How China pads car sales, growth tallies

New autos exported as ‘used’ since 2019

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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 criticised 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.