Xiaomi's High-End Strategy: An In-Depth Analysis of Q3 2024 Financial Results and Future Outlook

Tech 2024-11-19 23:07:40 Source: Network

Xiaomi's High-End Strategy: An In-Depth Analysis of Q3 2024 Financial Results and Future OutlookXiaomi Corporation's Q3 2024 financial report reveals significant achievements in its high-end strategy and outlines its future direction. The report shows that Xiaomi's total revenue reached RMB 92

Xiaomi Corporation's Q3 2024 financial report reveals significant achievements in its high-end strategy and outlines its future direction. The report shows that Xiaomi's total revenue reached RMB 92.5 billion, a year-on-year increase of 30.5%, and its adjusted net profit reached RMB 6.3 billion, a year-on-year increase of 4.4%. This impressive performance stems from breakthroughs in the high-end smartphone market and robust growth in other business segments.

Breakthrough in the High-End Smartphone Market: Increased Market Share and Sales Volume

Xiaomi

Since launching its high-end strategy in 2020, Xiaomi has, after four years of cultivation, achieved a significant breakthrough in the high-end market (price range above RMB 3,000). Third-party data shows that in Q3 2024, Xiaomi's high-end smartphone shipments accounted for 20.1% of the total smartphone shipments in mainland China, a year-on-year increase of 7.9 percentage points. Particularly in the fiercely competitive RMB 4,000-5,000 price segment, Xiaomi's market share reached 22.6%, a year-on-year increase of 9.7 percentage points, securing the top position in mainland China.

The successful launch of the Xiaomi 15 series further demonstrates the effectiveness of Xiaomi's high-end strategy. Priced starting at RMB 4,499, exceeding the RMB 3,000 threshold for the first time, the series surpassed 1 million units sold faster than its predecessor, the Xiaomi 14 series, confirming market recognition of Xiaomi's high-end products.

Xiaomi

The success of the high-end strategy directly contributed to Xiaomi's record-high quarterly financial results. The smartphone business, the core of Xiaomi's revenue, maintained strong growth in Q3, reaching RMB 47.5 billion, a year-on-year increase of 13.9%. This is mainly attributed to the dual increase in average selling price (ASP) and shipment volume. Xiaomi's smartphone ASP increased by 10.6% from RMB 997.0 per unit in Q3 2023 to RMB 1,102.2 in Q3 2024, with the increase in high-end smartphone shipments being the primary driver. Simultaneously, Xiaomi's smartphone shipments increased by 3.1% from 41.8 million units in Q3 2023 to 43.1 million units in Q3 2024, driven mainly by growth in the mainland China market.

Canalys data shows that while Xiaomi has not been among the top three globally for 17 consecutive quarters, its smartphone sales ranking in the Chinese market continues to rise, from fifth place in Q2 to fourth in Q3, with market share increasing by 1.2 percentage points year-on-year to 14.7%. Notably, among the top three global smartphone manufacturers, Xiaomi is the only brand to show year-on-year growth in both global and Chinese markets. Globally, Samsung saw a 2% year-on-year decline, Apple a 9% increase, and Xiaomi a 3% increase; in China, Xiaomi saw a 13% year-on-year increase, Apple a 6% decline, and Samsung failed to enter the top five. Xiaomi's growth momentum is expected to continue, with Xiaomi Group Partner, President, and President of the International Business Department, Lu Weibing, promising that Q3 represented the lowest point for the year's smartphone gross profit margin, with a rebound expected in Q4.

Xiaomi

Offline Channel Expansion: Successful Implementation of the New Retail Strategy

Xiaomi's high-end breakthrough is inseparable from its significant efforts in expanding offline channels. When summarizing Xiaomi's impressive quarterly results, Lu Weibing highlighted three key factors: product competitiveness, brand power, and new retail. The interplay of these three elements has contributed to Xiaomi's current success.

Xiaomi

As early as 2020, when Xiaomi attempted new retail reforms, the top management reached a consensus: the success of the future high-end strategy hinges on the development of brand stores. Users purchasing high-end products tend to prefer brand stores over general stores. Therefore, the importance of offline channels was once again emphasized.

