BIZCHINA / Weekly Roundup
Recent auto recalls in China
By YU QIAO (China Daily)
Updated: 2006-03-10 17:25
When it rains, it pours. A slew of foreign and domestic carmakers have
shaken the mainland auto industry recently by pulling a number of
different vehicles off the Chinese market due to defects and other
potential problems.
Between February 22 and March 3, Nissan, Renault, Porsche,
DaimlerChrysler, Shanghai General Motors and FAW Huali announced plans to
recall more than 30,000 automobiles. These recalls have all been
announced as World Consumer Rights Day on March 15 draws closer.
Many analysts view these moves with suspicion, however.
"Why didn't they announce these recalls earlier or later?" asks Jia
Xinguang of China Automotive Industry Consulting and Development Corp in
Beijing.
"They have chosen this time to win points with both consumers and the
regulators."
The current scenario resembles the spate of recalls announced before the
national launch of the first auto recall regulations on October 1, 2004.
Some producers had refused to pull problematic vehicles before this
comprehensive recall system had been established.
"These recalls show how much carmakers care about domestic consumers.
It's a new era of competition," Jia says.
China is the world's third biggest and fastest growing car market. It is
forecast to be No 1 within 10 to 15 years. In 2005, total auto demand hit
5.8 million units, with 3.1 million passenger cars.
Michael Dunne, president of Automotive Resources Asia Ltd, which has
offices in Shanghai, Beijing and Bangkok, says that automakers are now
more eager than ever to satisfy Chinese consumers.
"Recalls are much less expensive than the negative fallout from a car
defect that hasn't been addressed," Dunne says.
"Neglecting customers is the kind of thing that can do real damage to a
brand. No one wants to fall into that category."
Once the recall system was launched, automakers started paying more
attention to consumer demands. A spokesperson from DaimlerChrysler China
says the safety of customers and their families is the company's highest
priority.
"The recall regulation is providing greater transparency and certainty in
this very important area for consumers, manufacturers, and authorities,"
the spokesperson says.
DaimlerChrysler announced on March 2 that it would recall 23,677
Mercedes-Benz S-Class sedans sold in China due to possible fuel tank
fissures.
"We believe that the recall measure shows we care about our customers and
demonstrates to them that DaimlerChrysler AG, as a responsible
manufacturer, continues to pay close attention to the performance of our
vehicles. The company does not hesitate to take action to address any
problems that may arise," the spokesperson says.
Analysts and carmakers say China's current auto recall regulations are
not enough, however. According to regulations published by the General
Administration of Quality Supervision, Inspection and Quarantine,
automakers must recall faulty vehicles. Otherwise, they will be put on a
public blacklist and can face fines of up to 30,000 yuan (US$3,700).
"We need stricter regulations and more legislation relating to auto
recalls like in the United States and Japan," Jia says.
Vehicle manufacturers in the United States that are found hiding
significant problems can be fined tens of millions of US dollars. Those
convicted of serious cover-ups can be sent to prison.
Sources from the quality administration say there are still some
automakers covering up faults out of fear that their reputations will be
damaged. This is primarily because Chinese consumers are unfamiliar with
vehicle recalls.
Beijing native Zhan Yangdong bought a US brand last year.
"Recalls mean poor quality. I don't expect my car to be recalled,
although it would be free of charge if it happened."
Jia predicts auto recalls will become a more frequent occurrence in
China, in light of growing sales. This should familiarize mainland
consumers with the practice.
Recent auto recalls
On February 22, Porsche announced it would recall 60 Carrera S 997 sports
cars due to defective exhaust pipes.
On February 27, Nissan announced it would recall 4,542 X-Trail T30 SUVs
because of fuel leaks.
On February 27, FAW Huali announced it would recall 721 Dario Terios
compact SUVs due to faulty horns.
On February 28, Renault announced its plan to recall 291 Laguna BGOW
sedans because of fuel pipe problems
On March 2, DaimlerChrysler announced it would recall 23,677 Mercedes
S-Class sedans due to possible fuel tank problems.
On March 3, Shanghai General Motors announced it would recall 1,231
Excelle sedans because of defective anti-lock braking systems.
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