China’s Auto Industry Under Fire for Inflating Sales with Zero-Mileage Exports

China’s auto industry has come under scrutiny for allegedly inflating its sales figures by exporting brand-new cars as “used.” This practice, known as the “zero-mileage” scheme, involves registering new vehicles as used before exporting them to overseas markets. The scheme has been reported to have been running since 2019, with the backing of local governments eager to boost their regional GDP to meet performance targets set by Beijing.

At least 20 jurisdictions, including major export areas such as Guangdong and Sichuan, have publicly supported or facilitated the export of zero-mileage used cars through tax incentives, infrastructure support, and special export licenses. For instance, Shenzhen’s development commission announced plans to include zero-mileage used cars in its target to export 400,000 vehicles in 2024. Guangzhou created new vehicle registration quotas specifically for zero-mileage gasoline cars, despite environmental restrictions. In Sichuan, authorities partnered with e-commerce platforms to promote the online sale of these cars.

The primary goal of this scheme is to show sales growth and hit performance targets at any cost. This practice has led to an explosion in used car exports, with industry insiders estimating that 90% of China’s 436,000 used car exports in 2024 were, in fact, zero-mileage. Each transaction involves both a “new car sale” and a “used car export,” which means the economic activity is recorded twice, further boosting GDP tallies. This makes these transactions particularly attractive for regional officials looking to curry favor with Beijing.

Critics warn that this practice not only threatens the credibility of China’s carmakers on a global scale but could also trigger retaliation from foreign regulators already wary of China’s growing dominance in the global auto market. The mass export of new vehicles labeled as “used” is distorting foreign markets and fueling accusations that China is “dumping” unwanted vehicles overseas to relieve domestic overcapacity.

Russia, one of the largest recipients of these cars, issued a decree in 2023 banning zero-mileage used cars from manufacturers with official distributors, directly targeting Chinese brands such as Chery, Geely, and Changan. Other countries are also beginning to tighten definitions of “used cars” to stop the exploitation of this loophole. Jordan, for instance, is mandating a waiting period after a car is registered before it can be classified as used.

The influx of these vehicles is creating friction in markets with established manufacturers and dealership networks. It’s not just about market share—it’s about trust. Back in China, some company executives are beginning to distance themselves from the practice. Zhu Huarong, the chairman of Changan, warned at a recent conference that zero-mileage exports could “enormously damage Chinese brands’ image” overseas. Xing Lei, who runs the U.S.-based consultancy, AutoXing, also expressed his concern regarding the practice. “If investors start wondering how many sales are real and how many are padded, confidence in the sector could collapse,” he said.

Excess production has ignited a bitter price war among automakers, and even subsidized electric vehicles are being offloaded in overseas markets for quick cash. William Ng of Huanyu Auto in Chongqing said his company earned as much as 10,000 yuan, which is about $1,400, in profit per vehicle by reselling EVs bought for 40,000 yuan in Central Asia. Ng complained that independent traders, livestreamers, and TikTok influencers were flooding the zero-mileage used car market, likening it to “selling wine or vases one day and cars the next.”

People’s Daily recently condemned the sale of zero-mileage cars within China, but the government has remained silent on the export practice. Neither the State Council nor the commerce ministry responded to requests for comment. On the other hand, the China Passenger Car Association boldly defended the practice as a strategic workaround for global trade barriers, particularly in markets where Chinese brands face entry restrictions or lack consumer recognition.