JAC Motors Facing Emissions Fraud Charges In China
JAC Motors is currently facing allegations of emissions fraud, with the firm scheduled to defend itself in a hearing this week in China. If regulators find it guilty of fraud, the company could be facing stiff fines that would essentially ruin its reputation globally. This could be an additional burden to its already weak financial performance.
The company reportedly received a notice earlier in the month from the Beijing Municipal Ecological Environment Bureau. The agency accused the company of distributing defective pollution control device used for emissions inspections. Reports have revealed that most of the vehicles in question are commercial vehicles. However, the specific models and types of vehicles being investigated remain unclear.
The Anhui-based manufacturer currently suffered from poor first-quarter performance, with a 69.13 percent drop in profits when compared to the same quarter last year. JAC Motors reported net first-quarter profits of around $9.51 million.
Apart from the ongoing investigation, JAC Motors was previously the center of a separate emissions scandal in 2014. The company as caught intentionally altering some of its car's engine and model numbers on qualification certificates.
This was reportedly done by the company to make it seem like its cars had passed the National IV emissions standards during that time. JAC Motors admitted to the wrongdoing in 2014 and was asked to pay hefty fines as punishment.
Following the slew of international automotive companies being caught in emissions scandals within their respective countries, China has tightened its regulations for domestic automakers. Just recently, Chinese regulators had fined two Shandon-based manufacturers $5.52 million for attempting to cheat in emissions tests with defective pollution control devices.
The two companies, which included truck manufacturer Shandong Kama Automobile, were found to have hundreds of diesel-powered commercial vehicles with excessive emissions well above the national limits.
The Kama was also found guilty of tampering with its vehicle's pollution devices in an attempt to fool emission testing systems. Apart from the hefty fine, the company was also asked to return its illegal gains from the sales of its trucks.
Among the different emission scandals, Volkwagen's involvement still remains to be the most publicly known. The German automaker was investigated by the United States Environmental Protection Agency (EPA) in 2015.
The agency then discovered that Volkswagen had tampered with its vehicle's software in order to pass emissions inspections. The investigation also revealed that the emissions generated by the company's vehicles were severely over the national limits. Around 11 million diesel cars were found to be involved in the scandal and Volkswagen ended up paying $1.12 billion in fines.