Chinese EV manufacturers accused of using insurance to boost sales figures

China’s booming electric vehicle industry is facing heightened regulatory pressure after it emerged that leading carmakers Neta and Zeekr recorded tens of thousands of vehicles as sold, despite those vehicles never reaching buyers.

Documents reviewed by international media, and corroborated by accounts from dealers and customers, reveal that both brands used pre-emptive insurance registrations to book vehicles as retail sales. The tactic allowed manufacturers to meet ambitious targets in a fiercely competitive market but has triggered alarm among Chinese authorities and industry watchdogs.

Neta, the electric marque owned by the financially troubled Zhejiang Hozon New Energy Automobile, is reported to have pre-insured more than 64,000 vehicles between January 2023 and March 2024. That figure accounts for over half of its officially declared sales in that time.

Zeekr, a premium electric brand under the Geely Auto banner, adopted a similar practice in the southern city of Xiamen. There, insurance records show a sharp rise in sales in December last year — 2,737 vehicles were booked as sold, more than 14 times the monthly average.

Industry sources say cars were insured and recorded as sold before being physically delivered to customers, or in some cases, before being matched with a buyer at all. These vehicles, often referred to as “zero-mileage used cars,” remained in warehouses or showrooms.

The revelations have prompted concern in Beijing. Reports in state-affiliated media, including China Securities Journal and People’s Daily, have criticised the practice, suggesting it misleads consumers and distorts sales data. The Ministry of Industry and Information Technology is now considering a rule that would prohibit resale of vehicles within six months of registration — a move designed to curb manipulation of sales numbers.

In a statement posted to Chinese social media platform Weibo, Zeekr said the pre-insured vehicles were intended for showroom display and remained “legally new”. It has since launched an internal review. Neta has not issued a formal response. Its parent company entered bankruptcy proceedings last month.

Dealers speaking on condition of anonymity say they were directed by Neta to treat pre-insured vehicles as sold. “We were told to explain to customers that their insurance had started early and would need renewing sooner,” said one dealer. Many of those cars remain unsold in storage.

Buyers also expressed frustration. Some discovered their traffic insurance policies were already months old at the time of purchase, limiting coverage and eligibility for claims.

Neta’s strategy reportedly began in late 2022, as it sought to capitalise on government EV subsidies before they expired. The brand has since experienced a sharp decline in sales.

China’s electric vehicle sector, once hailed as a showcase of technological leadership, is now grappling with the consequences of overcapacity and aggressive growth targets. Analysts warn that inflated sales figures could erode trust among investors and skew industry forecasts.

Authorities are now under pressure to restore transparency and accountability in a market that accounted for over 60 per cent of global EV production last year.

Biggest EV Sellers in Australia (2024)