China EV brands Zeekr, Neta inflated car sales using insurance scheme

Chinese electrical vehicle brands Neta and Zeekr inflated sales in caller years to deed assertive targets, with Neta doing truthful for much than 60,000 cars, according to documents reviewed by Reuters and interviews with dealers and buyers.

The companies arranged for cars to beryllium insured earlier they were sold to buyers, the documents show, enabling them nether Chinese industry car registration practices to book sales early truthful they could deed the monthly and quarterly targets, the dealers and buyers said.

Neta booked early sales of astatine slightest 64,719 cars done this method from January 2023 to March 2024, according to copies of records it sent to dealers, seen by Reuters. That was much than fractional the sales of 117,000 vehicles it reported implicit the 15 months. Neta's effort to book sales early has not been antecedently reported.

Zeekr, a premium EV brand owned by Geely, utilized the aforesaid method to publication early sales in precocious 2024 successful the confederate metropolis of Xiamen done its main trader there, state-owned Xiamen C&D Automobile, according to dealers, buyers and sales receipts seen by Reuters.

Analysts and investors tracking China's car manufacture gauge show and estimation inventory levels with 2 sets of sales data. Wholesale numbers reported by automakers to the manufacture relation show sales from automakers to dealers, portion retail information compiled from registration records of mandatory traffic insurance show the sales to users.

Vehicles booked arsenic sold earlier reaching a purchaser are called "zero-mileage used cars" in the Chinese car industry. The signifier has emerged retired of cutthroat contention for sales in the world's largest car market, which is reeling from a brutal, years-long terms warfare caused by chronic overcapacity.

The manufacture faces a infinitesimal of reckoning, with authorities media calling retired the zero-mileage car practice, China's furniture pledging to regulate "irrational" competition, and different cardinal authorities bodies organizing meetings with the industry's largest players to explicit interest astir specified methods.

On Saturday, a work tally by the China Association of Auto Manufacturers said the manufacture ministry was readying to clamp down connected the signifier by banning cars from being resold within six months of being registered arsenic a sale.

Also connected Saturday, Chinese authorities media reported that Zeekr had been selling cars with insurance already purchased to inflate sales, the archetypal specified naming of a circumstantial automaker successful a motion that Chinese authorities are getting much superior astir the crackdown.

In a front-page story, the China Securities Journal newspaper, 1 of China's astir important government-owned fiscal publications, interviewed Zeekr car buyers successful cities specified arsenic Guangzhou and Chongqing, who the paper said had recovered that their cars already had insurance policies earlier they were sold.

They said they were refused refunds, even though they felt they were deceived.

The paper questioned Zeekr's unusually high sales in the cities of Shenzhen and Xiamen successful December. Its reported sales based off insurance registration records successful Xiamen surged to 2,737 that month, much than 14 times its monthly average.

The China Securities Journal besides raised questions over Neta's sales, saying it showed anomalies. Reuters is reporting for the archetypal clip details of how Neta inflated sales.

Zhejiang Hozon New Energy Automobile, which owns Neta, and Xiamen C&D did not respond to requests for remark connected Saturday. A spokesperson for Geely said, "Geely firmly rejects the study enactment guardant by the China Securities Journal." The spokesperson declined to remark connected Reuters findings oregon supply further details.

Zeekr said connected Sunday connected its relationship connected Chinese societal media level Weibo that the vehicles mentioned successful the media reports were for showroom display. It confirmed that the cars had been insured with mandatory traffic insurance, saying that it was for ensuring information portion being exhibited, and that they were inactive legally caller erstwhile sold to buyers.

It did not straight reply Reuters' questions connected whether it had counted them arsenic retail sales. However, its Weibo connection said it had besides acceptable up a peculiar squad to analyse the sales issues raised successful the media reports, without going into further details.

Li Yanwei, an expert with the China Automobile Dealers Association, said connected Weibo connected Saturday that helium believed Zeekr and Neta carried retired specified practices to embellish their fiscal reports and execute their show goals.

"This mode of whitewashing show is not advisable," helium said.

Pressure connected Dealers

Last period the state-owned People's Daily, which often presents the views of China's ruling Communist Party, published an editorial condemning the merchantability of zero-mileage used cars domestically and listing a litany of harms the signifier brings upon the manufacture and buyers.

This period 4 trader associations based successful the affluent Yangtze River Delta urged automakers to acceptable them more reasonable sales targets and inducement policies, saying, without providing details, that dealers were being forced to falsify sales.

Neta booked sales early by arranging insurance policies for cars earlier sending them to dealers, according to records shared with Reuters and a trader for the brand.

The records incorporate details for each car and the insurance policies purchased connected them, with the names of the insurance agents. Dealers were capable to notation to these erstwhile they recovered a purchaser to transportation the argumentation to, according to copies seen by Reuters. The institution booked early sales of 64,719 cars this way.

"In Neta's case, the institution made it wide to dealers that the cars were insured up of clip and truthful counted arsenic sold," said the dealer, who spoke connected information of anonymity, citing fears of retaliation from the company.

"We had to explicate to buyers that the traffic insurance was complementary and punctual them it would expire earlier and should beryllium renewed connected time," helium said.

But three Neta buyers, who asked not to beryllium named, told Reuters the dealerships had not told them the policies had begun good earlier the acquisition date, lone uncovering retired erstwhile the policies expired.

The trader said Neta started doing this successful precocious 2022 to obtain EV subsidies that were acceptable to extremity that year.

Neta's sales peaked successful 2022 erstwhile it was ranked arsenic the eighth-largest shaper of new EVs in China with sales of 152,000 vehicles. Sales fell past twelvemonth to 87,948 vehicles, including 23,399 exported, and it sold 1,215 cars successful the archetypal 4th of 2025, according to information from the China Association of Automobile Manufacturers.

The marque has been successful fiscal occupation since precocious 2024, and its owner, Zhejiang Hozon New Energy Automobile, entered bankruptcy proceedings in China last month, according to authorities media.

Zeekr, which is being privatized by Geely Auto, booked sales with the assistance of Xiamen C&D, which runs dealerships for Zeekr and other brands.

Xiamen C&D registered the vehicles' insurance policies nether the names of 2 subsidiaries successful December, allowing Zeekr to number the sales before year-end, according to 4 dealers and 2 buyers, arsenic good arsenic a receipt shared with Reuters.

Zeekr dealers sold immoderate of the cars successful consequent months to buyers successful different cities specified arsenic Beijing and Chongqing, the sources said.

"The Zeekr salesman said the car would beryllium 3,000 yuan ($420) little than a car I would get from the store and I would besides get a charging coupon worthy 10,000 yuan," said a purchaser successful different confederate city. He declined to beryllium named, citing concerns of retaliation from the automaker.

The China Securities Journal reported that astir of the owners it spoke to said their cars were insured by Xiamen C&D and its affiliates.

Reuters could not find however overmuch of Zeekr's Xiamen sales in December were booked early.

China Automobile Dealers Association information showed that 2,508 of the 2,737 sales Zeekr booked successful Xiamen successful December were sold to companies, portion 257 went to idiosyncratic buyers.

But information published by Xiamen's conveyance medication bureau showed conscionable 271 cars registered successful December for licence plates, which genuine buyers mostly get erstwhile they person their cars.

The Neta dealer said galore of the zero-mileage used cars helium received from the institution remained successful his warehouse, unsold. The institution "only had 1 message: Just bash it, everyone other is doing it".