China Exports New Cars as Used to Boost Sales, Cut Oversupply

China’s automotive industry is exporting brand-new vehicles as used cars to inflate sales figures and reduce domestic oversupply, according to a Reuters investigation. The scheme involves registering “zero-mileage” vehicles—cars that have never been driven—as second-hand before export, a practice encouraged by local governments to meet aggressive economic targets set by Beijing.

The process begins immediately after a car leaves the assembly line. Exporters purchase vehicles from manufacturers or dealers, register them with Chinese license plates, and then reclassify them as used cars for export. This enables automakers to book the transactions as sales and record revenue.

“This is the outcome of an almost-four-year price war that has made companies desperate to book any sales possible,” said Tu Le, founder, Sino Auto Insights.

These reclassified vehicles are being shipped to regions including Russia, Central Asia, and the Middle East. While scrutiny of the practice has increased recently, it has been ongoing since at least 2019, when China permitted used vehicle exports. Wang Meng, a consultant for the China Automobile Dealers Association, estimates that 90% of the 436,000 used cars China exported in 2024 were zero-mileage vehicles.

The issue gained attention in May after the chairman of Great Wall Motor criticized the domestic sale of such vehicles. On June 10, People’s Daily, a state-run newspaper, echoed these concerns and called for tighter domestic regulation. However, no equivalent measures have been applied to exports.

Local governments, including those in export hubs like Guangdong, Sichuan, and Henan, have supported the practice with measures such as:

• Fast-tracking tax rebate claims

• Allocating additional registration quotas

• Providing free warehouse space near borders

• Funding networking events for car traders
   

In Shenzhen, authorities targeted the export of 400,000 zero-mileage used cars as part of a 2024 plan. Similarly, Guangzhou eased registration caps to increase exports of gasoline-powered vehicles, while Zhengzhou’s Xinmi district supported exporters to “use exports to drive domestic sales.” Sichuan province promoted online platforms like Alibaba International for exporting zero-mileage new energy vehicles (NEVs).

The exported cars are primarily gasoline-powered, reflecting weak domestic demand, though electric vehicles (EVs) are also included due to subsidies. “We made CN¥10,000 (US$1,400) profit on a CN¥40,000 (US$5,600) EV by exporting to Central Asia,” said William Ng, director, Huanyu Auto’s international division, which began exporting zero-mileage used cars in 2022.

Concerns over vehicle dumping—selling subsidized goods below market prices—are also mounting, especially as China shifts exports away from high-tariff markets like the United States.

Some countries are responding. Russia banned zero-mileage used car imports from brands with local distributors in 2023. Other nations, such as Jordan, revised definitions of used cars to require minimum usage periods.

Ng observed that the boom has attracted smaller sellers and influencers, eroding profits. “They used to sell vases and wine, and now they’re selling cars the same way. This is chaos,” he said.