China is taking decisive action against a contentious industry practice that has allowed automakers to inflate sales figures while undermining consumer confidence abroad.
Beginning January 1, 2026, new regulations will dramatically restrict the export of brand-new vehicles masquerading as used cars.
The Zero-Mileage Problem
The practice, known in industry circles as “zero-mileage” exports, involves registering vehicles fresh from assembly lines and immediately shipping them overseas as technically “used” cars.
These vehicles arrive at foreign ports with registration papers but virtually no road use, having never served their ostensible domestic purpose.
Primary destinations for these quasi-new vehicles include Russia, Central Asian republics, and Middle Eastern markets, where regulatory frameworks have been less stringent in distinguishing between genuinely used and newly registered automobiles.
Why Manufacturers Do It
The scheme offers automakers multiple advantages. Companies can report inflated domestic sales figures, creating an appearance of stronger market performance. Tax incentives tied to export volumes provide additional financial motivation.
The practice also helps clear surplus inventory without publicly acknowledging overproduction problems that could signal weakness to investors and competitors.
For an industry grappling with intense competition and production overcapacity, these short-term gains have proven difficult to resist, despite long-term reputational costs.
Consumer Consequences
Foreign buyers of these vehicles face significant disadvantages. Without proper manufacturer authorization for export, overseas owners often discover they cannot access spare parts or after-sales services.
Warranty claims may be rejected, and routine maintenance becomes complicated when local service centers lack parts or technical documentation.
This has damaged the international reputation of Chinese automotive brands precisely as they attempt to establish themselves as credible alternatives to established Japanese, European, and American manufacturers.
Beijing’s Response
The new regulatory framework requires exporters to meet stringent conditions when shipping vehicles registered within 180 days.
Companies must demonstrate manufacturer authorization and prove they can provide adequate after-sales support at destination markets. This includes maintenance services, spare parts availability, and warranty fulfillment.
Local commerce authorities will conduct enhanced monitoring of used car exporters, with penalties for dishonest reporting or quality assurance failures.
The regulations aim to ensure that genuinely used vehicles continue flowing to legitimate markets while closing the loophole that has facilitated data manipulation.
Industry Impact
As the world’s largest vehicle exporter, China’s automotive sector has achieved remarkable growth in international markets.
However, practices like zero-mileage exports threaten to undermine this progress by eroding trust among foreign consumers and regulatory bodies.
Industry analysts suggest the crackdown reflects Beijing’s broader commitment to sustainable, quality-focused growth rather than quantity-driven expansion.
By forcing transparency in export practices, authorities hope to protect the long-term competitiveness of Chinese brands abroad.
The reforms arrive at a critical juncture for China’s automotive industry, which faces both unprecedented opportunities in electric vehicle markets and significant challenges from domestic overcapacity.
Whether these regulations succeed in curbing grey market practices while preserving legitimate used car exports will become clear as the implementation deadline approaches.
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