China Floods Global Markets with Brand New Cars Disguised as “Used” to Inflate Sales

China’s auto industry has been gaming the system for years by shipping brand-new cars overseas labeled as “used” vehicles. The zero-mileage scheme lets automakers inflate sales figures while local governments boost GDP statistics to impress Beijing.

Here’s how it works. Fresh cars roll off assembly lines, and exporters immediately buy them from manufacturers or dealers. They register the vehicles with Chinese plates, instantly classify them as second-hand, then ship them to markets like Russia, Central Asia, and the Middle East.

The double counting creates artificial revenue spikes. Since export firms both purchase and sell the same car, transaction values double compared to normal new or used car sales. Local governments actively court these businesses to set up shop and juice their economic numbers.

Of the 436,000 used vehicles China exported in 2024, an estimated 90% were actually zero-mileage cars, according to China Automobile Dealers Association consultant Wang Meng. The number represents about 6% of China’s total 6.41 million vehicle exports last year.

Local government support ranges from simplified paperwork to extra registration quotas to free warehouses near borders. Reuters identified 20 regional governments, including major hubs like Guangdong and Sichuan, actively promoting the practice through official policy documents.

The scheme gained momentum after China legalized used car exports in 2019, coinciding with a brutal domestic price war that made companies desperate to book any sales possible. Huanyu Auto in Chongqing reported earning $1,400 profit on a $5,700 electric sedan sold to Central Asia in their peak years.

But cracks are showing. Russia banned zero-mileage cars from brands with official distributors in 2023. Jordan is tightening the used car definitions. Even Chinese automaker bosses are speaking out, with Great Wall Motor and Changan calling for crackdowns on the practice.

The People’s Daily, China’s official government newspaper, recently condemned domestic zero-mileage sales, a sign that Beijing may have been running out of patience with the artificial inflation.

Foreign governments may hate losing tax revenue from this scheme, but for their buyers, getting zero-mileage cars at used prices is an unbeatable deal only China’s creative accounting can provide.