Eliza Wong
The Unfolding Controversy
Recent reports reveal disturbing practices within China’s rapidly growing EV market. Neta Auto stands accused of artificially inflating sales statistics through systematic manipulation—prematurely registering insurance for unsold vehicles to classify them as official sales. According to dealership sources, manufacturer representatives explicitly justified this by claiming competitors engaged in identical practices. This scandal exposes deep-rooted pressures in China’s automotive sector, where sales targets and expiring government subsidies potentially override ethical business conduct.
Sales Inflation Mechanism
The scheme operated through coordinated insurance manipulation:
- – Dealers registered compulsory traffic insurance for unsold inventory
- – Vehicles immediately counted as “sold” in monthly/quarterly reports
- – These “zero-kilometer used cars” remained warehoused indefinitely
- – Documentation shows 64,719 units falsified from January 2023-March 2024
The Financial Implications
Distorted sales figures directly impact corporate valuation and investor confidence. By counting warehoused vehicles as revenue, companies:
Subsidy Race Against Time
Sources indicate this fraud accelerated in late 2022 as automakers rushed to qualify vehicles for expiring government subsidies under China’s new-energy vehicle incentive program. The practice enabled:
- – Qualification for financial benefits vehicles wouldn’t otherwise secure
- – Artificial inflation of market share statistics
- – Misleading quarterly reports to shareholders
Dealership Pressure Tactics
Multiple dealers described intense pressure to comply with these fraudulent schemes:
- – Explicit instructions to process premature insurance registrations
- – Forced explanations to customers about shortened insurance periods
- – Manufacturer indifference to unsold “used” vehicles clogging inventory
One dealer anonymously reported Neta representatives brushing off concerns with the phrase: “Go ahead and do it—everyone else is.”
Industry-Wide Fraud Patterns
This scandal represents symptomatic industry rot. The widespread “zero-kilometer used car” phenomenon involves:
A Regulatory Blindspot
Despite Chinese officials proposing a 6-month ban on new-vehicle resales (per Automotive Review magazine), enforcement remains inconsistent. These vehicles typically appear:
- – Through 3,000+ used-car platforms nationwide
- – With artificially low odometer readings
- – Without disclosing original registration status to buyers
Great Wall Motors Chairman Wei Jianjun (魏建军) publicly condemned this as “an industry tumor” during recent policy discussions.
Consumer Impact Fallout
Buyers face tangible harm from these practices:
- – Depressed resale values due to dual-registration stigma
- – Unexpected insurance expiration notices without disclosure
- – Difficulty verifying actual vehicle history
- – Potential warranty complications
Broader Market Consequences
Beyond individual grievances, industry-wide harm includes:
Data Distortion Effects
By artificially inflating registration statistics, automakers create dangerous illusions:
- – False signals about EV adoption rates
- – Misallocation of manufacturing investments
- – Distorted competitive analyses
- – Undermined trust in Chinese auto exports
Pathway to Transparency
Meaningful reform requires coordinated action:
- – Implementation of proposed resale restrictions
- – Independent third-party sales verification
- – Strict penalties for insurers enabling fraudulent registrations
- – Whistleblower protections for dealership staff
The industry has reached an ethical crossroads. Authentic market growth demands abandoning statistical theatrics and rebuilding trust through demonstrable sales integrity and regulatory accountability.
