JAC Motors is again suspected of emissions fraud: may be severely punished by the environmental protection department

In the automotive industry, emissions fraud is a very serious matter. In addition to Volkswagen in Germany, there have also been precedents of huge penalties for emissions fraud in China.

JAC Motors has once again attracted attention from relevant departments due to its emission issues.

On May 5, an announcement from the Beijing Municipal Ecology and Environment Bureau indicated that a hearing would be held to investigate the serious penalties against JAC Motors for allegedly passing off inferior pollution control devices as good ones and selling them as qualified emission inspection products.

This is an announcement of the postponement of a hearing. The hearing was originally scheduled to be held on April 15, but was postponed to May 16 due to the application of the party involved, JAC Motors.

The announcement did not mention which JAC Motors products had "inferior pollution control devices" and which models were "sold as qualified emission inspection products"?

On May 8, a relevant person from the Beijing Municipal Ecology and Environment Bureau also said in response to an inquiry from 21st Century Business Herald, "Because this is a case that is still under investigation, no conclusion has been reached, and it is not convenient to disclose too much specific information now. The final result will depend on the penalty decision."

However, an insider of JAC Motors said that the models of JAC that were accused of emissions fraud this time were mainly commercial vehicles. During the process of upgrading emission standards, the emission capabilities of some trucks did not keep up, but the specific models and scale involved are still unclear.

In fact, JAC Motors has encountered the problem of "emission fraud" before. As early as 2014, when some regions took the lead in implementing the National IV emission standard, JAC heavy trucks were exposed by CCTV's "Focus Interview" for modifying the engine model and code on the vehicle certificate to pass off the National III as the National IV.

At that time, JAC said that the behavior was done by dealers and that they would strictly manage sales channels. However, the "Focus Interview" investigation believes that such emission fraud cannot be done without the cooperation of manufacturers.

The above-mentioned JAC insider admitted that JAC was "criticized by name" at the time, and objectively violated laws and regulations, and was later punished. However, he also emphasized that the emission fraud was not a problem of JAC alone, "It was the same for commercial vehicles and even the entire automotive industry."

However, the "punishment" he mentioned about JAC has not been announced. It is still unknown what the result of the hearing on emissions fraud will be and whether it will have a further impact on JAC's operating performance.

Currently, under the macro environment of overall adjustment of the automobile industry, JAC Motors itself has fallen into operational difficulties. In 2018, JAC Motors' net profit attributable to shareholders of listed companies was -786 million yuan, a sharp drop of 282.02% year-on-year.

Volkswagen "Fake Gate"

In the automotive industry, emissions fraud is a very serious matter. Previously, Volkswagen of Germany was "defeated" in the relevant market due to emissions fraud, and faced a large number of accusations and huge claims.

In September 2015, the U.S. Environmental Protection Agency pointed out that Volkswagen installed cheating software in some diesel vehicles to falsify exhaust emissions tests to show that the results met emission standards, but when the vehicles were actually driving, the exhaust emissions seriously exceeded the standards.

Since then, many countries around the world have launched investigations into Volkswagen, which has been mired in emissions scandals. Volkswagen has also admitted that the number of diesel vehicles involved in illegal emissions is estimated to be 11 million, mainly models equipped with EA189 diesel engines, involving four brands: Volkswagen, Audi, Skoda, and Seat.

In June 2018, the prosecutor's office in Brunswick, Germany, fined Volkswagen Group 1 billion euros (1.1 billion U.S. dollars). According to the investigation by the supervisory department, between mid-2007 and 2015, Volkswagen launched cars equipped with EA288 (Gen3) diesel engines in the U.S. and Canadian markets, and cars equipped with EA189 diesel engines in the global market, involving a total of 10.7 million vehicles.

In a statement on the same day, Volkswagen said it accepted the punishment from the Brunswick prosecutor's office and would give up the appeal.

The Volkswagen "emissions scandal" has not yet been completely resolved, and the brands involved are not limited to the four mentioned above. Recently, Porsche has also been punished. On May 7, the Stuttgart Procuratorate in Germany stated that Porsche neglected product quality control and would pay a fine of 535 million euros (about 600 million U.S. dollars) for installing software that cheated in exhaust emission detection.

Domestic penalty precedent

There are precedents in China for penalties for exceeding emission limits and for falsifying or passing off inferior vehicle pollution control devices as good ones.

In January 2018, according to a report from the Ministry of Environmental Protection at the time, two Shandong automakers were found to have produced vehicles that exceeded pollutant emission standards and falsified pollution control devices. The Ministry of Environmental Protection ordered the two companies to suspend production and rectify the situation, and issued fines totaling more than 38 million yuan.

It is reported that this is the first time that the Ministry of Environmental Protection has imposed a fine on an automobile manufacturer.

The two automakers are Shandong Kaima Automobile Manufacturing Co., Ltd. and Shandong Tangjun Ouling Automobile Manufacturing Co., Ltd. The Ministry of Environmental Protection at the time found during product sampling that more than 100 light diesel trucks produced by the two companies in 2016 had excessive emissions.

What is more serious is that Shandong Kaima tampered with the pollution control devices of 318 heavy-duty diesel trucks of another model it produced, so that the vehicles would not alarm even when the diesel exhaust treatment fluid did not meet the standards, which greatly increased the emission of pollutants.

The 318 heavy-duty diesel trucks with tampered pollution control devices also became the largest recipients of the fines. In response, the Ministry of Environmental Protection confiscated nearly 720,000 yuan of illegal income and imposed a fine of 30.4966 million yuan, twice the value of the goods (the value of the goods was about 15.25 million yuan), for a total of 31.21 million yuan in fines and confiscations.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.