News >Bizchina

Regulator to ratchet up recall rules

2011-03-21 15:13

Fine now just 30,000 yuan for cover-up of problem

BEIJING - A new, much stronger regulation governing vehicle recalls will be unveiled this year, Liu Pingjun, deputy director of General Administration of Quality Supervision, Inspection and Quarantine, said in a recent press conference.

"We have continued to hold special meetings on auto recalls and our current plan is to issue the regulation this year," Liu said. "The State Council's Legislative Affairs Office attaches great importance to it."

According to a draft of the new regulation released last July to solicit public opinion, automakers that cover up problems to avoid recalls will face a maximum fine equal to 50 percent of the total value of the affected products.

Regulator to ratchet up recall rules

Once implemented, the new law will be much more stringent than the country's current regulation formulated in 2004, which said automakers will only be fined up to 30,000 yuan if they are found to hide product defects - a penalty that is generally believed to be too light to restrain potential cover-ups.

Just a month ago Toyota announced a recall of more than 2 million cars in global markets excluding China.

When asked for a "complete explanation and detailed technological specifications" by the nation's quality watchdog, Toyota then announced a recall of about 5,200 Lexus sedans in China.

Liu said the quality supervision administration effectively protected the rights and interests of Chinese consumers in that case.

He noted that the Chinese government treats auto products - whether imported, purely domestic or made at local joint ventures - equally without discrimination.

Last year a total of 1.18 million vehicles were recalled in China, the world's largest market in which 18 million vehicles were sold during the period.

In the United States, some 20 million vehicles were recalled in 2010, far more than the total 11.5 million that were sold.

Lack of supervision is the reason for fewer recalls in China, analysts said

Among the total recalls in China last year, only a tiny fraction - about 39,000 cars - were by domestic brands. Far greater numbers were the recall of 176,000 imported models and 962,000 cars made at Sino-foreign joint ventures.

"An auto recall is not necessarily a bad thing," Yan Guangming, a senior reporter and veteran observer of the automotive industry, told China Daily. "Instead it is a measure to defend a brand and shows the confidence of a company."

He noted that a recall doesn't necessarily mean cars are poorly made - in most recalls affected models have a potential fault that could lead to safety problems under certain circumstances.

In addition to enhanced supervision from the government, auto companies should treasure their brands and take the initiative in responsible recalls, Yan said. There will be more auto recalls in China in the future as manufacturers increasingly regard them as an important aspect of after-sales services, he said.

Related News: