Beijing raises fines for car recall failures

But the tougher penalties on dealers and carmakers will not have much effect on the number of recall orders, analyst says

PUBLISHED : Thursday, 01 November, 2012, 12:00am
UPDATED : Thursday, 01 November, 2012, 4:48am

Beijing is imposing tougher penalties on carmakers and dealers who fail to recall defective vehicles properly.

The State Council has approved a new Administrative Regulation on Defective Automobile Products Recalls, which will take effect from January 1.

The new regulation raises the penalty for those who violate the rules to a maximum one million yuan (HK$1.24 million). A similar regulation issued by the product quality watchdog in 2004 capped the penalty at 30,000 yuan.

The new regulation contains stricter and more detailed rules on how to monitor, investigate and enforce vehicle recalls.

"This is a sign that China is shifting from a production-oriented auto market to a consumer-oriented auto market," said Zhang Zhiyong, an independent industry expert based in Beijing.

"It shows that the authorities are getting more and more serious about dealing with people's concerns about road safety and quality of cars."

About nine million cars sold on the mainland have been recalled because of quality problems since October 2004, mainland media reports say. Most were made by top carmakers, including Toyota, Honda and Volkswagen.

The latest recall involves Italian luxury sports-car maker Maserati, which recalled four models with wheel faults on Tuesday.

Under the new regulation, anyone has the right to file a complaint for possible defects in a car to the authorities, and the government will share the information among its departments.

It says manufacturers must stop producing, selling or importing automotive products immediately once they confirm there are defects. The authorities can start an on-site investigation in carmakers' factories or dealerships if needed.

Manufacturers who break the rules face a fine of between 50,000 yuan and one million yuan.

Those that do not stop producing, selling or importing defective cars, try to cover up the defects or refuse to make recalls will be fined up to 10 per cent of the value of the defective cars sold.

Zhang does not expect the number of recalls to increase significantly despite the new rules.

"Big foreign carmakers usually have already very well-established recall mechanisms, while most drivers of domestic branded cars are not used to reporting problems to the relevant authority or manufacturers," he said.

Separately, the government unveiled a natural gas policy yesterday designed to spur the transport sector's use of the cleaner-burning fuel, Reuters reported.

Besides homes, utilities and factories, the government for the first time targeted the transport sector - covering buses, taxis, trucks and vessels - as preferred users of natural gas, a document on the website of the National Development and Reform Commission said.