VW to recall vehicles in China on complaints about gearbox
Automaker has faced issues with the system in China since last year
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SHANGHAI (Bloomberg) -- Volkswagen Group plans to recall vehicles in China after drawing scrutiny from the nation's quality inspector and state broadcaster over its dual-clutch transmission.
The automaker will conduct a voluntary recall related to the part, which is refers to as its direct shift gearbox, Volkswagen said in March 16 statement without providing details.
The statement came after China's General Administration of Quality Supervision, Inspection and Quarantine said it told the German automaker to conduct a recall, and after Volkswagen was featured in China Central Television's annual show about anti-consumer practices. The program also featured Apple Inc. and Anhui Jianghuai Automobile Co. this year.
The Volkswagen case may test China's recall laws, which were introduced this year and give the watchdog broader powers to order investigations and impose fines should manufacturers and importers fail to recall faulty products in a timely manner.
The nation's legislature approved plans last week to expand the authority of the food and drug regulator amid growing public discontent over quality and safety.
"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 LLP in Beijing, whose firm advises European and U.S. automakers on product liability and intellectual property issues in China.
Recall estimate
As many as 680,000 vehicles sold in China, including Bora, Golf, Passat and Lavida models, might be equipped with the DSG system covered by the recall, according to estimates by auto research LMC Automotive.
Volkswagen is currently "figuring out the different scenarios," Christoph Ludewig, a spokesman for the company in Beijing, said in an e-mail today. "We are in touch with AQSIQ and will announce more when we have details."
The company said in May last year that it had sold almost 1 million DSG-equipped vehicles in China.
Chinese owners of VW vehicles fitted with the technology -- a system with two gearboxes that help enhance gear changes and improve fuel economy -- have reported abnormal vibrations, loss of power and sudden acceleration, according to CCTV's report.
The Wolfsburg-based automaker has addressed issues with the system in China 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.
Driver feedback
Only a "few hundred" of DSG-fitted vehicles had faults that prompted driver feedback, according to a Bloomberg News interview with Harthmuth Hoffmann, a company spokesman, on May 31, 2012.
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 SA shut an outlet in central China after being featured on CCTV. The year before, Henan Shuanghui Investment & Development Co. shares tumbled 10 percent 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 yesterday pledging to improve consumer safety by tackling food problems and the environment with an "iron fist."
In its March 16 statement, the Chinese quality watchdog didn't say how many Volkswagen vehicles would be involved in the recall and calls to its news department seeking comment went unanswered over the weekend.
The regulator said it will compel the automaker to call back the vehicles if it doesn't comply.
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