China’s burgeoning electric vehicle (EV) market, a global powerhouse in both production and sales, is confronting a critical challenge to its market integrity. Authorities are now poised to introduce stringent measures aimed at curbing a widespread “zero-mileage” sales scheme. This deceptive practice involves registering and insuring vehicles without their actual sale to end-users, thereby artificially inflating sales figures amid intense industry competition and significant overcapacity. This decisive action underscores Beijing’s commitment to cultivating a more transparent and equitable automotive sector.
- China’s EV market faces significant integrity challenges due to “zero-mileage” sales.
- This practice involves registering and insuring unsold vehicles to inflate reported sales figures.
- The Ministry of Industry and Information Technology (MIIT) proposes a six-month resale embargo on newly registered vehicles.
- Prominent EV brands, Neta and Zeekr, have been accused of substantially inflating sales.
- Beijing aims to foster greater market transparency and ensure reported sales reflect genuine demand.
Understanding the “Zero-Mileage” Phenomenon
The “zero-mileage” phenomenon refers to a deceptive sales tactic in which new vehicles are prematurely registered and frequently insured by manufacturers or dealerships. This enables companies to categorize these vehicles as “sold” for official reporting, despite them remaining unsold inventory. Such practices are primarily fueled by aggressive internal sales quotas, persistent overcapacity, and fierce price wars, especially prevalent within the highly competitive electric vehicle sector, ultimately leading to manipulated performance metrics.
Regulatory Response and Industry Initiatives
In a direct response to these concerns, China’s Ministry of Industry and Information Technology (MIIT) is reportedly evaluating a six-month embargo on the resale of newly registered vehicles. This proposed measure, highlighted by Auto Review – a publication affiliated with the China Association of Automobile Manufacturers (CAAM) – marks Beijing’s most forthright attempt to date at addressing this pervasive issue. The objective is to prevent the misuse of insurance and licensing data for the purpose of recording inflated sales, thereby enforcing truly genuine market transactions.
This issue has attracted considerable national scrutiny, including public condemnation from prominent industry figures such as Great Wall Motor’s CEO, Wei Jianjun, and a critical editorial published in the Communist Party’s official newspaper, People’s Daily. Concurrently, China’s cabinet has affirmed its commitment to enhancing supervision over the domestic automotive market. In light of these developments, major automakers including BYD and Chery are reportedly assessing potential penalties for dealerships found to be pre-licensing unsold vehicles. Additionally, the China Automobile Dealers Association has put forth a proposal for a comprehensive code system designed to track used car exports, intending to mitigate existing policy loopholes.
Case Studies and Industry Impact
Recent investigative reports, notably those from Reuters, have brought to light the extensive nature of these practices across the industry. For example, two prominent Chinese electric vehicle brands, Neta (an entity of Zhejiang Hozon New Energy Automobile) and Zeekr (a premium marque under Geely Auto), have faced serious accusations of significantly inflating their sales figures. Neta is reported to have pre-insured more than 64,000 vehicles between January 2023 and March 2024. This figure alone accounts for over half of its publicly reported sales during that specific timeframe, with buyers often encountering problems when their insurance policies expired prematurely. Similarly, Zeekr allegedly recorded inflated year-end sales in 2024 via its state-owned dealership partner, Xiamen C&D. Data suggests a substantial discrepancy between Zeekr’s reported sales and the actual number of vehicle registrations for license plates, which are a mandatory prerequisite for delivery to legitimate purchasers. Zeekr has formally denied these state media reports, while Neta and Xiamen C&D have refrained from comment.
Outlook and Market Integrity
The impending regulatory actions signify a critical juncture for China’s automotive industry. By decisively addressing practices that undermine market transparency and integrity, Beijing aims to cultivate a more sustainable and equitable competitive landscape. This strategic shift seeks to ensure that reported sales figures accurately mirror genuine consumer demand, rather than reflecting manipulated inventory movements or fictitious transactions.
Oliver brings 12 years of experience turning intimidating financial figures into crystal-clear insights. He once identified a market swing by tracking a company’s suspiciously high stapler orders. When he’s off the clock, Oliver perfects his origami… because folding paper helps him spot market folds before they happen.