China Considers Six-Month Ban on Resale of Newly Registered Vehicles to Curb Zero-Mileage Sales

China's Ministry of Industry and Information Technology is considering a six-month embargo on the resale of newly registered vehicles. This move is aimed at curbing the practice of "zero-mileage" used car sales, where vehicles are technically classified as used despite never having been driven or transferred to actual buyers. Automakers and dealers achieve this by registering cars and insuring them before final sale, allowing them to meet aggressive internal sales quotas and report stronger performance figures.

The zero-mileage phenomenon has become a significant issue in China's highly competitive car market. The practice involves automakers and dealers registering and insuring vehicles before they are sold to actual buyers. This allows them to meet sales quotas and report inflated performance figures. The measure, if implemented, would prevent any vehicle from being resold within six months of registration, curbing the manipulation of insurance and licensing data to record inflated sales.

The issue gained national attention in May after Great Wall Motor’s CEO, Wei Jianjun, publicly criticized the scheme. The Communist Party’s People’s Daily also ran an editorial last month condemning the sale of zero-mileage used cars. China’s cabinet recently pledged to increase its supervision of the domestic auto market. Automakers, including BYD and Chery, are now considering penalizing dealers who engage in practices like pre-licensing unsold vehicles.

The China Automobile Dealers Association has also proposed a code system for tracking used car exports, which could further limit abuse of the policy loophole. New revelations exposed how two Chinese electric vehicle brands, Zeekr and Neta, booked tens of thousands of sales using the pre-insurance tactic. Neta, owned by Zhejiang Hozon New Energy Automobile, pre-insured over 64,000 vehicles between January 2023 and March 2024, which accounts for more than half of its reported sales during that period.

In many cases, buyers were unaware that the insurance had already begun and only discovered the discrepancy when the insurance policies expired sooner than expected. The dealers are claiming they were pressured to move the inventory and explain away early-expiring traffic insurance as “complimentary.” The strategy reportedly began in late 2022 and continued well into 2024, even as the company’s finances deteriorated. Neta’s parent company entered bankruptcy proceedings last month, and first-quarter sales for 2025 plunged to just over 1,200 vehicles.

Zeekr, a premium EV brand owned by Geely Auto, similarly recorded inflated year-end sales in 2024 with the help of its state-owned dealership partner. Data showed that out of the 2,737 cars “sold” in Xiamen that month, only 271 were actually registered for license plates, which is a necessary step for delivery to real buyers. The buyers reported being lured into purchasing these cars with discounts and promotional offers. One Zeekr customer said a salesperson promised a 3,000 yuan discount and a 10,000 yuan charging coupon, but the car came with a pre-existing insurance policy registered under Xiamen C&D.

Zeekr has denied the state media reports, while Neta and Xiamen C&D did not respond to inquiries. The proposed ban is a direct response to the growing issue of zero-mileage used car sales, which has been a contentious topic in the industry. By preventing the resale of new cars within the first six months, the ministry hopes to eliminate the loophole that allows dealers to exploit the system. This policy is expected to have a significant impact on the used car market, as it will force dealers to adhere to stricter regulations and transparency in their sales practices.

The ban is part of a broader effort to regulate the auto industry and ensure fair competition. It is also seen as a measure to protect consumers from being misled by deceptive sales practices. The ministry's decision comes at a time when the auto industry is undergoing rapid changes, with the rise of electric vehicles and new technologies. The ban on zero-mileage used car sales is expected to promote a more transparent and ethical market, benefiting both consumers and legitimate dealers.

The implementation of this ban will require close monitoring and enforcement to ensure compliance. The ministry will need to work with local authorities and industry stakeholders to effectively enforce the new regulations. The success of this policy will depend on the cooperation of all parties involved and the willingness to adhere to the new rules. Overall, the ban on zero-mileage used car sales is a significant step towards creating a more transparent and fair auto market in China.