China says 5 auto firms cheated on green car subsidies worth 1 bln yuan

* Cheating involved 1 bln yuan in subsidies – ministry

* Revokes licence of Suzhou Gemsea, fines others

* Subsidiary of Chery Holding among those fined

(Adds company names)

By Jake Spring

BEIJING, Sept 8 China’s Ministry of Finance said
on Thursday that five domestic automakers had cheated its
programme to subsidise electric and plug-in hybrid vehicles and
received roughly 1 billion yuan ($150 million) in illegal

The companies alleged to have benefited primarily make buses
and include a subsidiary of Chery Holding, owner of the seventh
most popular Chinese passenger car brand.

The ministry said it would revoke the production licence of
Suzhou Gemsea Coach Manufacturing, while the other four firms
would be fined the equivalent of 50 percent of the wrongly
received subsidies, while efforts would also be made to recover
any awards which had been obtained illegally.

The Chinese government has used subsidies and hard targets
to promote electric and plug-in hybrid vehicles, spurring sales
to more than quadruple last year, in an effort to combat heavy
pollution in much of the country.

The subsidy cheating investigation is another blow to China
achieving its full year sales target of 700,000 new energy
vehicles (NEVs), Chinese shorthand for electric and plug-in
hybrid cars, Yale Zhang, managing director of consultancy
Automotive Foresight, said.

Only 215,000 such cars were sold in the first seven months
of the year, according to China’s automakers association.

The ministry said Suzhou Gemsea had fabricated virtually its
entire new energy vehicle manufacturing and sales operations,
including forging sales and manufacturing certificates and
licenses for the vehicles.

“Individual companies seeking profit, violated relevant laws
to cheat and fraudulently obtain financial subsidies, seriously
disrupting the market order, violating the legitimate interests
of firms that honor the law in researching, developing and
manufacturing new energy vehicles,” it said in a statement.

Suzhou Gemsea could not immediately be reached for comment.

Chery Wanda Guizhou Bus, King Long United Auto Industry,
Shenzhen Wuzhoulong Motors, and Henan Shaolin Bus claimed
subsidies for vehicles they had not finished building, the
ministry said.

Shaolin Bus declined to comment, while the other companies
could not immediately be reached for comment.

The finance ministry laid out penalties for other potential
violations to subsidy policies but did give names of other
companies alleged to have wrongfully obtained subsidies. The
ministry inspected 90 companies in total.

China spent $4.5 billion last year in subsidies for such
vehicles, although it is set to gradually phase out the payments
by 2021.
($1 = 6.6635 Chinese yuan renminbi)

(Additional reporting by Beijing newsroom; Editing by
Muralikumar Anantharaman and Alexander Smith)

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