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New Straits Times
25-06-2025
- Automotive
- New Straits Times
China auto industry inflates sales by exporting new cars as 'used
BEIJING/SHANGHAI: China's auto industry has inflated car sales for years through a burgeoning government-backed grey market that registers new cars right off the assembly line and then ships them overseas as "used" vehicles. These so-called "zero-mileage" cars have never been driven but are exported as used to markets like Russia, Central Asia and the Middle East. The practice allows Chinese automakers to show growth and offload inventory that would be difficult to sell domestically, according to a Reuters review of government documents and interviews with five auto dealers and traders. "This is the outcome of an almost four-year price war that has made companies desperate to book any sales possible," said Tu Le, Michigan-based founder of consultancy Sino Auto Insights. The practice only gained national attention after the boss of Chinese automaker Great Wall Motor criticised the sale of zero-mileage used cars within China in May. On June 10, the People's Daily condemned the practice. The paper, which often reflects the views of China's top Communist Party leadership, blamed such fake used cars for depressing prices during a severe domestic price war and called for "tough regulatory action" to restore order. Despite the criticism, the export of these fake used cars is actively encouraged by regional governments in China, according to a Reuters review of state media and government documents. Local authorities see the practice as crucial for meeting Beijing's ambitious economic growth targets. Reuters identified 20 local governments – including major export hubs like Guangdong and Sichuan – that expressed support for zero-mileage used car exports in publicly available policy documents. These include creating extra export licences, fast-tracking tax rebates, investing in export infrastructure, and funding trade networking events, documents showed. How the scheme works: As a new car rolls off the production line, an exporter purchases the vehicle from the automaker or dealer, registers it with a Chinese licence plate, and immediately labels it as second-hand for export. The automaker then books the sale and logs the revenue. Such support would make little sense outside China's centrally planned economy. But in China, meeting growth and employment targets can earn promotions or unlock more funding, while missing them can result in demotions of local officials. Because exporters both buy and sell the same vehicle, the transaction value is effectively doubled, allowing local governments to inflate gross domestic product statistics, two Chinese auto executives said. The practice is one sign that China's car industry – the world's largest – is producing more than it can sell domestically, fuelling a prolonged price war and intensifying global concerns about auto "dumping". Cui Dongshu, secretary general of the China Passenger Car Association, defended the practice during a panel discussion hosted by Tencent's news portal. He said it offered a workaround for reaching overseas markets that are hard to enter due to rising trade barriers. He added it helped satisfy demand in countries where Chinese brands had not yet established a foothold. Reuters contacted all the local governments mentioned in this article. None responded. China's State Council and commerce ministry did not respond to requests for comment. China's foreign ministry referred queries to "the department in charge" without elaborating. GOVERNMENT SUPPORT Local government backing takes many forms, such as simplifying paperwork, providing extra vehicle registration quotas, and offering free warehousing near China's borders, documents showed. In February 2024, Shenzhen's planning commission pledged to expand zero-mileage used car exports as part of a goal to export 400,000 vehicles of all types for the year. In neighbouring Guangzhou, authorities introduced a mechanism to speed up such exports by allocating additional vehicle registration quotas – otherwise restricted to combat traffic and air pollution. Xinmi, a district of Zhengzhou in Henan province, said in February it helped Xinjiasheng Supply Chain Management Co. Ltd "promote zero-mileage used car exports, in order to use exports to drive domestic sales." Reuters found a dozen local governments incorporating the practice into their strategic growth plans. Sichuan province said in an October policy document it helped create an "online export ecosystem for zero-mileage used NEVs" (new energy vehicles) via platforms such as Alibaba International, which now hosts 100 Sichuan-based used car sellers. Xinjiasheng Supply Chain Management and Alibaba did not respond to requests for comment. MARKET SHIFTS The practice emerged after China legalised used car exports in 2019. Since then, thousands of traders have been involved in labelling new vehicles as used to exploit the export channel, said Wang Meng, a consultant to the China Automobile Dealers Association. Of the 436,000 used passenger and commercial