Chinese EV Giants Neta and Zeekr Accused of Inflating Sales through Insurance Maneuvering

In a bid to hit aggressive sales targets, Chinese electric vehicle manufacturers Neta and Zeekr have been accused of inflating figures by pre-insuring cars, according to documents reviewed by Reuters. The companies allegedly exploited car registration norms in China to book sales before actual purchases, insiders say. Neta reportedly booked over 64,000 early sales this way from January 2023 to March 2024, accounting for more than half its total reported sales during this period.

State media have voiced concerns over this "zero-mileage used cars" practice, which highlights the cutthroat competition in the world's largest auto market. China's cabinet has pledged to tighten regulations on such methods. Zeekr and Neta's alleged actions are under scrutiny, with Zeekr denying the accusations and claiming the insured vehicles were for showroom display.

These revelations come amid financial troubles for Neta's owner, Zhejiang Hozon New Energy Automobile, which recently entered bankruptcy proceedings. Meanwhile, analysts suggest that these practices were driven by a need to embellish financial reports. The situation underscores the intense pressure automobile dealers face in China's volatile market.

(With inputs from agencies.)