In recent times, the Chinese car market has been hit by a wave of “zero-kilometer used cars”. These vehicles, although labeled as second-hand cars, are actually new cars with extremely low mileage, already registered but not actually used. A recent investigation by Chinese media has revealed that behind this phenomenon lies a complex grey industry chain, disrupting market order and reflecting a deep crisis of imbalance in supply and demand as well as structural risks in the Chinese automotive industry.
According to a report by the “Daily Economic News” on June 10, on mainstream second-hand car trading platforms such as “Dongchedi” and “Xianyu”, thousands of “almost new cars” with less than a year old and mileage below 100 kilometers are prominently listed, covering almost all mainstream car brands in China.
At a used car market in Beijing, a certain brand’s “second-hand car” still had its body protection film and seat plastic covers intact, the new car smell was strong inside the car, and the dashboard displayed only 100 kilometers mileage, yet its selling price was nearly 110,000 yuan lower than the manufacturer’s suggested retail price for a new car.
Used car dealers admit that these vehicles are essentially new cars, but they complete the registration procedures in advance in the name of selling them as second-hand cars. An industry insider pointed out that new energy car companies, concerned about battery degradation, are particularly urgent in dealing with inventory, exacerbating this chaos.
The “zero-kilometer used cars” mainly originate from the following three channels:
1. Manufacturer’s “resource cars”: Original equipment manufacturers (OEMs) sell to “major customers” in bulk at a discount far lower than the market price to digest inventory or deal with old models.
2. 4S dealership’s “pushing volume cars”: Dealerships, to meet manufacturer sales targets or implement “full support, full tax” policies, manufacture false sales records by registering vehicles themselves.
3. Direct brand’s “canceled booking cars”: New energy car companies see vehicles returned due to consumer order cancellations. Some companies even incentivize sales staff to purchase cars in their own names, then “lease back” to the store as test drive vehicles, which later flow into the second-hand car market.
The report analyzes that the proliferation of this abnormal sales mode of “zero-kilometer used cars” is closely related to the peculiar sales mechanisms of the automotive industry. Dealers, by registering vehicles in large quantities that are about to be discontinued prior to model updates, end of quarter, end of year, or concentrated price cuts for new models, can accelerate fund turnover and meet the promotional assessments of OEMs, by then selling them at low prices under the guise of “second-hand cars”. This not only reduces on-paper losses but also includes sales performance, in hope of obtaining year-end rebates from manufacturers.
At the same time, China’s export of second-hand cars has surged in recent years, with new cars disguised as “zero-kilometer used cars”. A senior expert revealed that since 2023, a large number of “zero-kilometer used cars” have flowed through border ports to Central Asia and even been diverted to Russia. Enterprises and traders take advantage of the 13% or 3% value-added tax refund policies available for second-hand car exports and import restrictions on new cars in some countries.
Last year, Tencent and NetEase published an article under the name “Shuocaicat”, citing insider information revealing that BYD, NIO, and other car companies, in order to achieve sales targets, sold their brand new cars in bulk through internal channels to used car dealers, with these vehicles’ mileage marked as “0.01 kilometers” or “100 kilometers”.
The article disclosed that car companies like BYD (FCEV 5) and NIO (EC6, ET5) have similar “transactional collaborations” with used car dealers, involving sales fraud with significant complexities.
In May of this year, Wei Jianjun, Chairman of Great Wall Motors, once again publicly exposed the chaos of “zero-kilometer used cars” in the industry. He bluntly stated that these so-called “zero-kilometer used cars” are cars for which the registration procedures have been completed after obtaining license plates, making it seem like the vehicles have been sold, only to return to the hands of used car dealers.
Wei Jianjun, in an interview with Sina Finance, issued a warning regarding this phenomenon, stating that this chaos has affected multiple trading platforms involving thousands of dealers. Some heavily indebted car companies are using this method to mask operational risks.
According to data from the China Association of Automobile Manufacturers, from January to May 2024, the scale of price reductions in the Chinese automotive market has exceeded 90% of the total volume for the entire year of 2023, with new energy vehicles generally mired in loss-making sales. While sustained price wars may stimulate sales in the short term, it further intensifies industry competition, severely compresses car company profit margins, and poses a serious threat to the long-term stability of the entire industry chain.