Companies are fined for violating their green car subsidy program. (Photo : Getty Images)
The Chinese Ministry of Finance announced that there are five car companies who violated the terms of their hybrid car development program in order to get government funding. The amount totaled to roughly 1 billion yuan.
One of the companies who have allegedly misappropriated funds is a subsidiary of Chery Holding, the seventh largest car manufacturer in China.
The Ministry then released a longer list that involved Nissan and Hyundai.
"This is a major blow to the industry and also has a large impact on the country's policy enforcement," Xu Yanhua, a vice secretary for the China Association of Automobile Manufacturers.
The ministry said that they will be revoking production licenses of the top violator, Suzhou Gemsea Coach Manufacturing, and the others will be served fines amounting to half of the subsidy that they received.
Other companies which were involved in the scandal are Higer Bus in Suzhou, Wuzhoulong Motors in Shenzhen, Chery Wanda Bus Manufacturing Co. in Guizhou and Henan Shaolin Bus.
The Chinese government started to give out subsidies to car manufacturers to encourage energy efficient and no-emission cars. The move increased sales four times.
However, car manufacturers are baffled. A BYD spokeswoman said the firm had not received any official notification from authorities. "Right now we do not have any idea where the suspected list is coming from."
Nissan did not release any comment. A Hyundai spokesperson said that they are "checking with the relevant internal departments".
Yale Zhang, managing director of consultancy Automotive Foresight, said: "The subsidy cheating investigation is another blow to China achieving a full-year sales target of 700,000 electric and plug-in hybrid cars."
The carmakers' association said that the car companies were able to sell 245,000 in the first eight months of the year.
