Bugs in the system

CCTV's annual consumer rights report claims another scalp, with Europe's biggest carmaker recalling cars in China over gearbox problems

PUBLISHED : Tuesday, 19 March, 2013, 12:00am
UPDATED : Tuesday, 19 March, 2013, 4:18am

Volkswagen, Europe's largest carmaker, plans to recall vehicles in China after drawing scrutiny from the country's quality inspector and state broadcaster over defective gearbox systems.

The company will conduct a voluntary recall related to its direct-shift gearbox (DSG) system, Volkswagen said on the weekend, without giving details.

The statement came after the General Administration of Quality Supervision, Inspection and Quarantine said it told the carmaker to conduct a recall, and after Volkswagen was featured in China Central Television's annual show about anti-consumer practices - a programme that also featured Apple and Anhui Jianghuai Automobile this year.

The Volkswagen case could test recall laws introduced in China this year that give the watchdog broader powers to order investigations and impose fines should manufacturers and importers fail to recall faulty products in a timely manner. "Any manufacturer, under the new law, should be aware that there's an increase in the chances that they'll be ordered to recall," said Paolo Beconcini, managing partner at Carroll, Burdick & McDonough in Beijing, whose firm advises European and US carmakers on product liability and intellectual property issues in China.

As many as 680,000 units sold in the country, including Bora, Golf, Passat and Lavida models, might be equipped with the DSG system involved, according to estimates by industry research firm LMC Automotive.

Volkswagen is "figuring out the different scenarios", Christoph Ludewig, a spokesman for the firm in Beijing, said yesterday.

"We are in touch with AQSIQ and will announce more when we have details."

The firm said in May last year it had sold almost one million DSG-equipped vehicles throughout the country.

Chinese owners of VW vehicles fitted with the technology - a system with two gearboxes that helps improve gear changes and improve fuel economy - have reported abnormal vibrations, loss of power and sudden acceleration, according to CCTV's report.

The carmaker has addressed issues with the system on the mainland since last year. In May, it said its Chinese division agreed to extend the warranty for the automatic transmission technology to 10 years in response to customer complaints. The standard warranty is two years.

Only a "few hundred" DSG-fitted vehicles had faults that prompted driver feedback, according to a Bloomberg interview with a VW spokesman on May 31.

Companies operating in China, both domestic and foreign, are increasingly bracing for the annual CCTV show, broadcast every March 15 for World Consumer Rights Day, as the world's second-biggest economy continues to expand.

Last year, France's Carrefour shut an outlet in central China after being featured on CCTV. The year before, Henan Shuanghui Investment and Development shares tumbled 10 per cent after CCTV reported the company bought pigs that were fed an illegal additive.

The broadcast comes as China ushers in new state leadership for the first time in a decade, with Premier Li Keqiang pledging to improve consumer safety by tackling food problems and the environment with an "iron fist".

The National People's Congress approved plans last week to expand the authority of the food and drug regulator amid growing public discontent over quality and safety.

In its statement on Saturday, the quality watchdog didn't say how many Volkswagen vehicles would be involved in the recall. The regulator said it would compel the carmaker to call back the vehicles if it didn't comply.

In its programme, CCTV also investigated alleged flaws in the after-sales service of California-based Apple.

Carolyn Wu, the firm's spokeswoman in Beijing, said Apple had established a network of more than 500 authorised service centres in 270 cities across the country to provide "unmatched" support to owners of its devices.

CCTV said in its broadcast that Anhui Jianghuai Automobile sold cars with rusted chassis.

The firm said in a statement on its website on Saturday that a "lack of experience" resulted in the failure to ensure the body structure was properly painted to deter rust.

It said it fixed the rust issue of 6,579 affected vehicles and would work with the quality regulator to issue a recall.

The consumer programme also reported on impure gold made in a workshop in Shenzhen and sold in shops in Tianjin and Hebei.

Some medical companies, including one in Henan province, were singled out for hiring actors to masquerade as doctors to promote products.

CCTV also investigated the use of substandard concrete by some developers in Shenzhen who used low-quality sea sand instead of river sand.

The Shenzhen Housing and Construction Bureau found 31 concrete-mixing plants violated industry rules, according to a statement posted on its website on Saturday.