[Dippy]

In an interesting development, China’s commerce ministry will meet with industry bodies and automakers, including BYD and Dongfeng Motor, to discuss increasing sales of "used cars" that have never been driven.

This comes after Great Wall Motor's Chairman Wei Jianjun spoke about a phenomenon called "second-hand cars with zero mileage" that has emerged in the Chinese market in recent times.

What happened here is that cars that had been registered, had license plates, and were marked as sold, but had never been driven, were being sold in the second-hand market. It is being said that at least 3,000 to 4,000 dealers on used car platforms were selling these cars.

Other participants invited to the meeting include the China Association of Automobile Manufacturers (CAAM), China Automobile Dealers Association (CADA), as well as some trading platforms of used cars, the source who prefers to be anonymous said.

The source said the tactic was seen as a potential method within the industry for automakers and dealers to support new car sales as they try to meet aggressive sales targets.

Shares of Chinese automakers such as BYD and Leapmotor fell in value after this development was reported. Both fell 3.1 percent.

Source: Reuters

Link to Team BHP news

[GTO]

Dumping cars just to meet sales targets and get incentives helps no one. It drastically affects the new car market (price wars), greatly disrupts the used car market, kills resale value for existing car owners and is a short-term fix at best.

Such games should be strictly avoided. It leads to unfair competition and an unhealthy market place.

The only time new cars should be allowed for sale through used car channels is when they're sitting unsold (on dealer yards) for 6 - 12 months. Then, they are dead inventory. As an example, in India, we saw the Nissan X-Trail on sale through used car dealers because they just wouldn't sell new. But these "zero mileage" cars of China are clearly planned overproduction by the manufacturers.

[Mystic]

We are going to see this situation in India also in near future with respect to automobiles. This reminds me of our unregulated real estate industry until recently (hoping that the new regulatory authority is recognising the loopholes now). We often see many projects in metros that it is sold out. We can see thousands of apartments vacant for years and even decades with no occupants. When you want to buy them as a used apartment by seeing an ad for used apartments from a so called owner, one will be surprised that it would be registered by the builder directly and not from the owner.

[Lalvaz]

Originally Posted by GTO

The only time new cars should be allowed for sale through used car channels is when they're sitting unsold (on dealer yards) for 6 - 12 months. Then, they are dead inventory. As an example, in India, we saw the Nissan X-Trail on sale through used car dealers because they just wouldn't sell new. But these "zero mileage" cars of China are clearly planned overproduction by the manufacturers.

If Nissan had announced the price cut on Xtrail, would it have not sold via its own sales channel? I think it was just laziness and the lure to do a bulk deal with BBT.