Seres, Huawei and Chongqing: An Auto City at a Crossroads

Chongqing, the city that reclaimed the title of China’s top automotive production hub in 2025, now finds itself navigating one of the most challenging periods in its industrial history. A visit by Mayor Chen Xinwu to Seres Group underscored official concern: output is contracting, growth momentum has stalled, and the high-profile partnership that drove the city’s electric vehicle surge is undergoing a fundamental restructuring. What unfolds next will shape not just the fortunes of one manufacturer, but the future of China’s most important automotive ecosystem.

The Numbers Tell a Story of Sharp Reversal

In 2025, Chongqing produced 2.788 million vehicles, 8.0% of the national total, and stood first among Chinese cities. That position is now under threat. For the first eight months of 2026, overall production fell 12.6% year‑on‑year, with the decline accelerating from a 10.1% drop in the January–July period. August alone saw output plummet 28%: 168,900 vehicles compared with 234,800 in the same month of 2025. Most striking of all: the auto industry’s value‑added output recorded zero growth in the first eight months, meaning the sector is treading water even as the broader market shifts.

Seres Group, one of Chongqing’s two “hundred‑billion‑yuan” automakers, is central to this slowdown. In the first half of the year, Seres’ new energy vehicle sales appeared solid at 178,800 units, up 3.87% year‑on‑year. But by August, the picture had darkened dramatically: total NEV sales fell to just 24,700 units, down 42.55% year‑on‑year, while Seres‑branded vehicles dropped 46.91% to 21,300 nearly halved in a single month.

The AITO Adjustment: Restructuring or Breakup?

The catalyst for this turbulence came on September 15, when Huawei and Seres announced a revised operating model for their jointly created AITO brand. Widely interpreted in markets as a “breakup,” the reality is a transfer of control rather than a termination of ties. Under the new arrangement, Seres takes the lead across four core domains: product definition, marketing, sales channels, and after‑sales services. Huawei remains involved as a strategic partner and shareholder in Yinwang Intelligent Technology the joint venture entity in which Seres holds a 10% stake but its role shifts from front‑line operator to technology enabler.

Feng Lei, president of the Firestone Industrial Research Institute, frames the transition as both necessary and risky. Short‑term uncertainty is unavoidable: many AITO buyers were drawn specifically by the “Huawei certainty” the brand’s prestige, its ecosystem integration, and its reputation for software excellence. As store displays, sales messaging, and over‑the‑air update priorities are reoriented toward Seres, demand in the premium 400,000–500,000 yuan (US$60,000–75,000) price bracket is expected to soften. Yet Feng also notes that the M9 and M8 models have genuine independent strength: the M9 has topped sales in the 500,000 yuan segment for two consecutive years with cumulative deliveries exceeding 300,000 units, and the M8 dominates its own category. The challenge is not that the products lack appeal it is whether Seres can translate “Huawei endorsement” into a sustainable premium built on its own R&D, manufacturing efficiency, and brand equity. If it cannot, both pricing power and sales volume could erode in tandem.

Huawei’s Evolving Footprint: Beyond “No Car Manufacturing”

The AITO restructuring is part of a broader reconfiguration of Huawei’s automotive ambitions. For years, the company has maintained it “does not make cars,” but the reality is nuanced. Through its Harmony Intelligent Mobility Alliance (HIMA), Huawei’s Consumer Business Group led by Richard Yu has exercised decisive influence over product design, technology, branding, and distribution, with manufacturing partners largely handling production and supply chain execution. HIMA has functioned as an ecosystem rather than a single brand, spanning partners including Seres, Chery, JAC, BAIC, and SAIC.

The formation of Yinwang Intelligent Technology and the “Huawei Qiankun” intelligent automotive solutions arm has broadened this model further. New “Jing Mode” partnerships with GAC and Dongfeng now deploy identical technology under the “Huawei Qiankun” banner, diluting the exclusive association once enjoyed by AITO. For Seres, this means the unique competitive advantage it held being first and closest to Huawei’s consumer ecosystem, is being integrated into a wider platform available to rivals.

Chongqing’s Double Transition Challenge

The slump in Seres’ growth has exposed deeper structural vulnerabilities in Chongqing’s automotive economy. The city’s rapid rise to number one masked a difficult reality: it remains heavily reliant on internal combustion engine production, and the shift to electric vehicles has not proceeded fast enough to fill the gap left by falling petrol‑car sales. In the first eight months of 2026, NEV production in Chongqing grew by only 4.6% too modest to offset the sharp decline in traditional vehicle output. The city’s “twin pillars” Seres and Changan Automobile, are both under pressure: Changan’s first‑half production and sales fell 12.67% and 17.44% respectively, while Seres’ August figures reflect a steeper decline still.

Feng Lei characterises Chongqing’s difficulty not as a local decline but as the concentrated impact of national trends: domestic vehicle sales down roughly 22% year‑on‑year, exports up 66.7%, and NEV growth nationally at 10.8%. Chongqing’s profile — strong assembly base, robust component localisation at 45%, but relatively modest profit margins leaves it exposed when domestic demand contracts and export capacity takes time to build. The pattern described as “volume down, price down, value propped up only by product mix” is increasingly visible.

Government‑Enterprise Collaboration: The New Phase

Against this backdrop, Mayor Chen Xinwu’s inspection visit was more than a formality it was a signal of intervention. The mayor called for “high‑quality development through government‑enterprise collaboration,” directing municipal and district authorities to establish permanent support mechanisms, optimise policy around R&D, talent recruitment, and consumption incentives, and resolve practical bottlenecks facing enterprises. The message is clear: Chongqing will not allow its most strategic industrial sector to falter.

For Seres, this means moving beyond reliance on Huawei’s channels to building independent capabilities in research, branding, management, and overseas expansion. The city’s 15th Five‑Year Plan envisions an automotive industry exceeding 1 trillion yuan in value, with full control over supply chains and globally competitive product lines. Achieving that vision will require not just recovering lost ground but leapfrogging into a new phase of autonomous strength.

Chongqing stands at a defining moment. The partnership that catapulted Seres to national prominence is evolving; the market is more competitive than ever, and the transition from petrol to electric vehicles demands accelerated investment and re‑skilling. Yet the foundations remain strong: deep manufacturing expertise, a vast supplier network, and the backing of a city determined to maintain its industrial leadership. The question for Seres and Chongqing is the same: can they turn a period of vulnerability into a moment of renewal? The answer will determine not just who sells cars in China, but who builds the next generation of mobility.