vehicles exported by China in 2024, 90 per cent are estimated to be zero-mileage, according to Wang. China overtook Japan as the world's largest new car exporter in 2023, shipping 6.41 million vehicles. About six per cent of these were zero-mileage used cars, Wang said. Dealers and experts said most zero-mileage used cars are petrol-powered and less appealing in China's increasingly EV-focused market. However, electric vehicles, which benefit from government subsidies, also make up a sizeable share. Chongqing-based Huanyu Auto entered the zero-mileage export business in 2022. "The returns were so good in 2022 and 2023 that we could earn 10,000 yuan (US$1,400) profit on a sedan bought for 40,000 yuan and sold in Central Asia," said William Ng, the firm's international market director. Criticism is building. On June 7, Zhu Huarong, chairman of Changan Automobile, urged a crackdown on such exports, warning it could "enormously damage Chinese brands' image" abroad. Changan did not respond to a request for further comment. Xing Lei, founder of US-based consultancy AutoXing, said the trend could make investors question Chinese automakers' sales figures. "How many are real or inflated? No one knows," Xing said. 'DUMPING' CONCERNS The growing number of new cars sold overseas as "used" is reinforcing fears that China is dumping state-subsidised vehicles into foreign markets, especially as US tariffs close one of its largest destinations. Several countries are starting to push back. Some worry the influx will overwhelm local dealers and confuse buyers. "We're definitely seeing friction and tension in markets where there are already manufacturers on the ground," said Michael Dunne, a consultant who tracks China's auto sector. In 2023, Russia banned zero-mileage used cars from brands with official distributors, affecting Chinese automakers like Chery, Changan and Geely, according to Heihe's commerce bureau. Geely declined to comment, while Chery and Changan did not respond. Other countries such as Jordan are tightening the legal definition of "used" by requiring longer post-registration or post-manufacture timelines before export. Ng of Huanyu Auto said competition from small-scale sellers and even influencers on platforms like TikTok is squeezing margins. "They used to sell vases and wine, and are now selling cars in the same way," he said. "This is chaos."
Time of India
24-06-2025
- Automotive
- Time of India
Local Chinese governments promote 'zero-mileage' used car exports, inflating sales, growth figures
China 's auto industry has inflated car sales for years through a burgeoning government-backed grey market that registers new cars right off the assembly line and then ships them overseas as "used" vehicles. These so-called "zero-mileage" cars have never been driven, but they are being exported as used to markets like Russia, Central Asia and the Middle East, allowing Chinese automakers to show growth and to dispose of cars that would be difficult to sell domestically, according to a Reuters review of government documents and interviews with five auto dealers and car traders. "This is the outcome of an almost-four-year price war that has made companies desperate to book any sales possible," said Tu Le , Michigan-based founder of consultancy Sino Auto Insights. The practice only gained national attention after the boss of Chinese automaker Great Wall Motor criticized the sale of zero-mileage used cars within China in May. On June 10, the People's Daily newspaper condemned the sale of zero-mileage used cars domestically. The paper, which often signals the positions of China's top Communist Party leaders, blamed these fake used cars for driving down prices amid a withering domestic price war and called for "tough regulatory action" to restore order. But the export and sale of fake used cars is actively encouraged by regional governments in China, according to a Reuters review of state media reports and government documents. Local governments have embraced the practice as vital to meeting ambitious targets for economic growth set by Beijing, according to a Reuters review of local policy documents and state media articles. Reuters has identified 20 local governments in China - including major export hubs like Guangdong and Sichuan - that have described their support for the export of zero-mileage used cars in publicly available government documents. The tactics include creating extra licenses for the export of zero-mileage used cars, fast-tracking tax rebate claims, investing in export infrastructure, and funding networking events to encourage zero-mileage used-car exports, the government documents showed. The zero-mileage used car export market works like this: as a fresh car emerges from the assembly line, an exporter buys the car either directly from the automaker or from a dealer, registers it with a Chinese license plate, and then immediately marks it as a second-hand car for shipping abroad. Along the way, the automaker books the car as sold and logs the revenue. The show of support from local governments would make little sense anywhere outside China's centrally planned