The businesses organized for automobiles to be insured earlier than they have been offered to consumers, the paperwork present, enabling them beneath Chinese language trade automobile registration practices to e book gross sales early so they might hit the month-to-month and quarterly targets, the sellers and consumers mentioned.
Neta booked early gross sales of at the very least 64,719 automobiles by way of this methodology from January 2023 to March 2024, in response to copies of data it despatched to sellers, seen by Reuters. That was greater than half the gross sales of 117,000 automobiles it reported over the 15 months. Neta’s effort to e book gross sales early has not been beforehand reported.
Zeekr, a premium EV model owned by Geely, used the identical methodology to e book early gross sales in late 2024 within the southern metropolis of Xiamen by way of its important supplier there, state-owned Xiamen C&D Car, in response to sellers, consumers and gross sales receipts seen by Reuters.
Analysts and traders monitoring China‘s auto trade gauge efficiency and estimate stock ranges with two units of gross sales knowledge. Wholesale numbers reported by automakers to the trade affiliation present gross sales from automakers to sellers, whereas retail knowledge compiled from registration data of necessary site visitors insurance coverage present the gross sales to customers.
Automobiles booked as offered earlier than reaching a purchaser are referred to as “zero-mileage used automobiles” within the Chinese language auto trade. The apply has emerged out of cutthroat competitors for gross sales on the planet’s largest auto market, which is reeling from a brutal, years-long value struggle attributable to power overcapacity.
The trade faces a second of reckoning, with state media calling out the zero-mileage automobile apply, China’s cupboard pledging to manage “irrational” competitors, and different central authorities our bodies organising conferences with the trade’s largest gamers to specific concern about such strategies.
On Saturday a publication run by the China Affiliation of Auto Producers mentioned the trade ministry was planning to clamp down on the apply by banning automobiles from being resold inside six months of being registered as a sale.
State media focus
Additionally on Saturday, Chinese language state media reported that Zeekr had been promoting automobiles with insurance coverage already bought to inflate gross sales, the primary such naming of a selected automaker in an indication that Chinese language authorities are getting extra critical concerning the crackdown.
In a front-page story, the China Securities Journal newspaper, one among China’s most essential government-owned monetary publications, interviewed Zeekr automobile consumers in cities equivalent to Guangzhou and Chongqing, who the newspaper mentioned had discovered that their automobiles already had insurance coverage insurance policies earlier than they have been offered.
They mentioned they have been refused refunds, despite the fact that they felt they have been deceived.
The newspaper questioned Zeekr’s unusually excessive gross sales within the cities of Shenzhen and Xiamen in December. Its reported gross sales based mostly off insurance coverage registration data in Xiamen surged to 2,737 that month, greater than 14 instances its month-to-month common.
The China Securities Journal additionally raised questions over Neta’s gross sales, saying it confirmed anomalies. Reuters is reporting for the primary time particulars of how Neta inflated gross sales.
Zhejiang Hozon New Energy Automobile, which owns Neta, and Xiamen C&D didn’t reply to requests for touch upon Saturday. A spokesperson for Geely mentioned, “Geely firmly rejects the report put ahead by the China Securities Journal.” The spokesperson declined to touch upon Reuters findings or present additional particulars.
Zeekr mentioned on Sunday on its account on Chinese language social media platform Weibo that the automobiles talked about within the media studies have been for showroom show. It confirmed that the automobiles had been insured with necessary site visitors insurance coverage, saying that it was for guaranteeing security whereas being exhibited, and that they have been nonetheless legally new when offered to consumers.
It didn’t straight reply Reuters’ questions on whether or not it had counted them as retail gross sales. Nonetheless, its Weibo assertion mentioned it had additionally arrange a particular group to research the gross sales points raised within the media studies, with out going into additional particulars.
Li Yanwei, an analyst with the China Car Sellers Affiliation, mentioned on Weibo on Saturday that he believed Zeekr and Neta carried out such practices to decorate their monetary studies and obtain their efficiency objectives.
