Chinese language electrical automobile manufacturers Neta and Zeekr inflated gross sales lately to hit aggressive targets, with Neta doing so for greater than 60,000 vehicles, in accordance with paperwork reviewed by Reuters and interviews with sellers and patrons.
The businesses organized for vehicles to be insured earlier than they have been offered to patrons, the paperwork present, enabling them below Chinese language trade automotive registration practices to ebook gross sales early so they might hit the month-to-month and quarterly targets, the sellers and patrons stated.
Neta booked early gross sales of not less than 64,719 vehicles by means of this technique from January 2023 to March 2024, in accordance with copies of information 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.
Zeekr, a premium EV model owned by Geely, used the identical technique to ebook early gross sales in late 2024 within the southern metropolis of Xiamen by means of its major vendor there, state-owned Xiamen C&D Vehicle, in accordance with sellers, patrons and gross sales receipts seen by Reuters.
Automobiles booked as offered earlier than reaching a purchaser are known as “zero-mileage used cars” within the Chinese language auto trade. The observe has emerged out of cutthroat competitors for gross sales on this planet’s largest auto market, which is reeling from a brutal, years-long worth warfare brought on by persistent overcapacity.
The trade faces a second of reckoning, with state media calling out the zero-mileage automotive observe, the cupboard pledging to control “irrational” competitors, and different central authorities our bodies organizing conferences with the trade’s largest gamers to precise concern about such strategies.
On Saturday a publication run by the China Affiliation of Auto Producers stated the trade ministry was planning to clamp down on the observe by banning vehicles from being resold inside six months of being registered as a sale.
STATE MEDIA FOCUS
Additionally on Saturday, state media reported that Zeekr had been promoting vehicles with insurance coverage already bought to inflate gross sales, the primary such naming and shaming of a selected automaker.
In a front-page story, the China Securities Journal newspaper interviewed Zeekr automotive patrons in cities akin to Guangzhou and Chongqing, who the newspaper stated had discovered that their vehicles already had insurance coverage insurance policies earlier than they have been offered. They stated they have been refused refunds, although 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 in Xiamen surged to 2,737 that month, greater than 14 instances its month-to-month common. Reuters couldn’t decide how a lot of that quantity may need been booked early.
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.
Zeekr, Zhejiang Hozon New Vitality Vehicle, which owns Neta, and Xiamen C&D didn’t reply to requests for touch upon Saturday. A spokesperson for Geely stated, “Geely firmly rejects the report put forward by the China Securities Journal.” The spokesperson declined to touch upon Reuters findings or present additional particulars.
Li Yanwei, an analyst with the China Vehicle Sellers Affiliation, stated he believed the corporations carried out such practices to decorate their monetary stories and obtain their efficiency objectives.
“This way of whitewashing performance is not advisable,” he wrote on Chinese language social media platform Weibo on Saturday.
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 insurance coverage registration information present the gross sales to customers.
Some zero-mileage used vehicles are exported to be offered as second-hand vehicles abroad, however analysts and sellers say the home gross sales quantity is considerably larger, with Chinese language prospects nationwide shopping for what they imagine to be discounted new automobiles, solely to search out out later their automotive is just not insured below their title.
PRESSURE ON DEALERS
Final month the state-owned Individuals’s Every day, the mouthpiece of China’s ruling Communist Celebration, revealed an editorial condemning the sale of zero-mileage used vehicles domestically and itemizing a litany of harms the observe brings upon the trade and patrons.
This month 4 vendor associations primarily based 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 vehicles earlier than sending them to sellers, in accordance with information shared with Reuters and a vendor for the model.
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The information include particulars for every automotive 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 once they discovered a purchaser to switch the coverage to, in accordance with copies seen by Reuters. The corporate booked early gross sales of 64,719 vehicles this fashion.
“In Neta’s case, the company made it clear to dealers that the cars were insured ahead of time and therefore counted as sold,” stated the vendor, who spoke on situation of anonymity, citing fears of retaliation from the corporate.
“We had to explain to buyers that the traffic insurance was complementary and remind them it would expire earlier and should be renewed on time,” he stated.
However three Neta patrons, who requested to not be named, instructed Reuters the dealerships had not instructed them the insurance policies had begun nicely earlier than the acquisition date, solely discovering out when the insurance policies expired.
The vendor stated 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 latest 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 vehicles within the first quarter of 2025, in accordance with knowledge from the China Affiliation of Vehicle Producers.
The model has been in monetary bother since late 2024, and its proprietor, Zhejiang Hozon New Vitality Vehicle, entered chapter proceedings in China final month, in accordance with state media.
‘JUST DO IT’
The Neta vendor stated lots of the zero-mileage used vehicles he acquired from the corporate remained in his warehouse, unsold. The corporate “only had one message: Just do it, everyone else is doing it.”
Zeekr, which is being privatized by Geely Auto 0175.HK, booked gross sales with the assistance of Xiamen C&D, which runs dealerships for Zeekr and different manufacturers.
Xiamen C&D insured and registered the automobiles below the names of two subsidiaries in December, permitting Zeekr to depend the gross sales earlier than year-end, in accordance with 4 sellers and two patrons, in addition to a receipt shared with Reuters.
Zeekr sellers offered among the vehicles in subsequent months to patrons in different cities akin to Beijing and Chongqing, the sources stated.
“The Zeekr salesman said the car would be 3,000 yuan ($420) less than a car I would get from the store and I would also get a charging coupon worth 10,000 yuan,” stated 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 a lot of the homeowners it spoke to stated their vehicles have been insured by Xiamen C&D and its associates.
China Vehicle Sellers Affiliation knowledge confirmed that 2,508 of the two,737 gross sales Zeekr booked in Xiamen in December have been offered to firms, whereas 257 went to particular person patrons.
However knowledge revealed by Xiamen’s automobile administration bureau confirmed simply 271 vehicles registered in December for license plates, which real patrons typically receive as soon as they obtain their vehicles.
