BEIJING (Reuters) -China's state news agency said on Tuesday some automakers were "drastically" inflating pre-sale orders, warning such a practice can mislead consumers and investors and harm the industry's future.

The Xinhua Daily Telegraph, a newspaper published by Xinhua, didn't name any of the automakers but alleged some asked employees to place refundable deposits to create an illusion of strong pre-sale performance while some had engaged with "a grey industry chain" offering the order-padding services.

The orders reported by the automakers lack oversight from third-party agencies and usually far exceed their actual deliveries, it said.

"Such inflated orders are raising alarm within the industry," the newspaper said, adding the practice has drawn regulatory attention.

China's industry ministry said in September it would launch a three-month campaign to crack down on false marketing and other online irregularities in the automotive sector.

INFLATING THE NUMBERS

The Xinhua article followed a commentary from the official Economic Daily on Saturday, which also condemned the order padding by automakers without naming.

Economic Daily said this practice originally came from the smartphone industry as companies used to race to claim tens of thousands or even millions of pre-orders that were not verifiable.

"Nowadays, it has become more of a marketing tactic for automakers to boast about their order numbers, which is detrimental to matching production and sales," Nio CEO William Li told reporters earlier this month, adding that his company didn't inflate such numbers.

The criticism follows other evidence of sales inflation being carried out in response to a bruising price war in the world's largest auto market. Reuters has reported on how Chinese automakers and dealers have used an insurance tactic to inflate car sales. Another method is to ship new cars overseas as used, which has been supported by local governments keen to boost economic performance.

The unusual practices are rooted in China's "production-oriented" industrial model as industry policy created an oversupply of cars, a Reuters investigation showed.

China's car sales grew by 9.9% to 14.9 million units in the first eight months of 2025, industry data showed. China Passenger Car Association noted that China accounted for 38% of the total car sales globally in August thanks to government subsidies.

(Reporting by Qiaoyi Li, Zhang Yan and Brenda Goh; Editing by Ros Russell)