation agreements with AITO authorized dealers will change from Huawei Terminal to an affiliated company of SERES Auto.
Comprehensive service fees for previous orders were settled by Huawei, while those for new orders thereafter will be borne by SERES.
Once SERES takes the lead in the channels, customer leads and conversion data will directly belong to it. Dealer admission and elimination, store location selection and display standards, as well as promotional policies and pricing discipline, will also be determined by SERES.
How to allocate customers among the M7, M8, and M9, and how to manage delivery, after-sales, and repurchase relationships, are also its responsibilities. These data and relationships are among the most valuable assets for an automotive brand.
On the consumer side, people feel they are buying a "Huawei AITO." After the channel becomes independent, SERES needs to gradually make consumers accept that AITO itself is the brand entity.
Brand positioning has also been untied.
When the five brands shared stores, AITO had to share space, sales, leads, and launch event resources with Maextro, Stelato, Luxeed, and Shangjie.
After opening exclusive stores, the complete product matrix from M5 to M9 can be fully displayed, and the store experience can be unified around high-end SUVs, without needing to be placed in the same showroom as other brands for horizontal comparison.
There is an opportunity for single-store conversion rates and high-end model transaction rates to rise. Going forward, advertising placement, store subsidies, dealer service fees, and sales personnel training will all be funded by SERES itself, and the same applies to the accounts for customer lead procurement and brand activities.
The Huawei service fees saved will be partially consumed by building self-owned channels and new advertising.
Net benefit of channel independence = Saved Huawei channel and service costs − New store and personnel costs − New advertising customer acquisition costs − Dealer subsidies ± Profit impact from changes in sales volume and prices.
It remains to be seen how much comprehensive service cost can be saved after Huawei no longer takes the lead, and how much more will be spent on self-built channels, advertising placement, and dealer incentives.
SERES's CNY 9.84 Billion Procurement from Yinwang
In the first half of 2026, SERES's procurement of goods and acceptance of services from Yinwang Intelligent Technology Co., Ltd. amounted to CNY 9.84 billion, equivalent to approximately 17.1% of its revenue for the same period.
SERES is deeply reliant on Huawei's intelligent vehicle technology and related supply systems. This includes hardware related to intelligent driving and cockpits, software and technical services, component costs, the supplier's own costs, and potentially procurement items not yet fully recorded in current profits and losses.
SERES has also invested in Yinwang and holds equity, making the relationship a dual one of business procurement and equity investment.
On the technology supply front, AITO will continue to use Huawei's cockpit and intelligent driving systems. Huawei's role is shifting from front-line operations back to technology supply and equity cooperation. AITO hasn't suddenly become harder to sell. It's just that the gross profit left per vehicle is decreasing, making the originally high sales investment feel even heavier.
◎ In 2025, SERES's NEV sales reached 472,300 units, with each vehicle corresponding to an operating revenue of approximately CNY 349,000, a gross profit of about CNY 102,000, and sales expenses of roughly CNY 51,000.
◎ In the first half of 2026, sales volume was 178,800 units, with each vehicle corresponding to an operating revenue of approximately CNY 322,000, a gross profit of about CNY 75,000, and sales expenses of roughly CNY 47,000.
Per-vehicle sales expenses dropped from approximately CNY 51,000 to about CNY 47,000, which appears to be an improvement.
Per-vehicle gross profit fell from about CNY 102,000 to approximately CNY 75,000, dropping even faster, considering the group also has components and other businesses.
In July and August 2026, SERES's vehicle sales dropped by 50.86% and 49.68% year-on-year, respectively. The channel reform is not yet complete, but the sales pressure has already arrived.
The channel independence in 2027 falls precisely at a time when product structure, sales volume, gross profit margin, and cash flow are all simultaneously under tight pressure.
Part 3: How Many Fewer Vehicles Will Be Sold, and What Will Be Used for Verification Going Forward
How Much Will Sales Drop Depends on How the Channels Are Implemented
◎ Looking at the extreme scenario, if not a single AITO vehicle enters Huawei stores and the exclusive stores cannot handle the foot traffic, the probability of sales damage exceeds 90%, and the first-year impact could reach 12% to 25%.
