Chinese Buyers Claim They Are Securing Insurance For Vehicles They Have Yet To Purchase | Carscoops

      One major Chinese automaker registered half of its vehicles before selling them over a 14-month span.

      Recent reports indicate that Chinese dealers are registering cars ahead of time to meet their internal monthly sales targets.

      Some customers have discovered that their newly acquired vehicles were already insured under different names.

      Several dealerships linked to automakers have acknowledged employing this controversial strategy.

      The impressive sales figures from Chinese car manufacturers may not be as straightforward as they appear. Beneath the eye-catching statistics lies a practice that raises concerns: certain companies seem to inflate their reported sales figures by insuring vehicles prior to their actual sale.

      A recent Reuters report reveals this tactic, suggesting that several leading Chinese car manufacturers count cars as “sold” once they are insured, even if those vehicles have not yet reached the consumers. This practice enhances sales figures, creating the illusion that targets are being achieved.

      Earlier this month, it was reported that Neta and Zeekr had insured tens of thousands of vehicles before selling them, allowing these companies to claim sales earlier than typical Chinese industry practices would allow. Specifically, Neta is said to have recorded at least 64,719 early sales from January 2023 to March 2024, representing over half of its total sales of 117,000 vehicles during that timeframe.

      It appears that many other companies may be engaging in similar practices. A recent examination by Reuters of 97 customer complaints regarding this controversial tactic revealed that in several instances, dealerships explicitly stated that this method was used to assist manufacturers in achieving their sales targets. Many customers only learned that their new vehicles had been previously insured after completing their purchases.

      Dealerships connected with prominent brands like FAW Hongqi, SAIC Roewe, SAIC VW, Dongfeng Nissan, GAC Toyota, GAC Honda, and SAIC GM have publicly acknowledged to official media that insuring unsold vehicles is a method employed to meet sales targets.

      Significantly, a spokesperson for Honda informed Reuters that GAC Honda dealers are not allowed to acquire compulsory insurance before selling new vehicles. Likewise, FAW Hongqi asserts that it does not partake in such questionable practices. GM China also clarified that it only records deliveries, not insured vehicles, in its sales statistics.

      In China, sales are tracked using two main metrics: the first comes from automakers reporting sales to the industry association, indicating sales from manufacturers to dealers. The second is retail data based on mandatory traffic insurance registrations, which reflects actual sales to consumers.

      This practice reportedly emerged as early as 2016 but has gained traction since early 2023 amid a price war in the Chinese automotive market. Companies like Li Auto have been known to focus heavily on publishing weekly sales rankings on social media, utilizing only insurance registration figures to showcase their performance.

      The China Association of Automobile Manufacturers (CAAM) has criticized the use of insurance statistics for public sales rankings, labeling the figures as unreliable and attributing them to what it described this month as an increasingly cutthroat environment.