Exclusive-China EV brands Zeekr, Neta inflated car sales using insurance scheme
The China Securities Journal also raised questions over Neta's sales, saying it showed anomalies. Reuters is reporting for the first time details of how Neta inflated sales.
Zhejiang Hozon New Energy Automobile, which owns Neta, and Xiamen C&D did not respond to requests for comment on Saturday. A spokesperson for Geely said, "Geely firmly rejects the report put forward by the China Securities Journal." The spokesperson declined to comment on Reuters findings or provide further details.
Zeekr told Reuters in an English-language statement on Sunday that the "vehicles referenced in some recent reports are for showroom display" that were covered by "mandatory car insurance" to ensure their safety while being exhibited.
"Before these vehicles are handed to customers there are no retail invoices issued, and they have not been registered or licensed with any vehicle registration authority," the company said.
In a separate Chinese-language statement published on its official Weibo account on Sunday, Zeekr said the policies put on these vehicles were "mandatory traffic accident insurance".
"(Zeekr) firmly opposes practices such as the sale of 'zero-mileage used cars' that disrupt the industry order," the company said, adding that the exhibition vehicles were "in a legal sense, always brand new and unregistered car products."
Zeekr did not respond to Reuters queries about using these cars to book sales.
Li Yanwei, an analyst with the China Automobile Dealers Association, said he believed the firms carried out such practices to embellish their financial reports and achieve their performance goals.
"This way of whitewashing performance is not advisable," he wrote on Chinese social media platform Weibo on Saturday.
Analysts and investors tracking China’s auto industry gauge performance and estimate inventory levels with two sets of sales data. Wholesale numbers reported by automakers to the industry association show sales from automakers to dealers, while retail data compiled from insurance registration records show the sales to users.
PRESSURE ON DEALERS
Last month the state-owned People's Daily, the mouthpiece of China's ruling Communist Party, published an editorial condemning the sale of zero-mileage used cars domestically and listing a litany of harms the practice brings upon the industry and buyers.
This month four dealer associations based in the wealthy Yangtze River Delta urged automakers to set them more reasonable sales targets and incentive policies, saying, without providing details, that dealers were being forced to falsify sales.
Neta booked sales early by arranging insurance policies for cars before sending them to dealers, according to records shared with Reuters and a dealer for the brand.
The records contain details for each car and the insurance policies purchased on them, with the names of the insurance agents. Dealers were able to refer to these when they found a buyer to transfer the policy to, according to copies seen by Reuters. The company booked early sales of 64,719 cars this way.
"In Neta's case, the company made it clear to dealers that the cars were insured ahead of time and therefore counted as sold," said the dealer, who spoke on condition of anonymity, citing fears of retaliation from the company.
"We had to explain to buyers that the traffic insurance was complementary and remind them it would expire earlier and should be renewed on time," he said.
But three Neta buyers, who asked not to be named, told Reuters the dealerships had not told them the policies had begun well before the purchase date, only finding out when the policies expired.
The dealer said Neta started doing this in late 2022 to obtain EV subsidies that were set to end that year.
Neta's sales peaked in 2022 when it was ranked as the eighth-largest maker of new EVs in China with sales of 152,000 vehicles. Sales fell last year to 87,948 vehicles, including 23,399 exported, and it sold 1,215 cars in the first quarter of 2025, according to data from the China Association of Automobile Manufacturers.
The brand has been in financial trouble since late 2024, and its owner, Zhejiang Hozon New Energy Automobile, entered bankruptcy proceedings in China last month, according to state media.
'JUST DO IT'
The Neta dealer said many of the zero-mileage used cars he received from the company remained in his warehouse, unsold. The company "only had one message: Just do it, everyone else is doing it".
Zeekr, which is being privatised by Geely Auto, booked sales with the help of Xiamen C&D, which runs dealerships for Zeekr and other brands.
Xiamen C&D insured and registered the vehicles under the names of two subsidiaries in December, allowing Zeekr to count the sales before year-end, according to four dealers and two buyers, as well as a receipt shared with Reuters.
Zeekr dealers sold some of the cars in subsequent months to buyers in other cities such as Beijing and Chongqing, the sources said.
"The Zeekr salesman said the car would be 3,000 yuan ($420) less than a car I would get from the store and I would also get a charging coupon worth 10,000 yuan," said a buyer in another southern city. He declined to be named, citing concerns of retaliation from the automaker.
The China Securities Journal reported that most of the owners it spoke to said their cars were insured by Xiamen C&D and its affiliates.
China Automobile Dealers Association data showed that 2,508 of the 2,737 sales Zeekr booked in Xiamen in December were sold to companies, while 257 went to individual buyers.
But data published by Xiamen's vehicle administration bureau showed just 271 cars registered in December for license plates, which genuine buyers generally obtain once they receive their cars.
(Reporting by Reuters staff; Editing by William Mallard and Susan Fenton)
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