China Carmakers Told to Explain Sales of 'Zero-Mileage Used Cars'

Senior officials in Beijing are seeking to get to the bottom of alleged dodgy dealings in the car industry.

Commerce ministry officials were due to meet with sector bodies and top automakers, such as BYD and Dongfeng Motor, to get answers as to why there has been an increase in sales of “used cars” that were never driven.

A source with direct knowledge of the matter, who spoke on condition of anonymity, told Reuters the ‘confidential’ issue was set to be discussed on Tuesday (May 27) afternoon.

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The new comes after Great Wall Motor’s chairman Wei Jianjun revealed in an interview with Sina Finance last week that a phenomenon called “secondhand cars with zero mileage” had emerged in the Chinese market as a result of the industry’s years-long price war.

The phenomenon, he said, involved cars that had been registered and had licence plates – marking them as sold – but had never been driven being sold in the secondhand market.

Wei said that at least 3,000 to 4,000 vendors on Chinese used car platforms were selling such cars.

The source said the tactic was seen as a potential method within the industry for automakers and dealers to support new car sales as they try to meet aggressive sales targets.

Other participants invited to the meeting include the China Association of Automobile Manufacturers (CAAM), China Automobile Dealers Association (CADA), as well as some trading platforms of used cars, according to the person.

The commerce ministry, BYD, Dongfeng Motor and CADA did not immediately respond to a request for comment. Great Wall and CAAM declined to comment.

News of the apparent scandal has caused shares of Chinese automakers such BYD and Leapmotor to extend their losses after Reuters reported the meeting – with both falling 3.1%.

Hong Kong’s Hang Seng Automobile Index fell more than 2%.