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A “zero-mileage car” is a Chinese vehicle that has been registered as soon as it comes off the end of the assembly line. Once registered in China, these cars are shipped to overseas markets, like the Middle East, Russia, and Central Asia, as used vehicles, even though they’ve had no previous owners and no miles put on them. The issue of zero-mileage cars in the Chinese market is related to a brutal price war that has been occurring in the Chinese auto industry for nearly four years. It came to public attention following complaints by major Chinese automaker Great Wall Motor in May 2025. Great Wall was critical of the sales of these zero-mileage cars within the Chinese market, and the Chinese Communist Party’s newspaper, the People’s Daily, came out against this practice in June 2025. Fake used cars are accused of depressing vehicle prices in the already cheap Chinese domestic market.

The real cause of the zero-mileage car controversy in China can be traced to the actions of regional and local governments, who own many Chinese auto companies. The aim is not only to boost employment, but also to meet the national government’s ambitious economic goals. The scheme is a way to maintain production, keep their people employed on the production lines, and hit growth targets. They are much less concerned about the effect of fake used cars on the market in general. 

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Here’s how the zero-mileage scheme works. As it comes off the assembly line, an exporter purchases the vehicle from either the automaker or a vehicle dealer. The exporter registers the vehicle with a Chinese plate. The carmaker gets to mark the car as sold and add the sale to its balance sheet. The exporter can now consider the car used and export it to a foreign market. Everyone seems to win in China’s centrally-planned economy. Regional and local governments receive incentives for hitting targets and keeping production lines humming, local residents continue to be employed by their hometown automakers, and government officials keep their jobs. 

However, these fake used cars are covering up the Chinese auto industry’s larger issue — China’s current production capacity is double the number of cars that it sells in its home market, leading to the domestic price war, low profits, and accusations that China is ‘dumping’ its cars abroad as exports. Many of these are electric vehicles, an area where China is already far ahead of the US. The downsides of zero-mileage cars in the Chinese domestic market are numerous. They distort market data, erode brand credibility, intensify domestic price wars, and risk backlash from international trade partners. The discounts on these cars reduce the sales of new electric vehicles from China and condition buyers to expect and wait for price cuts. A shakeout is coming.