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Survey: Price wars lead to car defects

(China Daily)
Updated: 2006-11-20 08:28

Price wars have taken a toll on the quality of domestically-made cars with defects reported in 77 per cent during the first six months of use, according to the latest market survey.

The 2006 China Automobile Customer Satisfaction Index (CACSI) said major defects involve tyres, air conditioning and braking systems, locks and steering wheels.

For every 100 new cars, there were an average of 338 defects, much higher than last year's 246.

A model poses by a concept car of Chery Automobile Co. of China during the 2006 Beijing International Automotive Exhibition in Beijing, Nov. 18, 2006. [Xinhua]

Meanwhile, the China Consumers' Association received 1,038 complaints in the first three quarters, up 21 per cent from last year. In the third quarter, the number was 44 per cent higher than the second.

Experts say price cuts which have averaged about 10,000 yuan (US$1,250) annually in the past few years have forced producers to purchase lower-grade parts in an effort to lower costs. "The defects are a result of carmakers constantly reducing prices and sacrificing quality," said Fan Tianshun, director of the customer affairs office of the China Quality Association, which conducted the CACSI survey.

Making matters worse is the shortened product launch cycle. For example, this year alone more than 100 models have been, or will be, launched.

"With shorter research, development and testing periods, the new models will, of course, have more defects," Fan said.

In the first 10 months, more than 3 million cars were sold, according to statistics from the China Automobile Industry Association. Last year there were an average of 3.4 cars per 100 families in China, an annualized increase of 45.9 per cent from 2003.

However, many domestic consumers still go by price and appearance. "People first think of 'owning" a car, then 'enjoy' its performance," Fan said.

"I recommend car producers not to grab market share simply by lowering prices," Fan said. "Such competition strategies will hinder their sustainable development in the long run."

The CACSI poll was based on 4,648 participants in 36 cities in 25 provinces. The 16 major domestic brands surveyed accounted for 72 per cent of all cars sold in China last year.

Though defects have increased by a large percentage, this year's customer satisfaction index has risen 0.1 per cent from last year. The improvement was mainly seen among cars whose prices ranged from 50,000 yuan (US$ 6,250) to 100,000 yuan (US$12,500) each.

"Cars within this price range were some years ago sold at about 50,000 yuan (US$7,500) higher," Fan said.

Jetta of First Automobile Works-Volkswagen, which ranked first in customer satisfaction, sold more than 140,000 units in the first 10 months of the year.

Geely, whose cars are mainly priced from 30,000 yuan (US$3,750) to 50,000 yuan each, had the least customer satisfaction. Others drawing negative comments included Chery QQ and ChangAn Alto.

(China Daily 11/20/2006 page1)