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An intensifying price war in China auto market has lasted roughly three years, which has stoked fears of long-anticipated shake-out in auto industry. The prolonged price war was harming the automotive supply chain,some suppliers are at risk of going under pressure from car companies to lower their prices.
Also there are a lot of unknowns behind the scene in the full-blown price war in China auto industry. According to related documents, Chinese electric vehicle brands Neta and Zeekr inflated sales in recent years to hit aggressive targets, with Neta doing so for more than 60,000 cars.
The companies arranged for cars to be insured before they were sold to buyers, the documents show, enabling them under Chinese industry car registration practices to book sales early so they could hit the monthly and quarterly targets.
Neta booked early sales of at least 64,719 cars through this method from January 2023 to March 2024. That was more than half the sales of 117,000 vehicles it reported over the 15 months.
Zeekr, a premium EV brand owned by Geely, used the same method to book early sales in late 2024 in the southern city of Xiamen through its main dealer there, state-owned Xiamen C&D Automobile.
Vehicles booked as sold before reaching a buyer are called “zero-mileage used cars” in the Chinese auto industry. The practice has emerged out of overheated competition for sales in China auto market, which is suffering from a brutal, years-long price war caused by serious overcapacity.
Neta’s sales peaked in 2022 when it was ranked as the eighth-largest maker of new EVs in China with sales of 152,000 vehicles. Sales fell last year to 87,948 vehicles, including 23,399 exported, and it sold 1,215 cars in Q1 of 2025, according to data from the China Association of Automobile Manufacturers.
The brand has been in financial trouble since late 2024, and its owner, Zhejiang Hozon New Energy Automobile, entered bankruptcy proceedings in China last month.
This growing phenomenon of “zero-mileage used cars” reflects the stress in the auto market which has also strained the industry. Chinese authorities are getting more serious about the crackdown, with state media calling out the zero-mileage car practice, and government pledging to regulate “irrational” competition. On the flip side, the industry ministry was planning to clamp down on the practice by banning cars from being resold within six months of being registered as a sale.
China's auto market is in an inflection point, facing a moment of reckoning. Investors should watch closely where the price war will be headed and what the negative spillover effect is ultimately.
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