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.
(China Daily 03/13/2006 page5)
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