China to punish carmakers who fail to meet fuel targets in 2015

By Reuters

Oct 17, 2014 08:09 AM EDT

China said on Thursday it would punish carmakers by restricting their production and publicly naming them if they fail to meet fuel consumption requirements on passenger vehicles set for 2015.

Punitive measures outlined for offenders of the already-announced fuel economy rules reflect Beijing's latest effort to fight pollution and promote more efficient use of energy.

They are also likely to push automakers, both foreign and Chinese, to embrace more cutting-edge technology such as gasoline-electric hybrids and all-electric cars.

China's fuel economy rules, as stringent as those to be enforced in the United States, Europe and Japan, involve a fleet-wide corporate average target of 6.9 liters per 100km in 2015 and 5.0 liters in 2020. They take effect on Nov. 1.

China said on Thursday it would publicly name carmakers who fail to meet the 2015 target and would ban the production of new models that do not meet fuel economy targets, to be determined by a special weight-based formula.

The government will also reject expansion plans by offenders, who be required to submit improvement plans.

James Chao, director of IHS Automotive for the Asia-Pacific region, said the punitive measures for 2015 "may not matter in a practical sense", because most automakers, save for a few, are projected to be able to comply with the requirements.

But if similarly tough punitive measures were to be enforced in connection with targets for 2020, "it could have a very significant effect, given that few (makers) ... are projected to be able to comply on a corporate average fuel efficiency basis," Chao said.

The rules were published by five government agencies including the Ministry of Industry and Information Technology (MIIT).

China has already taken a series of measures to fight pollution, including restricting car sales in major cities and providing incentives for selling electric vehicles. But the latest measures would put further pressure on carmakers.

Last year, 85 car manufactures in China measured their corporate-average fuel consumption, and about 30 percent of them, mostly domestic brands, failed to meet their annual target for 2013, according to results published by MIIT earlier this year.

No punishments were imposed at the time but China's desire to tighten up is behind the punitive measures backing the 2015 and 2020 targets.

The rules also apply to importers of foreign passenger vehicles. Last year, 13 importers of foreign brands, including General Motors Co, Nissan Motor Co, Porsche, Hyundai, failed to meet their annual target, partly reflecting the fact that most imports are bigger and more powerful models.

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