In 2024, Xiaomi's new retail strategy entered a year of further expansion and ecological upgrades. In Q3 2024, the number of Xiaomi's offline retail stores in mainland China continued to grow, exceeding 13,000 within the quarter. The effect of offline channel expansion is directly reflected in mobile phone sales. Third-party data shows that in Q3 2024, Xiaomi's offline channel market share for smartphone shipments in mainland China was 10.3%, a year-on-year increase of 1.7 percentage points. Lu Weibing expects the number of Xiaomi's offline retail stores to exceed 15,000 by the end of 2024 and reach 20,000 next year.

Xiaomi

Growth of Diversified Businesses: Strong Performance of IoT and Lifestyle Products, and Smart Electric Vehicles

In addition to the growth of the smartphone business, Xiaomi's other business segments also contributed significantly to its performance. In the smart home appliance sector, Xiaomi's air conditioner shipments in Q3 exceeded 1.7 million units, a year-on-year increase of over 55%; refrigerator shipments exceeded 810,000 units, a year-on-year increase of over 20%; and washing machine shipments exceeded 480,000 units, a year-on-year increase of over 50%. Refrigerator and washing machine shipments both reached record highs. The unexpectedly high sales volume drove a 54.9% year-on-year increase in Xiaomi's smart home appliance revenue in Q3, further pushing the revenue of its IoT and lifestyle products business to a record high, with a 26.3% year-on-year increase to RMB 26.1 billion and a gross profit margin of 20.8%, a 2.9 percentage point year-on-year increase.

Xiaomi Auto, currently Xiaomi's highest-priced business, has made a significant contribution to enhancing brand image and promoting the new retail strategy. The launch of the Xiaomi SU7 broke Tesla's long-term monopoly in the RMB 200,000-300,000 pure electric sedan market. Its high performance and positive user reviews have served as strong validation for Xiaomi's overall high-end brand strategy. Revenue from Xiaomi's innovative businesses, including smart electric vehicles, increased from RMB 26 million in Q1, to RMB 6.4 billion in Q2, and to RMB 9.7 billion in Q3. Specifically, revenue from smart electric vehicles increased from RMB 18.4 million in Q1, to RMB 6.2 billion in Q2, and to RMB 9.5 billion in Q3. The gross profit margin for the automotive business also increased from 12.6% in Q1 to 15.4% in Q2 and further to 17.1% in Q3. Lu Weibing is confident about the growth of the automotive business in Q4, expecting it to outperform Q3. This is mainly due to Xiaomi's continuously improving automotive production capacity and delivery targets. In Q3 2024, Xiaomi delivered 39,790 Xiaomi SU7 series vehicles, accumulating 67,157 deliveries and achieving the target of producing a cumulative 100,000 vehicles. Xiaomi has also raised its full-year vehicle delivery target from 120,000 to 130,000. The Xiaomi SU7 also achieved the top sales ranking in October for sedans priced over RMB 200,000 and for large-sized pure electric sedans, surpassing the Tesla Model 3. More importantly, the launch of the Xiaomi SU7 Ultra, priced at RMB 814,900, further elevated Xiaomi's high-end brand image. Within 10 minutes of its pre-sale launch, the SU7 Ultra received over 3,680 pre-orders, with official sales starting in March 2025. With increased production capacity, the delivery time for the Xiaomi SU7 has been shortened to 20-23 weeks.

Changes in User Structure: Growth of Female Users and High-End Potential

The success of Xiaomi's diversified product portfolio has also led to changes in its user structure, opening up new possibilities for its high-end strategy. Since its inception, male users have been the main purchasers of Xiaomi phones. However, this trend is changing. Lei Jun revealed in a live stream on November 1st that 56% of Xiaomi SU7 owners are iPhone users, including many who use both iPhone and Xiaomi products. This phenomenon continues with the Xiaomi SU7 Ultra, with official data showing that 10% of pre

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