Li Auto to Adjust Retail Network, Closing Underperforming Stores

As of now, Li Auto has established 662 service stores, covering 384 cities.

According to Chinese media reports, Li Auto is planning channel adjustments.

Informed sources revealed that Li Auto will subsequently close some underperforming stores. The process is currently still in the assessment phase, and the exact number of stores to be closed is unknown. It is reported that most of these stores slated for closure were established during Li Auto’s previous expansion phase.

Public information shows that over the past five years, Li Auto’s channel expansion was most aggressive in 2023, adding 179 retail centers within a single year.

Li Auto’s channel adjustment stems directly from the decline of a core metric: store efficiency.

Calculations estimate that Li Auto’s average annual deliveries per store in 2025 were approximately 741 vehicles. Compared to 2024, this efficiency indicator declined by over 25% year-on-year.

In 2023, Li Auto achieved a 182.2% year-on-year surge in deliveries with 376,000 vehicles. However, by 2025, despite the continued expansion of its retail network (increasing to 548 stores), its annual deliveries fell back to approximately 410,000 vehicles, falling short of the company’s expectations.

The focus of this round of adjustments has been explicitly defined as “closing unprofitable mall stores.”

Li Auto’s direct sales model requires the company to bear all operational costs of its stores. When per-store output declines, underperforming stores directly erode profits. Stores opened during the peak expansion period around 2023, particularly those in non-core areas or overly competitive commercial districts, have become key targets for this assessment.

Li Auto’s financial report data indicates that the company is currently facing severe profitability challenges.

The data shows that in the third quarter of 2025, after 11 consecutive quarters of profitability, the company recorded its first net loss for a single quarter, amounting to approximately 624 million yuan. This was mainly impacted by the MEGA recall incident, which directly led to a decline in the gross margin for that quarter. Excluding the recall costs, its gross margin for the quarter would have been 20.4%.

The decline in deliveries coupled with the recall event has put pressure on the company’s cash flow and profits. Closing underperforming stores is a direct measure for “reducing expenditure” and optimizing the cost structure.

During the 2025 Q3 earnings conference call, Li Xiang, CEO of Li Auto, stated that the company would return to a startup-style management model, with the core focus being on continuously improving efficiency rather than acquiring more resources.

This channel adjustment will also be part of the efficiency management efforts.

While optimizing existing stores, Li Auto simultaneously adopted a lighter approach to expansion. In mid-2025, Li Auto launched the “Hundred Cities, Myriad Stars” plan. This asset-light partnership model retains sales and service operations under Li Auto’s direct management, while partners bear the costs of heavy assets like store decoration and equipment. This model aims to penetrate lower-tier markets at a lower cost.

As of now, Li Auto has established 662 service stores, covering 384 cities.