Why buy a new car when you can get a steep discount on a "used" one with no miles, at all? In an apparent effort to juice sales numbers and get product off of their lots, Chinese dealerships have been listing "used" cars, complete with a discount from the brand-new price, at zero miles on the odometer. That's now been called out by Chinese newspaper People's Daily, which, per Fortune, is something of a mouthpiece for the government in Beijing. The article points out that the zero mileage practice may boost sales numbers on paper, but obviously hurt profit margins and will be unhealthy for the car industry in the long term.
Per Reuters, this editorial is coming just weeks after Chinese regulators met directly with carmakers over this exact issue. Taken together, Beijing seems to be sending a clear message that it wants the industry to stop the practice.
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It might seem like a good problem to have, but right now, Chinese manufacturing is actually producing too many goods. Per consulting firm Deloitte, China accounts for over a third of all manufacturing, across all sectors, globally. The trouble is that domestic spending inside the country is faltering, meaning the products are just clogging up shelves or, in the case of cars, lots. That puts a downwards pressure on prices.
In the case of the car industry, it has also been going through a price war over the last few years. That has forced domestic companies like BYD to cut prices to the bone — and then cut them even further, by offering brand-new "used" cars. In other words, just to get inventory moving and maintain market share, Chinese brands are distorting market pricing. That will, likely, come back to haunt them when they need to actually make more money. Beijing has apparently read the writing on the wall and is warning the sector to change course now.
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Compounding all of this is the global trade war. If your country is producing more goods than your domestic market is buying, then you'll want to start exporting to other countries. That was directly threatened last year, when President Joe Biden threw down 100% tariffs on Chinese EVs; then of course, this year President Donald Trump has put tariffs across all Chinese goods, the exact size of which seem to vary from week to week, but topped out (so far) to a colossal 145%.
Since tariffs make exports from China into the U.S. more expensive, it hurts the former's ability to offload its oversupply. That means that goods will just get more and more clogged in warehouses and lots, collecting dust. Zero mileage "used" cars were at least a way to get product moving; if Beijing really takes that away, then the whole situation just gets worse, possibly to the point of crisis. You'd think lots of cheap EVs would be good for both consumers and the planet, but in this whole mess, it really just seems like everyone's a loser.
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