What are zero-mileage used cars & why is China planning to ban their sale?

China plans to ban resale of cars within six months of registration to curb the growing sale of zero-mileage used cars, which distort sales data, affect buyers, and allow misuse of subsidies

China's ministry of industry is looking to ban the resale of vehicles within six months of their first registration, in a move to clamp down on the sale of so-called zero-mileage used cars, according to Auto Review, a publication backed by the China Association of Automobile Manufacturers.

What are zero-mileage used cars?

These vehicles are technically listed as used but have barely or never been driven. They appear as a result of intense competition in the Chinese car market, where manufacturers and dealers insure and register new cars without actual buyers in order to meet sales targets.

 

This practice has grown widespread due to years of aggressive price cuts and oversupply in the world's largest automotive market. However, it often creates complications for customers who later purchase these vehicles.

 

Why is the resale of zero-mileage used cars an issue?

Misleading sales figures: Registering unsold cars as “sold” distorts true market demand. This gives a false impression of a company’s performance, affecting industry data and potentially misleading investors.

 

Buyer inconveniences: Customers who purchase zero-mileage used cars might face warranty issues, as coverage usually starts from the date of initial registration. These cars may also have lower resale value and come with insurance or registration documents that are older than expected.

 

Abuse of subsidies and export rules: Some manufacturers have reportedly used such cars to wrongly claim government subsidies for new energy vehicles (NEVs), which are based on sales numbers. Others may label these cars as “used” to ease export restrictions, as some countries have looser rules for used vehicle imports.

Proposed measures and industry pushback

The Auto Review editorial stated that the China Automobile Dealers Association has also suggested introducing a coding system to regulate used car exports.

 

Additionally, automakers like Chery and BYD are reportedly planning to penalise dealers who license cars before they are genuinely sold. If implemented, these measures would represent the first government-led effort to address the issue on a national scale.

Mounting pressure for action

The issue gained public attention in May when Great Wall Motor CEO Wei Jianjun criticised the practice. Since then, signs have emerged that central authorities are preparing a crackdown.

 

Last month, a Communist Party newspaper published a piece criticising the trend, and on Friday (July 18), the Chinese cabinet said it would work to rein in what it called “irrational” competition in the domestic automotive industry.