China’s auto industry inflated sales for years by exporting new cars as ‘used’

China’s auto industry has inflated car sales for years through a burgeoning government-backed grey market that registers new cars right off the assembly line and then ships them overseas as “used” vehicles.

These so-called “zero-mileage” cars have never been driven but they are being exported as used to markets like Russia, Central Asia and the Middle East, allowing Chinese automakers to show growth and to dispose of cars that it would be difficult to sell domestically, according to a Reuters review of government documents and interviews with five auto dealers and car traders.

“This is the outcome of an almost-four-year price war that has made companies desperate to book any sales possible,” said Tu Le, Michigan-based founder of consultancy Sino Auto Insights.

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