Shanghai Volkswagen, a Sino-German joint venture, has been brought under the spotlight as China's watchdog issued a notice Thursday saying the company has sought about 16.7 million yuan ($2.72 million) by falsely claiming the number of vehicles that do not comply with the country's fuel-efficient standards for State-level subsidies.

The notice, published on the website of the National Audit Office, said the company has falsely claimed 5,570 vehicles that are not up to the standards for subsidies aimed at encouraging energy-saving and environmentally-friendly products in the country.

The subsidies have now been withdrawn, according to Chinanews.com.

"It was due to dealers' unawareness of the differences between the SVW policy and the national policy on energy-saving incentives....thus, they mistakenly considered the latter as the former," said a statement issued by Shanghai Volkswagen on Saturday, two days after the national notice.

Also under the spotlight were, Shanghai General Motors and Jianghuai Automobile which obtained 546,000 yuan and 165,000 yuan in similar ways.