China EV Brands Zeekr, Neta Inflated Car Sales Using Insurance Scheme
To meet aggressive expectations, Chinese electric vehicle brands Neta and Zeekr have inflated sales in recent years; Neta has done so for over 60,000 units.
Under Chinese industry auto registration norms, the businesses arranged for cars to be insured before they were sold to buyers, according to the records.
This allowed them to book sales early to meet the monthly and quarterly quotas, according to the buyers and dealers.
According to copies of documents Neta supplied to dealers, the company used this strategy to book early sales of at least 64,719 cars between January 2023 and March 2024. It reported selling 117,000 cars during the course of 15 months, which was more than half of that total. There hasn't been any prior coverage of Neta's attempt to book sales early.
Using the same strategy, Zeekr, a high-end EV brand owned by Geely, booked early sales in late 2024 in the southern city of Xiamen through its primary dealer, the state-owned Xiamen C&D Automobile, according to sales receipts, dealers, and buyers.
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Two sets of sales data are used by analysts and investors that follow the Chinese auto industry to assess performance and project inventory levels.
While retail data gathered from mandatory traffic insurance registration records shows sales to users, wholesale numbers submitted by manufacturers to the industry organization show sales from automakers to dealers.
In the Chinese auto market, cars that are listed as sold before they are purchased are referred to as "zero-mileage used cars." The practice arose from fierce competition for sales in the biggest auto market in the world, which is still recovering from a vicious, protracted pricing war brought on by chronic overcapacity.
With state media denouncing the zero-mileage car practice, China's cabinet promising to control "irrational" competition, and other central government authorities setting up meetings with the biggest players in the industry to voice concerns about such practices, the industry is facing a reckoning moment.
Additionally, it has been reported that Zeekr has been selling vehicles with pre-purchased insurance to boost sales. This is the first time a specific automaker has been named, and it indicates that Chinese authorities are taking the crackdown more seriously.
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One of China's most significant government-owned financial publications, the China Securities Journal, featured an interview with Zeekr car buyers in Guangzhou and Chongqing on its front page. The buyers claimed to have discovered that their vehicles had insurance policies in place prior to their sale.