China’s green car scandal snares 20 more manufacturers

The scandal involving Chinese carmakers and illegal subsidies is expanding, as the government identified 20 additional manufacturers that are bending regulations on green car subsidies.

According to the country's finance ministry, these manufacturers — including Nissan Motor Co. Ltd. and Hyundai Motor Co. — received around $150 million in illegal subsidies. Four of the offending companies will be fined, while the fifth, Suzhou Gemsea Coach Manufacturing Co., will have its production license revoked.

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

In the last year, China has provided subsidies worth $4.5 billion for green cars, pushing up sales by four times to 331,000 vehicles last year. However, the scandal could make it more difficult for the country to reach its target of selling 700,000 electric and hybrid cars in a year, according to Yale Zhang, the managing director of Automotive Foresight. Reuters/St. Louis Post-Dispatch