“This manner of whitewashing efficiency shouldn’t be advisable,” he mentioned.
Strain on sellers
Final month the state-owned Individuals’s Day by day, which frequently presents the views of China’s ruling Communist Occasion, printed an editorial condemning the sale of zero-mileage used automobiles domestically and itemizing a litany of harms the apply brings upon the trade and consumers.
This month 4 supplier associations based mostly within the rich Yangtze River Delta urged automakers to set them extra cheap gross sales targets and incentive insurance policies, saying, with out offering particulars, that sellers have been being compelled to falsify gross sales.
Neta booked gross sales early by arranging insurance coverage insurance policies for automobiles earlier than sending them to sellers, in response to data shared with Reuters and a supplier for the model.
The data comprise particulars for every automobile and the insurance coverage insurance policies bought on them, with the names of the insurance coverage brokers. Sellers have been in a position to refer to those after they discovered a purchaser to switch the coverage to, in response to copies seen by Reuters. The corporate booked early gross sales of 64,719 automobiles this manner.
“In Neta’s case, the corporate made it clear to sellers that the automobiles have been insured forward of time and due to this fact counted as offered,” mentioned the supplier, who spoke on situation of anonymity, citing fears of retaliation from the corporate.
“We needed to clarify to consumers that the site visitors insurance coverage was complementary and remind them it could expire earlier and ought to be renewed on time,” he mentioned.
However three Neta consumers, who requested to not be named, informed Reuters the dealerships had not informed them the insurance policies had begun effectively earlier than the acquisition date, solely discovering out when the insurance policies expired.
The supplier mentioned Neta began doing this in late 2022 to acquire EV subsidies that have been set to finish that yr.
Neta’s gross sales peaked in 2022 when it was ranked because the eighth-largest maker of recent EVs in China with gross sales of 152,000 automobiles. Gross sales fell final yr to 87,948 automobiles, together with 23,399 exported, and it offered 1,215 automobiles within the first quarter of 2025, in response to knowledge from the China Affiliation of Car Producers.
The model has been in monetary bother since late 2024, and its proprietor, Zhejiang Hozon New Vitality Car, entered chapter proceedings in China final month, in response to state media.
‘Simply do it’
Zeekr, which is being privatised by Geely Auto, booked gross sales with the assistance of Xiamen C&D, which runs dealerships for Zeekr and different manufacturers.
Xiamen C&D registered the automobiles’ insurance coverage insurance policies beneath the names of two subsidiaries in December, permitting Zeekr to rely the gross sales earlier than year-end, in response to 4 sellers and two consumers, in addition to a receipt shared with Reuters.
Zeekr sellers offered among the automobiles in subsequent months to consumers in different cities equivalent to Beijing and Chongqing, the sources mentioned.
“The Zeekr salesman mentioned the automobile can be 3,000 yuan ($420) lower than a automobile I’d get from the shop and I’d additionally get a charging coupon price 10,000 yuan,” mentioned a purchaser in one other southern metropolis. He declined to be named, citing considerations of retaliation from the automaker.
The China Securities Journal reported that many of the homeowners it spoke to mentioned their automobiles have been insured by Xiamen C&D and its associates.
Reuters couldn’t decide how a lot of Zeekr’s Xiamen gross sales in December have been booked early.
China Car Sellers Affiliation knowledge confirmed that 2,508 of the two,737 gross sales Zeekr booked in Xiamen in December have been offered to corporations, whereas 257 went to particular person consumers.
However knowledge printed by Xiamen’s car administration bureau confirmed simply 271 automobiles registered in December for license plates, which real consumers typically receive as soon as they obtain their automobiles.
The Neta supplier mentioned most of the zero-mileage used automobiles he obtained from the corporate remained in his warehouse, unsold. The corporate “solely had one message: Simply do it, everybody else is doing it”.
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