Chinese car brands have been like a rising dragon from the Far East, taking the world by storm with record-breaking sales figures. However, a new report by Reuters suggests it’s not all sunshine and rainbows there, alleging that some Chinese carmakers – specifically Neta and Zeekr – have been artificially inflating their sales figures.
The method is deceptive yet simple: the companies arrange for cars to be insured before they are ever sold to an actual customer. This is possible as under Chinese industry practice, a new car is officially considered “sold” once it is insured.
This enables carmakers to “book” the sale early to hit their monthly and quarterly targets, with these pre-insured vehicles later being sold as “zero-mileage” used cars in the Chinese market. Taking advantage of this trick, Neta has reportedly booked sales for at least 64,719 of the 117,000 vehicles it sold in the 15 months from January 2023 to March 2024.
Similarly, Zeekr also allegedly used the same method to book early sales in late 2024, through its state-owned dealership in Xiamen, China. The practice came to light after Chinese state media reported on the scheme, noting that insurance registrations for Zeekr in Xiamen had surged to 2,737 in a single month, over 14 times the monthly average.
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According to data published by the China Automobile Dealers Association, 2,508 of those 2,737 sales were to companies, while only 257 went to individual buyers.
However, a major discrepancy was found when compared with data from Xiamen’s vehicle administration bureau. Their records showed that only 271 new Zeekr cars registered for licence plates that month – a process which car buyers in China complete only once they take delivery of their vehicle.
Correlating the data was a report by China Securities Journal, an important government-owned financial publication, that interviewed Zeekr customers, revealing that their cars were already insured before they were bought. The same publication also questioned Neta’s sales figures, reporting that they displayed anomalies.
The bombshell reports have placed the Chinese car industry under heavy scrutiny. A publication run by the China Association of Auto Manufacturers previously reported that the Ministry of Industry and Information Technology (MIIT) was planning to clamp down on the practice by banning cars from being resold within six months of their registration date. However, the publication has since amended its report, citing “inaccurate descriptions.”
Obviously, both Neta and Zeekr declined to comment when approached by Reuters. A spokesperson for Geely, Zeekr’s parent company, said, “Geely firmly rejects the report put forward by the China Securities Journal.”
Zeekr added in a Weibo post that the vehicles mentioned were for showroom display and were insured to ensure safety, stating they are still legally new when sold. The company added that it will investigate the sales issues raised.
All said, it makes one wonder why carmakers would resort to this clever loophole. The reason may be mounting competition and financial pressure. In Neta’s case, its parent company, Hozon New Energy Automobile, recently commenced bankruptcy proceedings after facing losses amounting to CNY17.2 billion (approx. RM10.6 billion) between 2021 and 2023.
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