Business / Auto Policy

First formal rules on auto warranties

By Xu Xiao (China Daily) Updated: 2013-01-21 07:57

Sets minimum standards for duration and consumer rights

As China's automotive market continues to mature, car owners will have greater consumer protection through the nation's first mandated auto warranties formally adopted by the General Administration of Quality Supervision, Inspection and Quarantine last week.

Set to take effect on Oct 1, the new regulations require carmakers to offer warranties of at least two years or 50,000 kilometers.

Its also has provisions that require replacement of the entire vehicle if it has been under repair for more than 35 days or more than five times in the warranty period for the same quality problem.

As well, customers can ask for a new vehicle if key drivetrain components such as the engine or transmission require two repairs for the same problem over that time.

The regulation also has dispute resolution guidelines defining customer rights to discuss problems with carmakers and dealers or resort to third-party agencies such as local consumer councils.

It also requires provincial quality supervision departments to select experts to apportion responsibilities and solve disputes.

But some consumers have voiced worries about costly expert appraisals that are usually priced at tens of thousand yuan.

For their part, dealers are concerned whether a third-party authority will be able to correctly determine whether quality defects or driver abuse have caused mechanical problems.

Auto analyst Zhang Zhiyong said verification is the most essential part of implementing the regulation. He suggested that departments establish a clear system including authoritative third-party verification agencies and tell the public which experts are involved.

But another auto analyst, Jia Xinguang, said on his micro blog that appraisal is not needed in many cases.

"For example, a vehicle can be returned if its engine is not fixed after two repairs as the regulation says, so there's no need to appraise which detail caused the problem."

Jia said the new auto warranty regulation is built on the experience gained in regulations on other products. Although its formulation has been slow, the auto guidelines have relatively stringent requirements, he added.

Carmakers themselves have voiced support for the regulation, noting that they will adjust their after-sales service system if needed, but also expect more detail on some clauses.

One example is how to judge whether five repairs were for exactly the same problem.

Some industry insiders have low expectations for new regulations because "the maximum fine for carmakers is only 30,000 yuan".

But they did say it is a milestone in China's auto market. For the first time, legal obligations of automakers and support for car buyers are clearly defined.

Statistics from the Chinese language website for auto quality supervision shows there were 11,631 formal auto complaints in 2012, an increase of 60 percent from 2011, concerning 119 brands and 460 models.

Analysts say that auto complaints are likely to increase when the warranty regulation takes effect later this year, bringing more pressure on after-sales operations at both carmakers and their dealerships.

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