Zeekr and Neta, two Chinese electric vehicle (EV) manufacturers, inflated their sales figures by insuring vehicles before they were sold to customers. This tactic allowed them to record sales earlier under China's vehicle registration process, helping them meet monthly and quarterly targets.
Reuters reports that Neta pre-registered at least 64,719 vehicles between January 2023 and March 2024 using this method. This accounts for over 50% of the 117,000 vehicles they reported selling during those 15 months.
Zeekr, Geely's premium EV brand, employed the same tactic in late 2024 in Xiamen through its state-owned dealership, Xiamen C&D Automobile.
Industry analysts and investors rely on two sales datasets to assess performance and inventory levels. Wholesale figures, reported by manufacturers to industry associations, represent sales from manufacturers to dealerships. Retail data, derived from mandatory insurance registrations, reflects sales to end users.
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A Zeekr 001 electric vehicle at the 2024 Shanghai Auto Show. Photo: CnEVPost |
A Zeekr 001 electric vehicle at the 2024 Shanghai Auto Show. Photo: CnEVPost
These pre-registered vehicles are known within the industry as "zero-mileage used cars." This practice has emerged due to fierce sales competition in the world's largest auto market, grappling with a years-long price war fueled by chronic overproduction.
The industry is facing a reckoning, with state media criticizing these tactics and the government pledging to regulate "unreasonable" competition. Regulators have met with major industry players to express concerns.
On 19/7, a publication by the China Association of Automobile Manufacturers (CAAM) revealed the Ministry of Industry's plan to curb this practice by prohibiting the resale of vehicles within six months of their initial registration.
The same day, Chinese media reported Zeekr's involvement in inflating sales figures through pre-insured vehicles. This is the first time a specific manufacturer has been publicly named, signaling the government's increasingly serious stance.
The China Securities Journal, a leading financial publication, interviewed Zeekr customers in Guangzhou and Chongqing. These customers discovered their vehicles had been insured before purchase and reported being denied refunds despite feeling misled.
The newspaper questioned Zeekr's unusually high sales figures in Shenzhen and Xiamen in December 2024. Reported insurance registrations in Xiamen surged to 2,737 that month, 14 times the monthly average.
The newspaper also questioned Neta's sales, citing irregularities.
Geely denied the report. On 20/7, Zeekr stated on Weibo that the vehicles mentioned in media reports were for display purposes. They confirmed these vehicles were insured for safety and legal compliance during display and remained new when sold. Zeekr did not directly address whether these vehicles were included in retail sales figures. However, they announced the formation of a special team to investigate the sales concerns raised by the media, without providing further details.
Li Yanwei, an analyst at the China Automobile Dealers Association (CADA), believes Zeekr and Neta employed these tactics to embellish financial reports and meet performance targets. "This cover-up is unacceptable," he said.
Last month, the People's Daily, the Communist Party's mouthpiece, published an editorial condemning the sale of zero-mileage used cars and highlighted the detrimental effects on the industry and consumers.
This month, four dealer associations in the Yangtze River Delta urged automakers to implement more reasonable sales targets and incentive policies.
Records shared with Reuters detail Neta's pre-purchased insurance policies for 64,719 vehicles, including vehicle information, policy details, and the names of insurance agents. Dealers referenced these policies when transferring coverage to buyers.
An anonymous dealer stated, "In Neta's case, the company explicitly told dealers that these pre-insured vehicles were considered sold." They added, "We had to explain to buyers that the insurance was supplementary and would expire soon, requiring renewal."
However, three Neta buyers reported being unaware of the pre-existing insurance policies until they expired.
The dealer explained that Neta began this practice in late 2022 to qualify for EV subsidies set to expire that year.
Neta's sales peaked in 2022, ranking them as China's 8th largest new EV maker with 152,000 vehicles sold. CAAM data shows sales declined to 87,948 vehicles in 2024, including 23,399 exports, and only 1,215 vehicles sold in the first quarter of 2025.
The brand has faced financial difficulties since late 2024, and its owner, Zhejiang Hozon New Energy Automobile, filed for bankruptcy in China last month, according to state media.
Regarding Zeekr, four dealers, two buyers, and receipts shared with Reuters indicate Xiamen C&D registered insurance policies under two subsidiaries in December 2024. This allowed Zeekr to record sales before year-end, even though the vehicles remained unsold.
One buyer stated, "The Zeekr salesperson said the price was 3,000 CNY (420 USD) cheaper than what I would pay at the store, and I would also receive a 10,000 CNY charging voucher."
The China Securities Journal reported that most of the car owners they interviewed said their vehicles were insured by Xiamen C&D and its affiliates.
CADA data reveals that of the 2,737 Zeekr vehicles sold in Xiamen in December 2024, 2,508 were sold to companies, while 257 were sold to individual customers.
However, data released by Xiamen's vehicle administration bureau shows only 271 vehicles were registered with license plates in December, the plates buyers receive upon taking delivery.
The Neta dealer stated that many of the zero-mileage used cars they received from the company remain unsold in inventory. The company's "only message was: 'Just do it, everyone is doing it.'"
My Anh
