China intends to crack down on used car sales with zero miles
The industry ministry in China is set to implement a ban on the resale of cars within six months of their initial registration. This move aims to address the issue of zero-mileage used cars, according to a report from an industry association publication released on Saturday.
In China, zero-mileage used cars have surfaced due to the fiercely competitive landscape for sales in the largest auto market globally, which is currently grappling with a prolonged price war stemming from persistent overcapacity.
The process entails securing insurance for a new vehicle prior to its sale, enabling automakers and their dealerships to achieve sales objectives.
However, it may lead to inconveniences for customers.
Auto Review, a publication managed by the China Association of Automobile Manufacturers, disclosed the plan in an editorial shared on its WeChat account. The China Automobile Dealers Association, another industry group, has proposed a code system for the export of used cars.
The editorial noted that Chery and BYD (002594.SZ) were among the companies intending to hold dealers responsible for violations, such as licensing cars prior to their sale.
The measures, if implemented, would represent the initial policy action by the Chinese government to address the practice, which gained national attention after Great Wall Motor CEO Wei Jianjun highlighted it in May.
Since then, there have been multiple indications that China’s central government was gearing up for a crackdown, ranging from a Communist Party newspaper denouncing zero-mileage used cars last month to the country’s cabinet promising on Friday to manage “irrational” competition within the domestic auto industry.
