Recalls in China are increasing at a double-digit rate, signifying a more vigilant quality inspection process that results in one of the largest single recalls in China for General Motors, with over 1.4 million units recalled.
IHS Automotive perspective | |
Significance | Vehicle recalls in China are increasing at great speed, with recalls in 2013 rising to over 5 million units, and a sudden increase stemming from a GM recall for over 1.4 million units beginning today. |
Implications | With the increase in vehicle recalls and greater awareness among Chinese consumers, automakers are responding to recall orders swiftly to minimise damage to their brands in China. |
Outlook | Automakers are under pressure to assure vehicles produced in China follow the same quality standards as those produced in developed markets, indicating that suppliers need to assure their clients that quality control in China meets international standards. |
General Motors (GM) has been issued with a recall order from the Chinese General Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ) for over 1.4 million units, according to a statement on the government regulatory body's website on Friday (27 December).
The China Defective Products Administration Center (DPAC) said certain cars produced by the Shanghai GM (SGM) joint venture (JV) have potential risks of cracks in the fuel-pump brackets, which can cause fuel leaks. The vehicles to be recalled include 1,218,163 Buick Excelles produced between 17 January 2006 and 2 December 2011, and 243,297 Chevrolet New Sails produced between 9 April 2009 and 8 October 2011.
The AQSIQ said that SGM will replace the defective fuel-pump brackets in the affected vehicles.
In a statement sent to IHS Automotive, the automaker said the issues with the fuel pump have so far not resulted in any known casualties in China. The automaker has also stated that it will begin the recall today (30 December 2013).
"SGM will recall 1,218,163 Buick Excelle vehicles and 243,297 Chevrolet New Sails cars starting 30 December. The recall is due to the quality of a holding component for the fuel pump. The holder may crack after long-time use and result in fuel leakage under extreme circumstance. SGM so far hasn't received any casualty reports on this issue. The Buick and Chevrolet after-sales service centres will contact the customers and conduct vehicle checks and repairs," GM China said in an official statement sent directly to IHS Automotive.
Ford has also been issued with a recall order from the AQSIQ. The recall involves vehicles produced by the Changan Ford Automobile JV between 21 September 2012 and November 2013, involving 80,857 Kuga sport utility vehicles (SUV), due to substandard wheel knuckles, state owned China Daily says. The automaker will begin the recall 21 February 2014. The newspaper says the automaker has halted the SUV's production due to the issues. According to the report, local owners of the Kuga filed complaints to the authorities in China early December due to cracks in the front wheel knuckles. Changan Ford will replace the front left and right wheel knuckles.
In a statement sent to IHS Automotive, the automaker says that local production of the Kuga has not been halted, although the automaker highlights that the problems are due to quality issue from its supplier in China not meeting its international global quality standard.
"No, production of Kuga is not impacted. We are prioritising the parts for the recall. In addition, we are doing our best to secure sufficient parts from Ford's global supplier base, so, continued production of Kuga is not impacted," Ford says in a statement sent to IHS Automotive.
Ford states that the recall is due to issues with the standards of certain parts. "Please note that we are recalling the vehicles because certain batches of the part (knuckles in the front suspension system) did not meet Ford's global material strength standards for that part," the automaker has said.
Ford states that the recall will begin in 2014, due to the automaker having to stockpile adequate replacement parts. "Due to preparation of the service parts, the recall will be initiated from 21 February 2014. Before this date, if owners experience irregularities while using their vehicles, please contact the local dealers to arrange for vehicle inspections," said Ford in the statement to IHS Automotive.
China recalls over 5 million units in 2013
China has recalled 3.76 million vehicles from 1 January 2013 to 26 December 2013, according to the AQSIQ. This indicated an annual increase of 17.37% year on year (y/y) – but this is before the major GM recall, which was announced 27 December.
The recalls include 1.96 million vehicles as a direct result of investigations by the AQSIQ. Of the total recalls of 3.76 million, around 3.28 million were from domestic Chinese automakers, China Daily reports. A total of 482,200 imported vehicles were recalled in the period.
Meanwhile, further 1.4 million GM vehicles were issued with a recall order, bringing the total so far to over 5 million vehicles in 2013.
Outlook and implications
The GM recall in China is significant for the automaker, as it affects its best selling Buick Excelle model. Despite GM stating that so far no casualties have been reported due to the fuel pump issue, any issue regarding potential fuel leakages are the most worrying for vehicle owners. The recall affected models from 2006.
IHS Automotive data shows that GM began local production of the Buick Excelle in August 2003, with around 36,800 units. In 2006, the Buick Excelle's annual local production increased to over 127,000 units and rose to over 239,000 units by end-2009.
Certain components relating to the fuel pump in the models produced prior to 2006 were imported from South Korea, sources told IHS Automotive. These models therefore are not affected by the recall.
So far in 2013, GM has had recalls affecting 207,766 Buick Lacrosse sedans produced between January 2006 and September 2009 due to issues with the brake assemblies (see China: 12 June 2013: GM and Toyota announce recalls in China). In May, around 602 Buick Lacrosse e-Assist hybrid vehicles were recalled (see China: 8 May 2013: Buick, Peugeot, and Great Wall face recalls in China), while 5,008 Buick Lacrosse sedans were issued with a recall order in March (see China: 19 March 2013: Buick, Cadillac, and Toyota face recalls for some models in China).
Overall in 2012, around 3.2 million vehicles were recalled in China (see China: 7 January 2013: Over 3 mil. vehicles recalled in China in 2012). This was a 74.86% y/y increase in recalls of vehicles in China. In 2011, vehicle recalls in China rose 55% y/y from 2010.
In 2013, the number of vehicles recalled is over 5.22 million units following the recent GM recall of 1.4 million units. This is a 63% y/y increase in the number of vehicles recalled in China. The AQSIQ is increasingly vigilant as consumers are more aware of their rights and global recalls. This has led to changes in Chinese law, whereby consumers are now given greater rights regarding sales of new vehicles with flawed or defective parts (see China: 16 January 2013: New warranty regulations protect car-buyers in China).
Chinese consumer led enquires into flawed components has led to the state-owned China Central Television (CCTV) playing a stronger role in investigating consumer concerns. In 2013, this led to a major recall by Volkswagen (VW) affecting over 384,000 units of its vehicles fitted with the DSG transmission in China (see China: 20 March 2013: VW recalls 384,000 units, JAC recalls 100,000 vehicles in China). In 2012, the AQSIQ originally announced it was looking into the VW vehicles with the DSG transmission system (see China: 21 June 2012: China's AQSIQ Studying VW DSG Transmission Issue, May Issue Recall). VW did not issue the recall until the CCTV programme in 2013. The first major CCTV-led recall took place in 2011, when a programme highlighted the defective tyres produced by South Korean tyre maker Kumho in China (see China: 13 April 2011: China recalls 75,480 cars owing to faulty Kumho tyres).
As Chinese consumers are increasingly aware of their rights, ignoring issues with components can begin to seriously affect brand loyalty. Automakers in China are now swiftly issuing recalls as soon as government regulatory bodies highlight any defective parts, as they aim to limit any damage to brand reputation by assuring consumers that safety of their car buyers is their prime concern.