The Chinese regime has been exporting new cars as “used” to absorb the auto industry’s overcapacity amid low domestic demand and increased tariffs, raising renewed concerns of dumping.
A large number of “zero-mileage” new cars have been marked as used and sold both domestically and abroad in recent years, according to Chinese and international media reports.
Auto companies and dealers register and license new cars, include them in the “sold” data, and then sell them at low prices through second-hand car dealers. This operation allows car companies to quickly deal with overstocked inventory and recover funds. It also creates a false impression of a robust market.
In 2024, China exported 436,000 used passenger cars and commercial vehicles, including electric vehicles, according to the China Automobile Dealers Association (CADA).
CADA consultant Wang Meng estimated that 90 percent of these were zero-mileage cars.
Sun Kuo-hsiang, a professor of international affairs and business at Nanhua University in Taiwan, said the practice is “disguised dumping.”
It will "impact the official sales and pricing system of Chinese auto brands overseas, damaging brand image and value,” he told The Epoch Times on June 26.
According to mainland Chinese media reports, many Chinese car dealers sell zero-mileage cars as used cars overseas in order to enjoy the export tax rebate for used cars while avoiding domestic tax costs.
China’s sluggish economy and weak domestic consumption have put further pressure on Chinese automakers, especially electric vehicle (EV) makers, who have already been struggling with overcapacity.
In order to absorb the overcapacity, China’s auto companies have increased their exports significantly in the past five years. Cheap Chinese EVs and hybrid cars have been flowing to Europe, Southeast Asia, and Latin America, putting pressure on those countries’ domestic auto industries and causing dumping concerns.
In response, the United States has imposed 100 percent tariffs on EVs imported from China. To protect its domestic industry, the European Union raised tariffs on China’s EVs to 45 percent.
However, used car exports are less impacted by the raised tariffs.
Since 2019, the Chinese Communist Party (CCP) has allowed the export of used cars to other countries. In 2023, the number of used cars exported overseas reached 275,000 units, and more than 60 percent of them were zero-mileage used cars, including some EVs, according to Chinese media reports.
In February 2024, the regime’s Ministry of Commerce, along with other agencies, issued a “Notice on Matters Related to the Export of Used Cars,” opening the export of used cars in all cities across the country. Since then, the export of zero-mileage used cars has soared in the overseas market.
Many of the zero-mileage cars exported as second-hand have been sold to markets in Russia, Central Asia, and the Middle East.
One route involves clearing these vehicles from the Horgos Port in northwest China and first shipping them to countries with low tariffs, such as Kyrgyzstan and Kazakhstan. They then enter the Russian market in batches, according to a report by Chinese financial media outlet STCN.
Zheng Qinmo, director of the Department of Diplomacy and International Relations at Tamkang University, said the Chinese cars have become prevalent in the Russian car market and that “this may cause global panic in the future.”
Other countries, “especially the European Union, will probably launch investigations into this issue and impose high tariffs to curb this unhealthy trend,” he told The Epoch Times on June 26.
He added that China’s zero-mileage used cars export has a greater impact on the markets and industries in countries that are relatively friendly to the CCP, including in Russia, Central Asia, Southeast Asia, and Central and South America.
In response, some countries, such as Russia and Jordan, have begun to impose restrictions on zero-mileage used cars. Russia issued a government decree in 2023 banning zero-mileage used cars from brands that already had official distributors in the country, including China’s Geely, Chery, and Changan. Jordan and other countries are setting up clearer definition and standards for used cars.
Industry insiders and analysts believe that the zero-mileage used cars phenomenon, which first started domestically in China, reflects the fierce internal competition in the Chinese auto industry caused by structural problems such as overcapacity and weak demand, conditions that have lasted for several years.
China’s auto industry has fallen into an unprecedented internal price competition this year because of overcapacity and weak domestic demand.
In May, China’s largest EV and plug-in hybrid car company, BYD, launched a large-scale price reduction campaign, with 22 models reduced by as much as 34 percent. Other Chinese automakers have had to follow suit and slash prices.
In the electric vehicle industry, seen by the Chinese regime as a strategic development focus, “the government’s subsidies and capacity incentive policies have led to a vicious cycle of price-cutting competition among Chinese automobile companies,” Zheng said.
He said that in order to maintain its market share, Chinese auto companies have found “a workaround—the strange phenomenon of zero-mileage used cars.”
Negative Impact on China’s Auto Industry
Selling new cars as zero-mileage used cars overseas will damage the brand value of the Chinese cars, Sun said.The practice has created an “after-sales service vacuum,” Sun said.
“[It] lacks formal after-sales service guarantees, which may lead to consumer complaints and further affect brand reputation,” he said.
“This practice is part of the gray industrial chain of falsely inflated sales and arbitrage subsidies, which may lead to industry chaos and potential financial risks.”
The export of zero-mileage used cars has been promoted by the Chinese communist regime.
About 20 Chinese provinces and municipalities, including major export hubs such as Guangdong and Sichuan, have expressed support for the zero-mileage used cars export program in public government documents, including by issuing additional export licenses, expediting tax refund applications, investing in export infrastructure, and funding exchange activities.
Sun said that local governments embroiled in debt are facing economic growth pressure to meet the GDP goal set by the regime, and that is why they “actively encourage this export model to achieve rapid growth.”
Zheng said: “In China’s totalitarian political system, local governments would never dare to promote such policies without the approval of the central government. At present, China probably hopes to solve its domestic overcapacity problem through this practice.”
