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.
For decades Ford Europe has had an employee scheme whereby they can get brand new hugely discounted cars every few months. This extended to their families and friends. Each employee could request several vouchers from Ford which are then used at a Ford dealership in exchange for a car on incredibly good finance payments. This was designed to boost the number of registered cars straight from the assembly line.
This sort of thing has always been standard practice in the automotive industry. The point is, this won’t work to paper over the cracks in China with their massive oversupply.