Concerns Raised Over Zeekr and Neta's Sales Practices Amid Industry Scrutiny

Recently, a "state-owned" media outlet publicly named Zeekr and Neta, questioning whether these two automakers are using inflated sales figures to achieve aggressive sales goals, particularly exploiting loopholes related to 0-kilometer used cars. Since the anti-involution campaign began in June, every aspect of the automotive industry has faced restructuring, starting from subsidies, quality, and payment timelines to now sales figures. This crackdown has been ongoing for two months without signs of abating. Following a series of revelations, it has become evident that the automotive industry has numerous loopholes. The China Securities Journal pointed out that both Neta and Zeekr have been accused of creating a false sense of prosperity by leveraging the "0-kilometer used car" loophole. Neta reportedly insured vehicles before their sale, allowing them to count these as sales prematurely, while Zeekr allegedly sold a large number of insured, transferred inventory vehicles as new cars to unsuspecting consumers through its direct sales stores. Two months ago, Pengpai News also reported that brands involved in the 0-kilometer used car issue included Wuling Hongguang, Leap Motor, Geely, BYD, Changan, FAW Bestune, Audi, XPeng, Li Auto, and Hozon, making it nearly impossible to guard against. This gray area has existed for years, but it has only recently come to light due to Wei Jianjun of Great Wall Motors' revelations. Interestingly, Geely's Yang Xueliang previously praised Wei as an "industry whistleblower," not anticipating that the ensuing controversy would turn into a backlash against Zeekr. Ultimately, the phenomenon of 0-kilometer used cars reflects a structural disorder in the industry, and targeting only two 'soft' automakers raises questions of fairness. Zeekr quickly responded with a statement clarifying that the vehicles mentioned in the report are legitimate display cars that had insurance for safety during the display period but had never issued retail invoices, thus still considered first-hand vehicles. However, the company’s response has left room for skepticism. Some netizens raised two main doubts: why would display cars need mandatory insurance, suggesting a potential for inflated insurance claims; and the abnormal sales spike reported in December last year in Shenzhen and Xiamen, questioning whether the number of display cars in one city could reach thousands. The question remains whether Zeekr exploited a loophole or if the China Securities Journal is misrepresenting facts. Following the exposure of the 0-kilometer used car issue, the entire industry is now wary. Reports indicate that companies like Chery and BYD have initiated accountability measures for dealers violating registration rules. Expecting all automakers to self-regulate is unrealistic, prompting relevant departments to launch enforcement actions. The China Automobile Dealers Association plans to promote a unique coding system for used car exports. A particularly stringent measure under consideration, as per a magazine affiliated with the China Association of Automobile Manufacturers, is a policy to prohibit the transfer of new cars to used status within six months of registration. However, this may raise concerns over potential 'scofflaw' behavior, leading to the report being revised with vaguer language. According to data from the China Automobile Dealers Association, vehicles with a registration date of three months or less and mileage of 50 kilometers or less accounted for 12.7% of the national used car market in 2024, with over 60% consisting of new energy vehicles, indicating a startling trend. Whether this series of measures will help the used car market move towards regulation and away from chaos remains to be seen. A series of stringent measures are expected to follow, as structural issues cannot be resolved overnight.