Consumer Rights Violated When Buying A Car, Xiaomi Must Return Double Face Money

Xiaomi SU7 electric car. (Photo: Xiaomi)

JAKARTA A court in Haikou, China's southern island province, ruled that companies related to Xiaomi should double down payment to consumers. This is because Xiaomi is considered to have implemented an unfair vehicle purchase clause.

As reported by Carnewschina, Wednesday, November 26, this case stems from a female consumer who is referred to in court documents as Ms Li (the pseudonym). He ordered the Aurora Purple SU7 Max Xiaomi color through the Xiaomi Auto application and paid a down payment of 5,000 yuan, equivalent to Rp11.7 million.

When they were about to take the car, consumers were asked to pay off the remaining 318,900 yuan, equivalent to Rp749 million. The full payment request was made before consumers checked the condition of this vehicle which later became the subject of the dispute.

Attorney from Beijing Strategy (Haikou) Law Firm, Liu Wei, stated that the policy contradicts Xiaomi's public promise which states that consumers can pay off payments after inspecting vehicles.

The court assessed that the clause in the contract had significantly increased consumer obligations and limited basic rights to check the quality of the vehicle before the transaction was completed.

The facts of the trial also revealed that Ms Li had submitted a postponement of unit retrieval due to financial constraints.

However, the company continues to produce vehicles and demands payment within seven days. If not fulfilled, the order is declared null and the down payment is charred.

The practice is considered to be against the principle of good faith in the agreement. In its consideration, the court referred to Xiaomi Auto's public statement in May 2024 which stated, "Xiaomi supports the remaining payments after vehicle inspection."

This statement is considered as the basis for consumer confidence when signing a contract, but the practice on the ground is different. The panel of judges then decided that Xiaomi was obliged to return an advance of 5,000 yuan and provide additional compensation with the same value.

The total that must be paid to consumers is 10.000 yuan, equivalent to IDR 23.5 million. This case is seen as an important precedent in China's automotive industry because it immediately targets the practice of full payment requests before the vehicle is handed over.

Low down payment business models, such as 5,000 yuan for SU7 and 20,000 yuan for the SU7 Ultra, previously pulled a spike in bookings. But the pressure from the decline in used car prices triggered an increase in cancellations, which prompted the company to tighten its payment scheme in the final stages of transactions.