economy. But here, showing rapid growth in sales and employment can bring about promotion or unlock new funding while missing economic targets that trickle down from Beijing can lead to demotions of local officials. Because these export firms both purchase and sell a single car, the transaction value is double that of new or used-car purchases, so local governments court them to set up shop on their turf to quickly and artificially boost their GDP statistics, two Chinese auto industry executives said. The tactic is only one sign that China's car industry - the world's largest - is allowing production to outpace demand, driving a protracted domestic price war and spurring accusations of automotive "dumping" abroad. Cui Dongshu , the secretary general of the China Passenger Car Association, praised the practice earlier this month during an online panel discussion hosted by Tencent's news portal, saying it was an alternative channel for automakers in China to access certain markets overseas that they may not be able to access due to rising trade barriers globally. He added that it also helped to satisfy overseas demand for China-made cars in countries where Chinese brands had yet to enter. Reuters contacted all the local governments mentioned in this article for comment but none responded. China's State Council and commerce ministry did not respond to a request for comment. GOVERNMENT SUPPORT Local government support has taken various forms, from simplifying paperwork, to allocating extra quotas for local vehicle registrations, to setting up free warehouses for zero-mileage used cars close to China's land and maritime borders, the Chinese documents showed. In February 2024, the planning commission of the southern city of Shenzhen, one of China's richest cities and a tech hub that is home to Huawei and Tencent, pledged to expand the export of zero-mileage used cars as part of efforts to reach an annual target to export 400,000 vehicles of all kinds. Nearby, the southern Chinese metropolis Guangzhou announced earlier this year it had created a mechanism to support and accelerate the export of zero-mileage gasoline vehicles by allocating extra quotas for local registrations that are otherwise capped to mitigate traffic congestion and air pollution in the city. Xinmi , a district of Zhengzhou, the provincial capital of China's third-most populous province of Henan, said in February that it helped local firm Xinjiasheng Supply Chain Management Co., Ltd to "promote zero-mileage used car exports, in order to use exports to drive domestic sales." Reuters found a dozen local governments were boosting the export of zero-mileage used cars as part of their strategy or core to their plans for growth. Sichuan province, one of China's most important economic engines, said in October in a policy document it had supported the creation of an "online export ecosystem for zero-mileage used NEVs" by promoting e-commerce platforms like Alibaba International, where 100 Sichuan-based used-car sellers are now active. Xinjiasheng Supply Chain Management and Alibaba did not respond to requests for comment. MARKET SHIFTS The practice began sometime after 2019 when China allowed used cars to be exported to other countries. Now thousands of traders are involved in passing off new cars as used to qualify for the channel, according to Wang Meng , a consultant for the China Automobile Dealers Association. Of the 436,000 used passenger and commercial vehicles exported by China in 2024, 90% are estimated to be "zero-mileage," Wang said. China overtook Japan to become the world's largest exporter of new cars in 2023 and exported 6.41 million vehicles last year, according to the China Passenger Car Association. Of these, about 6% would have actually been zero-mileage used cars, according to Wang's estimates. Two dealers and two industry experts said the majority of zero-mileage used cars are gasoline-powered and thus less desirable in the Chinese market. But electric vehicles, which are subject to generous government-funded purchase subsidies, also make up a significant portion. Huanyu Auto, a used-car seller in China's west metropolis of Chongqing, expanded to the zero-mileage used-car business in 2022. The returns were so good in 2022 and 2023 that they were able to earn 10,000 yuan ($1,400) in profit off an electric sedan that they had purchased in China for 40,000 yuan by selling it in Central Asia, said William Ng , director of the firm's international market division. Criticism has started to mount. On June 7, Zhu Huarong , chairman of Chinese automaker Changan, called for a crackdown on exports of zero-mileage used cars at a domestic auto conference, saying the practice could "enormously damage Chinese brands' image" abroad. Changan did not respond to a request for further comment. Xing Lei , the Massachusetts-based founder of consultancy AutoXing, which provides insights on Chinese EV companies to foreign investors, said the practice could cause foreign investors to assess Chinese automakers' sales skeptically. "How many are real or inflated? No one knows," he said. 