Chinese authorities have enacted a new regulation for car makers from April 1.
All domestic and foreign auto makers that operate in China now run under a two-credit system, which consists of the index of Car Average Fuel Consumption - or CAFC - and the index of New Energy Vehicle - or NEV.
CAFC measures the overall fuel consumption level of cars one company produces or imports while NEV calculates the proportion of new energy cars one company owns.
If either credit doesn't meet the criteria, the non-compliant company has to buy credits from other car makers that have extra credits.
Failure to meet the new guidelines could result in production or import cutbacks of an automaker's vehicles that are less fuel efficient.
The implementation of the credit system is designed to improve the fuel efficiency of traditional fuel vehicles, as well as to promote the deployment of new energy vehicles in China.
For more on this, CRI's Shane Bigham spoke with Einar Tangen, CRI business analyst.
