Imagine buying a “used” car that’s never been driven. Sounds odd? That’s exactly what’s happening in a booming grey market driven by China’s auto industry, and it’s quietly reshaping global car exports.
Welcome to the world of “zero-mileage” used cars: vehicles that are brand new, fresh off the assembly line, but labeled as second-hand the moment they get a license plate. Why? Because it helps automakers in China log the sales and ship them abroad without the red tape that often comes with exporting new cars.
It’s a clever but controversial way to show growth in an industry under pressure.
Why It’s Happening
Over the past few years, China’s car market has been locked in a brutal price war. Automakers are producing more cars than people want to buy. With inventory piling up, many companies are doing whatever it takes to move their vehicles, even if it means selling them overseas as “used.”
“This isn’t just about exports. It’s about survival,” said Tu Le, an auto industry expert based in Michigan. “Companies are desperate to show numbers any numbers — even if it means blurring the lines.”
By registering a car in China and immediately exporting it, automakers can log it as a sale. Meanwhile, most of the cars them unused cars find new homes in places like Russia, Central Asia, and the Middle East.
Backed by Local Governments
Here’s the twist: this isn’t happening in the shadows. Local governments in China are encouraging it.
Reuters found at least 20 cities and provinces, including powerhouses like Guangdong and Sichuan, actively supporting the export of these so-called used cars. They’re offering perks like tax breaks, registration fast-tracking, and even free warehouse space near ports.
For local officials under pressure to meet economic targets from Beijing, these exports offer a quick way to boost GDP figures and show employment gains.
In Shenzhen, city officials pledged earlier this year to increase exports of zero-mileage used cars as part of a larger vehicle export goal. In Guangzhou, city leaders made it easier to register these cars, even in areas where registrations are normally restricted due to traffic and pollution concerns.
Not Everyone’s a Fan
While the strategy may be boosting numbers on paper, it’s also drawing criticism. Some automakers fear the long-term damage it could do to their brands.
Zhu Huarong, the chairman of major carmaker Changan, recently called for a crackdown, saying the practice risks tarnishing Chinese companies’ reputations overseas.
Others worry it’s creating confusion and skepticism among foreign buyers. “Investors are starting to ask: how much of these sales are real?” said Xing Lei, an analyst who advises international investors on Chinese EV companies.
Pushback from Abroad
And it’s not just critics inside China. Some countries are taking action. Russia, for example, has banned zero-mileage used cars from Chinese brands that already have official dealerships in the country. Others, like Jordan, are redefining what constitutes a used car to avoid being inundated with these rebranded vehicles.
“This kind of loophole is shaking up markets in unpredictable ways,” said auto consultant Michael Dunne. “It’s starting to create friction with local dealers and manufacturers abroad.”
A Fading Gold Rush
At first, the margins were high. Traders like William Ng, who works with a car dealer in Chongqing, said they can make up to $1,400 in profit by selling a subsidized electric car overseas. But as the practice grew, so did the competition.
“Now even TikTok sellers are in the game,” Ng said. “People who used to sell wine or home decor are suddenly flipping cars. It’s become wild.”
The Bigger Picture
China became the world’s top car exporter in 2023, overtaking Japan. But as production continues to outpace demand, questions are rising: Are these exports sustainable? And what happens when more countries push back?
For now, the zero-mileage car trade is helping China’s automakers stay afloat. But whether it’s a smart workaround or a risky shortcut is a question the global auto market and regulators will soon have to answer.
