Corporate Average Fuel Consumption (CAFC) for Passenger Cars

Corporate Average Fuel Consumption (CAFC) for Passenger Cars refers to the weighted average fuel consumption figure calculated based on the individual fuel consumption of each vehicle model and its corresponding production or import volume for passenger cars built in or imported into China by automotive manufacturers. As one of China’s core regulatory tools for automotive energy conservation, the CAFC framework regulates the overall fleet fuel consumption of carmakers through progressively stringent annual compliance targets, compelling manufacturers to continually optimise the fuel economy of their vehicle line-ups.

Calculation Mechanism

CAFC is calculated by multiplying the fuel consumption of each vehicle model produced by a manufacturer (tested in accordance with the GB/T 19233 national standard) by its respective production volume, summing these figures, and dividing the total by the overall production volume to determine the weighted average. This mechanism prevents carmakers from relying on just one or two fuel-efficient models to pass the threshold, instead requiring the entire vehicle line-up to collectively meet annual fleet targets.

In regulatory practice, CAFC compliance targets comprise two key metrics: the Corporate Average Fuel Consumption Target Value, calculated by weighting the individual fuel consumption targets of a carmaker's various models; and the Corporate Average Fuel Consumption Compliance Value, derived from national annual fuel consumption reduction mandates. A manufacturer's actual fleet performance must meet both criteria simultaneously. For calculation purposes, the output volume of new energy vehicles (NEVs) can be multiplied (by a factor of 3 to 5 times prior to 2025) to incentivise the industry's transition towards electrification.

Policy Role and Function

CAFC serves as the foundation for calculating "fuel consumption credits" under China's Dual-Credit Policy. When a carmaker's actual CAFC figure is lower than its compliance target, positive fuel consumption credits are awarded; conversely, exceeding the target results in negative credits (deficits). Any deficit incurred must be balanced using carried-forward surplus credits, credits transferred from affiliated entities, or by purchasing New Energy Vehicle (NEV) credits.

As the cornerstone of the Dual-Credit framework, the CAFC target acts as a regulatory mechanism to reduce energy consumption in internal combustion engine (ICE) passenger cars. By raising compliance benchmarks year after year, the scheme exerts ongoing pressure on manufacturers to innovate in areas such as engine thermal efficiency, lightweighting, and hybrid powertrain integration, thereby driving a steady reduction in the industry's overall fleet fuel consumption.

Industry Performance and Trends

In recent years, compliance pressure under the CAFC regime has intensified significantly. In 2025, the industry's actual average fuel consumption rebounded to 3.38 L/100 km, with total negative fuel consumption credits swelling to 9.412 million points. The majority of non-compliant carmakers consist of traditional joint-venture brands and manufacturers with model portfolios skewed towards larger vehicles. As CAFC benchmarks become increasingly stringent year on year, meeting targets has become more challenging. Relying purely on incremental improvements to conventional powertrains is no longer viable; carmakers must swiftly realign their product portfolios towards hybridisation and electrification.