After a disastrous start, Huawei's nascent car business is rebounding, with strong sales of its latest model and a series of new OEM deals.

The Wenjie M5, jointly produced by Huawei and small carmaker Chongqing Sokon, sold 11,000 units in the first 87 days, including nearly half in May, local media have reported.

That's already more than the initial vehicle, the Seres SF5, sold in seven months (see Huawei takes the wheel in auto partnership after first car flops).

Figure 1: Huawei has also just struck smart car deals with Chery Automobile, Jianghuai Automobile and Jihu Automobile.
(Source: Sipa US/Alamy Stock Photo)

The M5, the first model to be equipped with Huawei's Harmony OS, is reportedly the fastest to reach 10,000 units sold in China.

Priced in the 259,800-331,800 yuan (US$38,600-$49,300) range, it's being sold primarily through Huawei's stores, reducing the marketing cost for both companies.

Sales in Huawei's home city, Shenzhen, have been boosted by a government subsidy of up to 50,000 yuan for each car equipped with Harmony OS.

With two other partners, Beijing-based BAIC and Changan, Huawei has released further new models, the Extreme Fox Alpha S and the Avita 11 respectively. A follow-up to the M5, the M7, is due to be released some time this month.

New smart car deals

Huawei has also just struck smart car deals with Chery Automobile, Jianghuai Automobile and Jihu Automobile.

The tech giant's renewed activity in the auto sector has sparked plenty of discussion about just how deep it will go into the business.

As one observer said, it is hard to believe that a company that promises never to build cars has managed to issue so many models so quickly.

Analysts have also noted that its partners are mostly smaller companies. The big players, such as Dongfeng and SAIC Motor, are far too wary of Huawei to include it in their smart car plans.

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Huawei is certainly playing the dominant role in the Sokon partnership. Not only is its brand and sales network driving M5 sales, it also took part in the design, R&D, and manufacture – reducing Sokon to the role of what some call an 'auto foundry.'

Not that Sokon is doing badly out of this. The little-known company has enjoyed a 47% run-up in its stock price in the past month thanks to the booming sales of the M5.

But Sokon cars will soon be competing in Huawei's store network with Polar Fox, Avita, and other models.

Auto industry analyst Zhang Xiang is one of those who believes Huawei is collaborating with car companies to learn how to build cars. In the future, he told 21st Century Business, Huawei will definitely go it alone.

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— Robert Clark, contributing editor, special to Light Reading