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Domestic and foreign automakers are recalling faulty vehicles ahead of official implementation of auto recall regulations, which start from October 1.
Automakers will be compelled to recall defective vehicles or they will be put on a "blacklist" and be fined a maximum of 30,000 yuan (US$3,600) if they are found to have tried to cover up problems, according to the regulations.
Mercedes-Benz of German-US auto giant DaimlerChrysler is the latest company which has applied to China's General Administration of Quality Supervision, Inspection and Quarantine to recall faulty vehicles sold in China.
Mercedes-Benz, which will start to produce its E and C-Class sedans later this year at DaimlerChrysler's joint venture in Beijing, said last Friday that the company will recall 12,988 units of its S, E, A, CL, and CLK-Class sedans in China because of potential problems in auto body control, braking and air conditioning systems.
The affected vehicles were produced between March 1997 and March 2004.
This is Mercedes-Benz's second recall in China this year.
In January, the company recalled 17 C, CLK and E-Class sedans in China as part of a global recall of 33,000 units.
Dongfeng Peugeot Citroen, the Sino-French joint venture based in Central China's Hubei Province, last Thursday began to recall 7,539 Citroen Picasso saloon cars because of air conditioning problems.
On September 8, Chang'an Suzuki, the Sino-Japanese joint venture in Southwestern Chongqing Municipality, began recalling more than 157,000 Alto mini cars because of fuel pipe faults, representing the biggest vehicle recall by number so far in China.
Other domestic and foreign automakers, including FAW Car Co Ltd, Guangzhou Honda, Mitsubishi Fuso Truck & Bus Corp and Toyota, have also recalled defective vehicles in China during the past three months.
"Automakers hope to show the public they are credible through voluntary recalls before implementation of the government auto recall regulations," said Jia Xinguang, chief analyst with the China Automotive Industry Consulting and Development Corp.
The recalls are part of efforts, especially on the part of domestic companies, to boost sales as car demand in China has been sluggish in recent months, Jia said.
Automobile recalls are new for customers and manufacturers in China, although a common practice in developed markets.
In the past, many automakers operating in China could cover up problems in their vehicles and avoid recalls as a result of the lack of regulations.
The recall regulations were released by the quality administration in March 15 this year.
"Manufacturers will face much more pressure as automobile recalls will take place in China more frequently with growing vehicle sales in China since the implementation of the recall regulations," Jia said.
It would be "much more terrible" for automakers to lose credit with the public as a result of covering up their vehicles' problems than monetary penalties, said Yu Xianzhong, an official from the quality administration.
Monetary penalties will possibly be raised in the future, Yu said.
"The current penalty is nothing for automakers, especially big names as they enjoy bumper profits," said Zhao Hui, a Beijing car owner.
Penalties against automakers who cover up serious vehicle problems amount to tens of millions of US dollars. In the United States those convicted of serious coverups can be jailed.
The current Chinese regulations are not adequate. Legislation for auto recalls like in the United States and Japan is badly needed," Jia said.
Some automakers in China are likely to continue to cover up problems in their vehicles because recalls can be very costly, despite the implementation of the current regulations, Jia said.
Vehicle demand in China is forecast to increase to 10 million units by 2010 from 4.5 million units last year.
Sales of China-made vehicles grew by 19.2 percent year-on-year to 3.28 million in the first eight months of this year.
Growth is down from 34 percent last year.
(China Daily September 20, 2004)
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