Deceptive Chinese Dealers Market Zero-Mileage Vehicles as Pre-Owned to Take Advantage of Subsidies | Carscoops

      China's car subsidy program has encountered a significant hurdle as several cities have paused the initiative.

      Over 4 million individuals have sought trade-in subsidies in China this year, with the government pledging to maintain funding for the program until 2025. Some businesses have taken to marketing new cars as "zero-mileage used cars" to access these subsidies.

      The car market in China has been thriving, supported by substantial government subsidies. Dealers have been exploiting this situation in various ways, including selling zero-mileage vehicles as “used” to benefit from trade-in subsidies intended for consumers. Currently, at least six cities and municipalities have suspended these subsidies, leading to increased costs for local buyers purchasing new cars.

      This pause follows concerns regarding the potential long-term effects of the ongoing automotive price war that has engulfed the nation.

      Cities like Zhengzhou and Luoyang have paused the program due to the depletion of initial funding from Beijing. Other cities such as Xinjiang, Chongqing, and Shenyang have joined in suspending a subsidy initiative originally aimed at boosting consumer spending amid China's economic struggles.

      According to Reuters, subsidies in the automotive sector and other industries have contributed to a 6.4% increase in local retail sales in May. Furthermore, data from the Ministry of Commerce indicates there have been over 4 million applications for car trade-in subsidies in the first five months of this year.

      While these subsidies assist in making cars more affordable, the program is being misused. A rising trend involves new cars being heavily discounted and sold as “zero-mileage used cars” to quickly clear stock. In addition, many dealers are marketing new vehicles as used ones eligible for trade-in subsidies.

      Reports indicate that such practices are one reason the subsidies have been depleted faster than anticipated, resulting in these suspensions.

      The National Development and Reform Commission and Ministry of Finance have stated that the subsidy program will persist through this year, though it remains uncertain when additional funds will be allocated by Beijing.