The lost portion includes Huawei's natural foot traffic, the psychological gap from consumers misinterpreting the channel adjustment as "Huawei withdrawing from AITO," and the decrease in outlet density in third- and fourth-tier cities.
The sales gap during the dealer transition period and the rise in independent customer acquisition costs must also be factored in. Some former HIMA stores will be converted into AITO exclusive stores, some stores will switch to selling the other four brands, and some Huawei supermarket stores will continue to retain AITO.
SERES's self-built user centers will continue to expand, and AITO will retain its HIMA identity and Huawei's technical support.
◎ For a smooth transition, store re-signings must go without a hitch, and foot traffic must not be interrupted. This entirely relies on SERES's channel execution capability to backstop. The baseline scenario is the most likely outcome, with sales dropping in the single digits and the sales expense ratio rising slightly.
The combined probability of execution pressure and severe mistakes is about one-quarter, with the trigger points lying in store coverage and consumer perception.
◎ The weighted central estimate of sales loss is approximately 5% to 6%.
If AITO could originally sell 300,000 to 400,000 units in 2027, the corresponding impact of the channel adjustment would be a loss of about 15,000 to 25,000 units sold.
Based on the rough per-vehicle financial metrics for the first half of 2026, every 10,000 fewer NEVs sold could correspond to approximately CNY 3.2 billion in revenue and CNY 750 million in gross profit.
The actual impact will vary with model structure, dealer expenses, and variable marketing expenditures, and cannot be directly extrapolated linearly.
◎ From the change in the contracting entity to the implementation of the network separation on January 1, 2027, there are still over a dozen months in between.
During this period, who funds dealer incentives, how leads are distributed, and how after-sales responsibilities are divided will all affect terminal stability. Whether consumers perceive a smooth handover or brand turmoil depends on these details.
What Huawei is Stepping Back From
Network separation is not a one-way benefit for Huawei.
◎ In the short term, Huawei may lose the largest sales volume contribution brought by AITO, the technology showcase effect formed by high-end models like the M9, a portion of channel and sales service revenue, as well as the automotive foot traffic and transaction efficiency in Huawei stores.
In 2025, AITO delivered over 420,000 units, accounting for about 70% of HIMA's total sales volume. Whether the remaining four brands can quickly fill the store space and sales volume vacated by AITO remains unanswered.
◎ In the medium term, Huawei can yield store resources to Maextro, Stelato, Luxeed, and Shangjie, and HIMA's reliance on the single brand AITO will also decrease. The responsibility for heavy operations and channels will be handed back to mature automakers, while Huawei focuses on its technology platform and ecosystem revenue.
What Huawei wants to verify is whether this cooperation model can be replicated. If a mature cooperative brand can operate independently while retaining Huawei's technology, Huawei can free up its limited terminal resources for more automakers.
How many AITO exclusive stores and retained Huawei supermarket stores there are, the effective coverage rate in the top 50 core cities, the three conversion rates for lead retention, test drives, and orders, the new orders 8 to 12 weeks after the adjustment, the sales expense ratio and per-vehicle sales expenses, operating cash flow, and dealer payment collection cycles.
If the store retention rate in core cities exceeds 90%, and the short-term drop in orders does not exceed 10%, the full-year sales loss might be less than 5%.
Conversely, if store coverage drops significantly, consumers widely interpret the channel adjustment as "Huawei withdrawing," and the sales expense ratio continues to rise, the sales loss could exceed 10%, and the profit pressure will be even greater than the sales pressure.
We won't have to wait long for these figures; the orders and store numbers in the first quarter of 2027 will reveal whether the channel migration is successful.
Conclusion
AITO's product competitiveness will not change regardless of whether it leaves Huawei stores or not. Continuing to use Huawei's technology will not guarantee sales volume either.
Over the past five years, Huawei has helped AITO complete brand incubation from scratch. Now, SERES wants to transform AITO into a luxury brand capable of independent customer acquisition, independent operations, and mastering customer relationships.
What this adjustment tests is whether AITO can still sell its cars on its own after stepping out of Huawei's led sales system.