'DUMPING' CONCERNS The proliferation of new cars being shipped for sale with "used" tags is reinforcing fears that China is dumping subsidized vehicles overseas, at a time when Beijing is scrambling to find export markets outside the United States, now heavily protected by tariffs. Some countries, concerned that the influx of cars will crowd out local dealers and confuse consumers, are starting to push back. "We're definitely seeing friction and tension in markets where there are already manufacturers on the ground there," said Michael Dunne , a consultant who closely follows the China auto industry. Russia in 2023 issued a government decree effectively banning zero-mileage used cars from brands that already had official distributors in the country. The commerce bureau of Heihe, a Chinese city that sits on the China-Russia border, said last November on its website that this applied to Chinese brands such as Chery, Changan, and Geely. Geely declined to comment, while Chery and Changan did not respond to requests for comment. Other countries' market regulators, including Jordan, are fine-tuning their definition of used cars by mandating a longer period after a vehicle's licensing or production before it is classified as used. Ng, of Huanyu Auto, said growing competition from new entrants such as mom-and-pop stores and even TikTokers selling zero-mileage used cars was causing the trade to become less lucrative. "They used to sell vases, wine, and are now selling cars in the same way," he said of the new entrants. "This is chaos."
Asahi Shimbun
24-06-2025
- Automotive
- Asahi Shimbun
Local Chinese governments promote ‘zero-mileage' used car exports, inflating sales, growth figures
A salesperson checks the interior of a second hand Hongqi HQ9 PHEV at a used car market in Beijing, China June 6, 2025. (REUTERS) BEIJING/SHANGHAI--China's auto industry has inflated car sales for years through a burgeoning government-backed grey market that registers new cars right off the assembly line and then ships them overseas as 'used' vehicles. These so-called 'zero-mileage' cars have never been driven, but they are being exported as used to markets like Russia, Central Asia and the Middle East, allowing Chinese automakers to show growth and to dispose of cars that would be difficult to sell domestically, according to a Reuters review of government documents and interviews with five auto dealers and car traders. 'This is the outcome of an almost-four-year price war that has made companies desperate to book any sales possible,' said Tu Le, Michigan-based founder of consultancy Sino Auto Insights. The practice only gained national attention after the boss of Chinese automaker Great Wall Motor criticized the sale of zero-mileage used cars within China in May. On June 10, the People's Daily newspaper condemned the sale of zero-mileage used cars domestically. The paper, which often signals the positions of China's top Communist Party leaders, blamed these fake used cars for driving down prices amid a withering domestic price war and called for 'tough regulatory action' to restore order. But the export and sale of fake used cars is actively encouraged by regional governments in China, according to a Reuters review of state media reports and government documents. Local governments have embraced the practice as vital to meeting ambitious targets for economic growth set by Beijing, according to a Reuters review of local policy documents and state media articles. Reuters has identified 20 local governments in China - including major export hubs like Guangdong and Sichuan - that have described their support for the export of zero-mileage used cars in publicly available government documents. The tactics include creating extra licenses for the export of zero-mileage used cars, fast-tracking tax rebate claims, investing in export infrastructure, and funding networking events to encourage zero-mileage used-car exports, the government documents showed. The zero-mileage used car export market works like this: as a fresh car emerges from the assembly line, an exporter buys the car either directly from the automaker or from a dealer, registers it with a Chinese license plate, and then immediately marks it as a second-hand car for shipping abroad. Along the way, the automaker books the car as sold and logs the revenue. The show of support from local governments would make little sense anywhere outside China's centrally planned economy. But here, showing rapid growth in sales and employment can bring about promotion or unlock new funding while missing economic targets that trickle down from Beijing can lead to demotions of local officials. Because these export firms both purchase and sell a single car, the transaction value is double that of new or used-car purchases, so local governments court them to set up shop on their turf to quickly and artificially boost their GDP statistics, two Chinese auto industry executives said. The tactic is only one sign that China's car industry – the world's largest – is allowing production to outpace demand, driving a protracted domestic price war and spurring accusations of automotive 'dumping' abroad. Cui Dongshu, the