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China may soon prohibit car resales within six months of registration to curb “zero-mileage” car sales—part of broader efforts to rein in chaotic market practices.

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Introduction: Cracking Down on a Car Sales Loophole

In a bold move to restore order to its chaotic auto industry, China is set to introduce a policy banning the resale of vehicles within six months of registration. The proposed rule is aimed squarely at stopping the spread of “zero-mileage” used cars, a controversial practice that has distorted the nation’s automotive sales landscape and drawn sharp criticism from both regulators and automakers.

️ Context & Background: The High-Stakes Battle Behind the Wheel

China is home to the largest auto market in the world, but in recent years, it has become a battlefield marked by razor-thin profit margins and relentless price wars. This brutal competition has forced dealers and manufacturers into creative, sometimes questionable strategies to hit sales targets.

One such workaround is the “zero-mileage” used car scheme. Dealers register and insure brand-new cars without ever handing them to customers, creating the illusion of sales. These cars are then resold as used, though they’ve never actually been driven. While it helps companies meet quotas, it leaves consumers navigating an unclear resale market and undermines the credibility of industry data.

Main Developments: China Eyes First Official Ban on Early Resale

An editorial by Auto Review, the media arm of the China Association of Automobile Manufacturers (CAAM), revealed that the Ministry of Industry and Information Technology is considering a policy that would outlaw the resale of vehicles within six months of their initial registration. This would be the first formal regulatory step by the government to address the zero-mileage loophole.

Additionally, the China Automobile Dealers Association (CADA) has proposed a tracking system to monitor used car exports, signaling an intent to extend scrutiny beyond domestic transactions.

Major domestic carmakers, including BYD and Chery, are reportedly onboard with the reforms. Both companies have pledged to discipline dealerships caught registering vehicles before legitimate sales, in a clear attempt to tighten control over sales channel ethics.

Expert Insight & Industry Response: From Outcry to Action

Public criticism reached new heights in May when Great Wall Motor CEO Wei Jianjun publicly condemned the practice, arguing it misleads consumers and distorts the market. Since then, signals from China’s central leadership suggest a broader crackdown is imminent.

Last month, a high-profile Communist Party-run newspaper denounced the zero-mileage phenomenon, and earlier this week, the State Council pledged to curb “irrational competition” in the electric vehicle (EV) sector. These aligned narratives indicate Beijing is serious about reshaping the automotive playing field.

Impact & Implications: A Fork in the Road for China’s Auto Market

If enforced, the six-month resale ban could significantly reshape how automakers and dealers operate. It would not only discourage artificial inflation of sales numbers but could also help rebuild consumer trust in the authenticity of vehicle histories.

For manufacturers, the rule may present short-term sales reporting challenges, but in the long term, it could reduce the intense pressure to manipulate targets. Dealers might also have to rethink aggressive discounting strategies and quick-flip tactics.

Meanwhile, used car buyers could benefit from greater transparency and more predictable pricing structures. However, the new policy may also lead to tighter inventory and fewer “nearly new” cars available at bargain prices.

Conclusion: Toward a More Transparent Market

China’s impending crackdown on zero-mileage car sales signals a pivotal shift in how the nation governs its powerful yet volatile auto industry. As regulators and manufacturers unite to clean up sales practices, the message is clear: sustainable growth and consumer integrity are now steering the wheel.

If the proposed ban is finalized, it will mark a milestone in China’s broader mission to bring rationality, fairness, and long-term vision back to a hyper-competitive sector that has long prioritized numbers over nuance.

Source: (Reuters)

⚠️ (Disclaimer:  This article is a journalistic rewrite based on publicly reported information. It does not represent direct statements from the Ministry of Industry and Information Technology or the companies mentioned unless explicitly cited. Readers are advised to follow official sources for policy enactments and legal updates.)

 

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