In recent years, the Chinese automobile industry has been embroiled in a serious issue where a large number of “zero-kilometer” new cars are being labeled as second-hand vehicles and sold to overseas markets, causing a significant impact locally. This rapidly growing gray market has been able to flourish due to strong support from local governments in their pursuit of the economic growth targets set by the Chinese Communist authorities. Experts point out that the phenomenon of “zero-kilometer second-hand cars” is a result of misguided policies by the Chinese authorities, leading to multiple negative effects domestically and internationally, with costs outweighing benefits.
According to a report by Reuters, various local governments in China have been actively promoting the export of “zero-kilometer second-hand cars” to markets in Russia, Central Asia, and the Middle East in order to meet the economic growth targets set by the Chinese Communist regime.
These “zero-kilometer second-hand cars” refer to new cars that have completed vehicle registration procedures and are technically classified as second-hand vehicles due to their zero mileage on the odometer.
After reviewing government documents and conducting interviews with five automotive dealers and traders, Reuters found that the export of “zero-kilometer second-hand cars” not only helps Chinese automakers achieve sales growth but also serves as a channel for managing domestic inventory surplus and clearing out slow-moving vehicle models.
It has been confirmed that 20 provinces and municipalities (including major export hubs like Guangdong and Sichuan) have publicly expressed support for the export of “zero-kilometer second-hand cars” through various measures such as issuing additional export permits, expediting tax refunds, investing in export infrastructure, and funding promotional activities as indicated in government documents.
Two high-level executives in the Chinese automotive industry revealed that companies exporting “zero-kilometer second-hand cars” engage in both buying and selling transactions for the same vehicle, resulting in transaction amounts that are double compared to traditional sales of new or used cars. Hence, local governments are actively attracting these companies to establish operations locally in order to quickly boost the regional Gross Domestic Product (GDP).
On June 26, Professor Sun Guoxiang, from the Department of International Affairs and Business at Nanhua University in Taiwan, conveyed to Epoch Times that the export of “zero-kilometer second-hand cars” can artificially boost local GDP figures in the short term, given that export companies generate double the transaction amounts when buying and selling these vehicles. This approach not only aids the government in achieving economic growth targets but also provides a way for automakers to address surplus inventory domestically and achieve sales growth.
Associate Professor Zheng Qinmo from the Department of Diplomacy at Tamkang University pointed out to Epoch Times that democratic countries, especially economically developed ones, are more concerned about employment and income rather than GDP, as the economic growth rate serves as a reference data.
Since 2019, the Chinese authorities have officially allowed the export of second-hand cars, with ten pilot provinces and cities including Beijing, Tianjin, and Shanghai.
According to data from the China Automobile Dealers Association, the export volume of second-hand cars was 3036 units in 2019, 4322 units in 2020, 15,000 units in 2021, 69,000 units in 2022, and surged to 275,000 units in 2023, surpassing 436,000 units in 2024.
Wang Meng, a consultant for the China Automobile Dealers Association, revealed that currently, there are thousands of traders involved in disguising new cars as second-hand cars in order to meet the qualification requirements for export channels. In 2024, China exported 436,000 second-hand passenger and commercial vehicles, with an estimated 90% being “zero-mileage” vehicles.
Sun Guoxiang stated that while this model may help to alleviate excess inventory in the short term, in the long run, it poses multiple negative impacts on the Chinese automotive industry. This includes exacerbating price wars and quality crises, potentially leading car companies to pursue sales volumes at any cost, thereby affecting product quality and market order, and even triggering a crisis of trust.
The Chinese automotive media “Car Prophets” mentioned on May 29 that “zero-kilometer second-hand cars” meet the condition of being “registered” in form, bypassing the high certification thresholds required for new car exports while enjoying up to a 13% export tax rebate. This pattern has become the key profit-making focus for many export enterprises.
Industry insiders revealed that with this process, a car priced at 200,000 Yuan can earn an additional 20,000 to 30,000 Yuan. Technical proficiency, branding, and services are no longer the core competencies, as the arbitrage structure itself has become the most valuable asset.
On June 19, as reported by China Auto Net, Wang Xiangyu, founder of the used car export service platform “Car Export Pass,” mentioned that the vast majority of “zero-kilometer second-hand cars” lack post-sales support, resulting in issues with timely repairs when problems arise with some customers’ vehicles, thus negatively impacting the overseas branding of automobile companies. Additionally, if official distributors of car companies have matured their operations overseas, the introduction of “zero-kilometer second-hand cars” by exporters will inevitably impact the local dealership business.
On June 25, during the 2025 Global New Energy Vehicle Cooperation and Development Forum (Shanghai), Tang Zhikun, General Manager of the International Business Center of XPeng Motor Technology Group, mentioned in an interview with Chinese media that a large number of cars from China are being exported through the “zero-kilometer second-hand car” model to destinations in the Middle East, North Africa, Central Asia, and other regions, presenting an enticing size that can indeed contribute greatly to sales volume. However, in the medium to long term, the negative impacts are definitely far greater than the positive ones.
Tang revealed that this year, many foreign governments are tightening regulations on this practice, progressively banning the import of zero-kilometer second-hand cars through legislation, certifications, and other means.
He added, “We have also observed that various markets are experiencing some backlash: consumers are complaining about the cars being in Chinese, unavailable spare parts, and inadequate repair services. Such complaints have grown substantially, and I believe this backlash has already started since the first half of this year.”
Sun Guoxiang believes that “zero-kilometer second-hand cars” are essentially new cars competing at low prices, impacting the international markets, and potentially leading to a dumping behavior that may affect the local automotive industry. This practice may bypass certain trade regulations or tariffs, triggering dissatisfaction and potential trade frictions, as seen with countries like Russia and Jordan starting to impose restrictions on “zero-kilometer second-hand cars.”
In April 2024, Russia announced that imported vehicles transshipped from Central Asia must pay the full customs duties, and starting from October 1, a 70%-85% increase in scrapping taxes would be implemented, with planned annual increments.
“Car Prophets” mentioned that the changes in Russian policy resulted in a several-thousand-Yuan cost increase per vehicle, nearly squeezing out all potential for arbitrage.
Moreover, Zheng Qinmo stated that “zero-kilometer second-hand cars” are the result of vicious competition, which can be attributed to Xi Jinping’s introduction of what he calls “new productive forces.” “A person who doesn’t understand economics much is leading the country’s economic policies. He believes that China is the ‘world’s factory,’ and as long as it is produced, it can be sold. If the domestic market can’t absorb it, it can be sold overseas.”
“However, the global market acceptance is limited. Through policy subsidies, this misconception has resulted in overcapacity, causing harm to the world. In a dictatorship, other voices cannot be heard and are even suppressed. We will see a wave of closures of a large number of (automotive companies) coming next.”
Furthermore, the active presence of “zero-kilometer second-hand cars” in the domestic market and the shift towards mass exports reflect the current economic situation in China. Sun Guoxiang indicated, “The automotive industry clearly suffers from excess production capacity, weak domestic demand resulting in inventory accumulation. Companies are embroiled in price wars, forcing them and local governments to seek unconventional sales channels and explore overseas markets as a way out. Local governments are facing pressure for economic growth and are encouraging this export model to artificially boost GDP figures.”