secretary general of the China Passenger Car Association, praised the practice earlier this month during an online panel discussion hosted by Tencent's news portal, saying it was an alternative channel for automakers in China to access certain markets overseas that they may not be able to access due to rising trade barriers globally. He added that it also helped to satisfy overseas demand for China-made cars in countries where Chinese brands had yet to enter. Reuters contacted all the local governments mentioned in this article for comment but none responded. China's State Council and commerce ministry did not respond to a request for comment. China's foreign ministry referred queries on the practice to 'the department in charge', without elaborating. GOVERNMENT SUPPORT Local government support has taken various forms, from simplifying paperwork, to allocating extra quotas for local vehicle registrations, to setting up free warehouses for zero-mileage used cars close to China's land and maritime borders, the Chinese documents showed. In February 2024, the planning commission of the southern city of Shenzhen, one of China's richest cities and a tech hub that is home to Huawei and Tencent, pledged to expand the export of zero-mileage used cars as part of efforts to reach an annual target to export 400,000 vehicles of all kinds. Nearby, the southern Chinese metropolis Guangzhou announced earlier this year it had created a mechanism to support and accelerate the export of zero-mileage gasoline vehicles by allocating extra quotas for local registrations that are otherwise capped to mitigate traffic congestion and air pollution in the city. Xinmi, a district of Zhengzhou, the provincial capital of China's third-most populous province of Henan, said in February that it helped local firm Xinjiasheng Supply Chain Management Co., Ltd to 'promote zero-mileage used car exports, in order to use exports to drive domestic sales.' Reuters found a dozen local governments were boosting the export of zero-mileage used cars as part of their strategy or core to their plans for growth. Sichuan province, one of China's most important economic engines, said in October in a policy document it had supported the creation of an 'online export ecosystem for zero-mileage used NEVs' by promoting e-commerce platforms like Alibaba International, where 100 Sichuan-based used-car sellers are now active. Xinjiasheng Supply Chain Management and Alibaba did not respond to requests for comment. MARKET SHIFTS The practice began sometime after 2019 when China allowed used cars to be exported to other countries. Now thousands of traders are involved in passing off new cars as used to qualify for the channel, according to Wang Meng, a consultant for the China Automobile Dealers Association. Of the 436,000 used passenger and commercial vehicles exported by China in 2024, 90% are estimated to be 'zero-mileage,' Wang said. China overtook Japan to become the world's largest exporter of new cars in 2023 and exported 6.41 million vehicles last year, according to the China Passenger Car Association. Of these, about 6% would have actually been zero-mileage used cars, according to Wang's estimates. Two dealers and two industry experts said the majority of zero-mileage used cars are gasoline-powered and thus less desirable in the Chinese market. But electric vehicles, which are subject to generous government-funded purchase subsidies, also make up a significant portion. Huanyu Auto, a used-car seller in China's west metropolis of Chongqing, expanded to the zero-mileage used-car business in 2022. The returns were so good in 2022 and 2023 that they were able to earn 10,000 yuan ($1,400) in profit off an electric sedan that they had purchased in China for 40,000 yuan by selling it in Central Asia, said William Ng, director of the firm's international market division. Criticism has started to mount. On June 7, Zhu Huarong, chairman of Chinese automaker Changan, called for a crackdown on exports of zero-mileage used cars at a domestic auto conference, saying the practice could 'enormously damage Chinese brands' image' abroad. Changan did not respond to a request for further comment. Xing Lei, the Massachusetts-based founder of consultancy AutoXing, which provides insights on Chinese EV companies to foreign investors, said the practice could cause foreign investors to assess Chinese automakers' sales skeptically. 'How many are real or inflated? No one knows,' he said. 'DUMPING' CONCERNS The proliferation of new cars being shipped for sale with 'used' tags is reinforcing fears that China is dumping subsidized vehicles overseas, at a time when Beijing is scrambling to find export markets outside the United States, now heavily protected by tariffs. Some countries, concerned that the influx of cars will crowd out local dealers and confuse consumers, are starting to push back. 