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China's Ministry of Commerce to Discuss Rise of Underiven 'Second-Hand' Cars
SHANGHAI – China's commerce ministry will convene a meeting with industry bodies and automakers, including BYD, Dongfeng Motor, and Great Wall Motor, to investigate growing sales of "unused" vehicles in the Chinese market. The session is scheduled for this afternoon, according to a source with direct knowledge of the matter.
In an interview last week, Great Wall Motor’s Chairman Wei Jianjun raised concerns over the emergence of "second-hand cars with zero mileage." These vehicles are registered and licenced, commonly referred to as sold, but have not been driven. Wei estimated that around 3,000 to 4,000 vendors of used cars in Chinese platforms engage in this practice.
The meeting also invites the China Association of Automobile Manufacturers (CAAM), China Automobile Dealers Association (CADA), and some used car trading platforms. Automakers' and dealers' use of this method is seen as a potential support mechanism for new car sales as they strive to attain aggressive sales targets amidst fierce competition.
Participants did not immediately respond to a request for comment. Meanwhile, shares in Chinese automakers such as BYD and Leapmotor suffered losses following Reuters' report on the meeting, with both falling 3.1 percent. Hong Kong's Hang Seng Automobile Index dropped by more than 2 percent.
The practice of selling technically "used" vehicles with zero mileage raises concerns about potential consumer deception and market distortion. Consequently, authorities are scrutinizing whether this tactic undermines fair competition and consumer rights, with the possibility of regulatory crackdowns to curb these sales strategies.
According to industry experts, the strategy artificially inflates sales figures while offloading inventories at discounted prices. This could mislead buyers who might unknowingly purchase vehicles with no valid warranties or proper documentation, damaging consumer trust and market integrity.
In view of these concerns, China's Ministry of Commerce is set to evaluate the implications of selling unused vehicles as second-hand cars. Regulatory action aims to address issues of transparency and ensure the overall health of China's secondary car market ecosystem.
- The China Association of Automobile Manufacturers (CAAM), China Automobile Dealers Association (CADA), and some used car trading platforms have been invited to join this afternoon's meeting, as concerns about the rise of second-hand cars with zero mileage in the Chinese market could impact the transparency and overall health of the secondary car market.
- The practice of selling "unused" vehicles as second-hand cars could potentially deceive consumers and distort the market, with industry experts suggesting that these tactics artificially inflate sales figures and offload inventories at discounted prices, compromising consumer trust and market integrity.
- As automakers and dealers employ this method to support new car sales amidst fierce competition, finance news outlets are closely monitoring the consequences, with reports suggesting that regulatory action may be taken to curb these sales strategies and protect consumer rights within the automotive industry.
