China names more firms in car scandal

Electric cars seen at a carpark of a factory in China's Hebei province. Both domestic and foreign carmakers have been accused of breaking rules on subsidies for electric and hybrid vehicles. The scandal is a setback to China's goal of achieving full-
Electric cars seen at a carpark of a factory in China's Hebei province. Both domestic and foreign carmakers have been accused of breaking rules on subsidies for electric and hybrid vehicles. The scandal is a setback to China's goal of achieving full-year sales of 700,000 green cars.PHOTO: REUTERS

Nissan, Hyundai among carmakers accused of breaking rules to get green vehicle subsidies

BEIJING • China has accused more than 20 additional carmakers, including Nissan and Hyundai, of breaking rules on green car subsidies, according to a state media report yesterday, widening a scandal over a US$4.5 billion (S$6 billion) annual payout programme.

China's Ministry of Finance punished at least five carmakers on Thursday, accusing them of cheating its programme to subsidise electric and plug-in hybrid vehicles, receiving roughly 1 billion yuan (S$203 million) in illegal subsidies.

"This is a major blow to the industry and also has a large impact on the country's policy enforcement," Ms Xu Yanhua, a vice-secretary for the China Association of Automobile Manufacturers, told a news briefing.

The ministry said it would revoke the production licence of Suzhou Gemsea Coach Manufacturing, while the other four firms would be fined. The companies named included a subsidiary of Chery Holding, owner of the seventh-most popular Chinese passenger car brand.

The scandal has cast a pall over China's drive to use subsidies to combat heavy pollution which affects large swathes of the country. This drive helped sales of electric and plug-in hybrids more than quadruple last year to 331,000 vehicles.

China's official Securities Daily newspaper reported yesterday that there was a list of an additional 20 companies that were also found to have committed violations.

These include Japan's Nissan, South Korea's Hyundai, Geely, Anhui Jianghuai Automobile (JAC Motor) and a subsidiary of BYD.

Nissan did not immediately respond to requests for comment. A Hyundai spokesman said the company was "checking with the relevant internal departments" and would respond with comment as soon as possible. Geely declined to comment.

A BYD spokesman said the firm had not received any official notification from the authorities. "Right now we do not have any idea where the suspected list is coming from."

A spokesman for JAC Motor, which this week announced it was exploring a potential joint venture focused on electric vehicles with German carmaker Volkswagen, said the firm did not have an immediate comment.

The subsidy cheating investigation is another blow to China, which is eyeing a full-year sales target of 700,000 electric and plug-in hybrid cars, said Mr Yale Zhang, managing director of consultancy Automotive Foresight.

Only 245,000 such cars were sold in the first eight months of the year, according to China's carmakers association.

China spent US$4.5 billion last year in subsidies for such vehicles, although it is set to gradually phase out the payments by 2021.

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 10, 2016, with the headline 'China names more firms in car scandal'. Print Edition | Subscribe