A court in southern China has ordered two Xiaomi-linked companies to refund double a consumer’s vehicle deposit, in what is believed to be the country’s first legal ruling addressing the automaker’s practice of demanding full payment before vehicle inspection and delivery.
The Haikou Meilan District People’s Court in Hainan province ruled that Haikou Xiaomi Jingming Technology Co., Ltd. and Xiaomi Jingming Technology Co., Ltd. must jointly return 10,000 yuan ($1,400) to a buyer identified as Ms Li within 10 days of the judgment taking effect, according to a report by Chinese media outlet Red Star, which cited court documents and the plaintiff’s legal counsel.
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The dispute originated from Ms Li’s July 2024 order of a Xiaomi SU7 Max in Aurora Purple, priced at 318,900 yuan, for which she paid a 5,000 yuan deposit via Xiaomi’s mobile application. Xiaomi staff later agreed to delay production after she sought to postpone pickup for financial reasons, telling her the order would remain valid for 360 days.
Despite that agreement, Xiaomi staff demanded in December that she pay the remaining balance within seven days, threatening to cancel the order and forfeit the deposit. After Ms Li refused, the order was cancelled and the deposit retained, prompting her to seek regulatory help and eventually pursue a lawsuit.
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A central point in the court’s ruling was a prior public statement issued by Xiaomi Auto in May 2024 in a customer Q&A, which said: “Xiaomi supports paying the final balance after vehicle inspection.” The court found this statement created a reasonable expectation for consumers entering into purchase contracts.
The court determined that the clause requiring full payment within seven days before inspection or delivery was “unfair and unreasonable,” as it imposed disproportionate financial risk and restricted the buyer’s right to verify vehicle quality. It also ruled that enforcing payment after agreeing to delayed production violated the principle of good faith.
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As a result, the court declared the disputed purchase agreement clause invalid and ordered the double refund of the deposit. Xiaomi has not publicly commented, and it remains unclear whether the company will appeal the decision.