'We're definitely seeing friction and tension in markets where there are already manufacturers on the ground there,' said Michael Dunne, a consultant who closely follows the China auto industry. Russia in 2023 issued a government decree effectively banning zero-mileage used cars from brands that already had official distributors in the country. The commerce bureau of Heihe, a Chinese city that sits on the China-Russia border, said last November on its website that this applied to Chinese brands such as Chery, Changan, and Geely. Geely declined to comment, while Chery and Changan did not respond to requests for comment. Other countries' market regulators, including Jordan, are fine-tuning their definition of used cars by mandating a longer period after a vehicle's licensing or production before it is classified as used. Ng, of Huanyu Auto, said growing competition from new entrants such as mom-and-pop stores and even TikTokers selling zero-mileage used cars was causing the trade to become less lucrative. 'They used to sell vases, wine, and are now selling cars in the same way,' he said of the new entrants. 'This is chaos.'
Yahoo
23-06-2025
- Automotive
- Yahoo
Exclusive-Local Chinese governments promote 'zero mileage' used car exports, inflating sales, growth figures
BEIJING/SHANGHAI (Reuters) -China's auto industry has inflated car sales for years through a burgeoning government-backed grey market that registers new cars right off the assembly line and then ships them overseas as "used" vehicles. These so-called "zero-mileage" cars have never been driven but they are being exported as used to markets like Russia, Central Asia and the Middle East, allowing Chinese automakers to show growth and to dispose of cars that it would be difficult to sell domestically, according to a Reuters review of government documents and interviews with five auto dealers and car traders. "This is the outcome of an almost-four-year price war that has made companies desperate to book any sales possible," said Tu Le, Michigan-based founder of consultancy Sino Auto Insights. The practice only gained national attention after the boss of Chinese automaker Great Wall Motor criticized the sale of zero-mileage used cars within China in May. On June 10 the People's Daily newspaper condemned the sale of zero-mileage used cars domestically. The paper, which often signals the positions of China's top Communist Party leaders, blamed these fake used cars for driving down prices amid a withering domestic price war and called for "tough regulatory action" to restore order. But the export and sale of fake used cars is actively encouraged by regional governments in China, according to a Reuters review of state media reports and government documents. Local governments have embraced the practice as vital to meeting ambitious targets for economic growth set by Beijing, according to a Reuters review of local policy documents and state media articles. Reuters has identified 20 local governments in China - including major export hubs like Guangdong and Sichuan - that have described their support for the export of zero-mileage used cars in publicly available government documents. The tactics include creating extra licenses for the export of zero-mileage used cars, fast-tracking tax rebate claims, investing in export infrastructure, and funding networking events to encourage zero-mileage used-car exports, the government documents showed. The zero-mileage used car export market works like this: as a fresh car emerges from the assembly line, an exporter buys the car either directly from the automaker or from a dealer, registers it with a Chinese license plate, and then immediately marks it as a second-hand car for shipping abroad. Along the way, the automaker books the car as sold and logs the revenue. The show of support from local governments would make little sense anywhere outside China's centrally planned economy. But here, showing rapid growth in sales and employment can bring about promotion or unlock new funding while missing economic targets that trickle down from Beijing can lead to demotions of local officials. Because these export firms both purchase and sell a single car, the transaction value is double that of new or used-car purchases, so local governments court them to set up shop on their turf to quickly and artificially boost their GDP statistics, two Chinese auto industry executives said. The tactic is only one sign that China's car industry – the world's largest – is allowing production to outpace demand, driving a protracted domestic price war and spurring accusations of automotive "dumping" abroad. CuiDongshu, the secretary general of the China Passenger Car Association, praised the practice earlier this month during an online panel discussion hosted by Tencent's news portal, saying it was an alternative channel for automakers in China to access certain markets overseas that they may not be able to access due to rising trade barriers globally. He added that it also helped to satisfy overseas demand for China-made cars in countries where Chinese brands had yet to enter. Reuters contacted all the local governments mentioned in this article for comment but none responded. China's State Council and commerce ministry did not respond to a request for comment. GOVERNMENT SUPPORT Local government support has taken various forms, from simplifying paperwork, to allocating