China Bold Crackdown on Zero‑Mileage Used Car Sales July 2025

 What Are “Zero‑Mileage” Used Cars?

“Zero‑mileage” used cars are technically second‑hand, yet barely driven or never used. This practice involves insuring and registering a brand‑new car, often to meet aggressive sales targets, before it actually goes to a buyer. The resale happens quickly—sometimes just weeks later—distorting both market data and consumer expectations.

In China’s fiercely competitive auto market, especially in the EV sector, this has become a widespread strategy to inflate sales numbers, qualify for subsidies, and clear dealer inventory without actually selling the vehicle to traditional buyers.

📉 Why the Government Is Stepping In

China's Ministry of Industry now plans to ban the resale of any vehicle within six months of its initial registration. This is the country's first direct policy response to the zero‑mileage problem, a sign that regulators are drawing a line under deceptive practices.

Why now?

1. Distorted Sales Data – Inflated figures mislead investors and policymakers.
2. Consumer Impact – Buyers may face warranty issues or hidden insurance problems.
3. Financial Abuse – Exploitative subsidy claims undermine market fairness.
4. Market chaos – Overcapacity and irrational competition have hurt profitability.

Stronger oversight is gaining traction through government warnings and dealer pushback, aided by leading automakers like BYD and Chery, who are preparing to hold dealers accountable.

🔧 Scope of the Six‑Month Ban

Under the new proposal:

• Cars cannot be resold within six months of first registration and insurance.
• It targets both domestic and foreign automakers, especially in EV.
• Dealer licensing practices will be monitored more closely.
• A code system for used car exports is also planned to track vehicle history.

This aims to stop the car‑flipping loophole and encourage transparency in resale procedures.

🚨 High-Profile Cases Highlight the Problem

Two EV brands—Neta and Zeekr—have become examples of how widespread the practice was:

• Neta allegedly insured over 64,000 vehicles between early 2023 and spring 2024 before sale, inflating its reported sales by more than half.
• Zeekr, working through a dealership in Xiamen, also booked large volumes in late 2024 using pre-registration tactics.

These cases showed how common and accepted the zero‑mileage strategy had become—leading to government scrutiny and serious backlash from state media and regulators.

🧩 Ripple Effects & Industry Pressure

This crackdown comes amid several warning signs:

• The People’s Daily editorialized against zero‑mileage sales in June.
• By July, China’s cabinet vowed to quell irrational competition in the EV space.
• Major automakers are now pushing dealers to comply with stricter ethics or face consequences.

Additionally, some cities have paused EV subsidies after funds were misused to promote zero‑mileage sales—indicating real-world fallout from the practice.

🆚 Impacts on Dealers, Manufacturers & Buyers

Stakeholder	Impact of Crackdown
Dealers	Must avoid pre-registering vehicles and risk penalties.
Automakers	Need to adjust reporting methods and enforce compliance.
Consumers	Will gain more transparent purchases and reliable warranties.
EV Market	May experience a slowdown, but long-term trust will improve.
Subsidy System	Will be shielded from fraud, aiding policy-making integrity.

🧭 What Happens Next?

Short-term (next 6 months):

• Dealerships must prove cars aren’t sold before six months.
• The ministry will issue enforcement rules and monitoring systems.

Mid-term (12–18 months):

• A code‑based tracking system for exports and domestic sales is expected.
• New safeguards in registration and trade reporting systems.

Long-term:

• A more stable, fair vehicle market.
• Recalibrated EV incentives and healthier competition.

💡 Takeaway: A Turning Point for China’s Auto Sector

China’s zero‑mileage sales crackdown is a rare and serious intervention by the government to repair trust in an over-inflated, subsidy-driven auto market. While short-term challenges for dealers and manufacturers are real, the move is expected to restore integrity, protect consumers, and stabilize the EV landscape for long-term growth.

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