Chinese Auto Industry Caught Inflating Sales By Selling 0-Mileage Used Cars As New Cars
The Chinese automotive market is inflating sales of new car exports. However, government-assisted grey market used cars have been recording them as new cars. These cars are exported to markets like Saudi Arabia, Russia and Central Asia
The issue was highlighted after the head of the brand, Great Wall Motor, criticised the sale of zero-mileage used cars in May. In June, a newspaper, the People’s Daily, also condemned this practice. The paper positions with China’s Communist Party leaders, pinning the blame on the fake used cars, which are driving the prices down in the middle of a domestic price war.
Support From The Local Government
Interestingly, this practice is encouraged by the local governments. At the time of exporting these cars to other markets, the local governments ensure to give certain liberties to car dealers. These range from extra licensing for the export of 0-mileage cars, fast-tracking of tax rebates, investment in export infrastructure, and funding of networking events which promote the sale of 0-mileage used car exports.
Process
The process of exporting a 0-mileage used car happens after a fresh car emerges from the assembly line. The exporter purchases the car, registering it as a Chinese vehicle. The exporter then marks it as a second-hand car for shipping internationally. In this process, the automaker registers the car as sold and logs the revenue.
The tactic shows China’s auto industry is overproducing, triggering a prolonged price war and foreign dumping accusations. It is important to remember that US tariffs can be forcing the country to develop an alternative export market. This helps meet overseas demand in countries where Chinese brands haven’t yet entered.
Implications Of The Tactic
After China allowed used car exports in 2019, traders began labelling new cars as used to bypass restrictions. In 2024, 90% of China’s 4,36,000 used vehicle exports had zero mileage, raising concerns about inflated sales figures. Critics warn that the practice could damage Chinese brands’ image and mislead foreign investors’ perception of the market.
These tactics have caused dumping concerns in the minds of a few countries. The reason can be attributed to China not having a significant export market outside of United States. Countries like Russia have banned the sale of 0-mileage used cars.
Outlook
Notably, this influx of cars will crowd the local dealers and confuse consumers in the process, causing concern in a few countries. Additionally, the various countries that share borders with China are fine-tuning the regulations regarding the sale of 0-mileage used cars within their territory.