extra quotas for local vehicle registrations, to setting up free warehouses for zero-mileage used cars close to China's land and maritime borders, the Chinese documents showed. In February 2024, the planning commission of the southern city of Shenzhen, one of China's richest cities and a tech hub that is home to Huawei and Tencent, pledged to expand the export of zero-mileage used cars as part of efforts to reach an annual target to export 400,000 vehicles of all kinds. Nearby, the southern Chinese metropolis Guangzhou announced earlier this year it had created a mechanism to support and accelerate the export of zero-mileage gasoline vehicles by allocating extra quotas for local registrations that are otherwise capped to mitigate traffic congestion and air pollution in the city. Xinmi, a district of Zhengzhou, the provincial capital of China's third-most populous province of Henan, said in February that it helped local firm Xinjiasheng Supply Chain Management Co., Ltd to "promote zero-mileage used car exports, in order to use exports to drive domestic sales." Reuters found a dozen municipalities were boosting the export of zero-mileage used cars as part of their strategy or core to their plans for growth. Sichuan province, one of China's most important economic engines, said in October in a policy document it had supported the creation of an "online export ecosystem for zero-mileage used NEVs" by promoting e-commerce platforms like Alibaba International, where 100 Sichuan-based used-car sellers are now active. Xinjiasheng Supply Chain Management and Alibaba did not respond to requests for comment. MARKET SHIFTS The practice began sometime after 2019 when China allowed used cars to be exported to other countries. Now thousands of traders are involved in passing off new cars as used to qualify for the channel, according to Wang Meng, a consultant for the China Automobile Dealers Association. Of the 436,000 used passenger and commercial vehicles exported by China in 2024, 90% are estimated to be "zero-mileage," Wang said. China overtook Japan to become the world's largest exporter of new cars in 2023 and exported 6.41 million vehicles last year, according to the China Passenger Car Association. Of these, about 6% would have actually been zero-mileage used cars, according to Wang's estimates. Two dealers and two industry experts said the majority of zero-mileage used cars are gasoline powered and thus less desirable in the Chinese market. But electric vehicles, which are subject to generous government-funded purchase subsidies, also make up a significant portion. Huanyu Auto, a used-car seller in China's west metropolis of Chongqing, expanded to the zero-mileage used-car business in 2022. The returns were so good in 2022 and 2023 that they were able to earn 10,000 yuan ($1,400) in profit off an electric sedan that they had purchased in China for 40,000 yuan by selling it in Central Asia, said William Ng, director of the firm's international market division. Criticism has started to mount. On June 7, Zhu Huarong, chairman of Chinese automaker Changan called for a crackdown on exports of zero-mileage used cars at a Chinese auto conference, saying the practice could "enormously damage Chinese brands' image" abroad. Changan did not respond to a request for further comment. Xing Lei, the Massachusetts-based founder of consultancy AutoXing which provides insights on Chinese EV companies to foreign investors, said the practice could cause foreign investors to assess Chinese automakers' sales skeptically. "How many are real or inflated? No one knows," he said. 'DUMPING' CONCERNS The proliferation of new cars being shipped for sale with "used" tags is reinforcing fears that China is dumping subsidized vehicles overseas, at a time when Beijing is scrambling to find export markets outside the United States, now heavily protected by tariffs. Some countries, concerned that the influx of cars will crowd out local dealers and confuse consumers, are starting to push back. "We're definitely seeing friction and tension in markets where there are already manufacturers on the ground there," said Michael Dunne, a consultant who closely follows the China auto industry. Russia in 2023 issued a government decree effectively banning zero-mileage used cars from brands that already had official distributors in the country. The commerce bureau of Heihe, a Chinese city that sits on the China-Russia border, said last November on its website that this applied to Chinese brands such as Chery, Changan, and Geely. Geely declined to comment while Chery and Changan did not respond to requests for comment. Other countries' market regulators, including Jordan, are finetuning their definition of used cars by mandating a longer period after a vehicle's licensing or production before it is classified as used. Ng, of Huanyu Auto, said growing competition from new entrants such as mom-and-pop stores and even TikTokers selling zero-mileage used cars was causing the trade to become less lucrative. "They used to sell vases, wine and are now selling cars in the same way," he said of the new entrants. "This is chaos."
