Unused"used" cars from China threaten global expansion of automakers
Chinese automakers are increasingly relying on overseas sales to offset a fierce price war in the domestic market and excess production capacity, but official exports of new vehicles require expensive dealer networks, logistics and after-sales services, and China restricts export licenses to manufacturers or authorized exporters, according to Nikkei.
In 2021, companies took advantage of the loophole by exporting new cars as "zero-mileage used cars," bypassing licensing requirements and offering significant discounts while remaining profitable. This grey market segment currently accounts for approximately 80% of China's used car exports, increasing from 15,000 units in 2021 to almost 440,000 in 2024, with over 500,000 expected in 2025. Although this practice contributes to an increase in exports, it distorts sales data, undermines established overseas networks, and risks damaging the reputation of Chinese brands due to a lack of after-sales service.
As these vehicles flooded markets from Russia to Southeast Asia, the Middle East, and Africa, margins dropped and competition intensified, echoing China's internal price war. Critics from the industry, including the heads of Great Wall and Chery, are calling for regulation, warning of chaotic and harmful consequences. Regulators are developing measures to address the gaps, especially given that from January 2026, fully electric cars will be subject to the same export licensing regime as hybrid cars and vehicles with internal combustion engines. The proposed solutions include limiting rapid re-exports, strengthening customs controls, and reviewing subsidies that encourage overproduction.