The Star
28-05-2025
- Automotive
- The Star
China auto price war fuels industry shakeout fears
AN intensifying auto industry price war in China has stoked fears of a long-anticipated shake-out in the world's largest car market. Shares of China's largest automakers sank on Monday after Chinese electric-vehicle (EV) giant BYD offered fresh discounts across more than a dozen models, and an executive at another car company fretted openly about the country's deepening price war. BYD's moves cut the starting price of its cheapest model, the battery-powered Seagull hatchback, to 55,800 yuan (US$7,765), from nearly US$10,000. The BYD price cuts, along with other developments, signal a potential tipping point, where weaker players can no longer sustain deepening losses from the downward spiral on prices, said Tu Le, managing director of Sino Auto Insights, an advisory firm. 'This points to a bloodbath later this year,' he said. 'This could be the first domino that would finally put pressure on weaker players – startups like Neta and Polestar – that have been teetering.' Last Friday, the chairman of Great Wall Motors, Wei Jianjun, warned that China's auto sector was in an unhealthy state, with pricing pressure hammering the bottom lines of car companies and suppliers. He even drew a parallel to Evergrande, the Chinese property developer that was liquidated last year after a major debt crisis. 'Now, Evergrande in the automobile industry already exists, but it has not collapsed,' he told Sina Finance in an interview. In another sign of stress in the market, Reuters reported that Chinese commerce regulators are examining a growing phenomenon that has also strained the industry: sales of 'used cars' that are essentially new cars with zero miles. The tactic is seen as a way for automakers and dealers to hit aggressive sales targets, a person familiar with the matter told Reuters. A slew of startup companies have piled into China's car market over the past decade, drawn by the burgeoning EV sector. The market has grown crowded with cut-throat price competition and most companies sustaining heavy losses. Of the 169 automakers operating in China today, more than half have less than 0.1% market share, according to data from research firm Jato Dynamics. The crowded field is reminiscent of the US auto sector in the early 20th century, when more than 100 companies vied with big players such as Ford, before the industry consolidated. Le said the price war has lasted roughly three years. Carmakers once enjoyed a premium for advanced features such as driver-assistance systems that take control of steering and braking in certain situations, but now more have been offering these as part of the sticker price. Last week, China's state planner cautioned that competition in some industries was getting too heated, with some companies even selling their cars below cost, disrupting fair competition. Last Friday, Wei, the Great Wall chairman, warned the prolonged price war was harming the automotive supply chain. Some suppliers are at risk of going under because of pressure from car companies to lower their prices, he said. 'Some products have been reduced from 220,000 yuan to 120,000 yuan in the past few years,' he said, without naming companies. 'What kind of industrial products can be reduced by 100,000 yuan and still have quality assurance?' Still, predictions of consolidation in China's car market have gone on for years, but the field has only grown, said Michael Dunne, a consultant who closely follows the China auto industry. 'BYD's price cuts will drive out some of the weaker players,' he said. 'But for every casualty here comes a new Xiaomi or Huawei barrelling into the arena.' — Reuters Norihiko Shirouzu writes for Reuters. The views expressed here are the writer's own.
