VW ordered to recall cars

German carmaker Volkswagen AG was ordered by China's top quality watchdog Saturday to recall vehicles equipped with the company's direct shift gearbox (DSG), after several malfunctions of the technology were exposed by an investigative program on China Central Television (CCTV).

The CCTV program, which was aired on World Consumer Rights Day on Friday, said that the DSG technology could cause problems such as a sudden loss or increase of power while driving.

On Saturday, China's General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) announced that the DSG technology could cause safety hazards, so it had ordered the company to recall all models fitted with it.

In a later statement on Saturday, Volkswagen said it would implement a voluntary recall regarding the DSG issue, and the company "has been and will continue to cooperate with all relevant authorities."

Volkswagen did not comment on details of the recall when contacted by the Global Times Sunday, but said that a further announcement would come soon.

The CCTV program said seven Volkswagen models equipped with the DSG transmission have been found to have power problems, and around 500,000 such vehicles have been sold in the Chinese mainland market.

It has been over a year since consumer complaints about the DSG system started to emerge. But prior to the AQSIQ order, Volkswagen said that it would not recall the vehicles as the reported problems posed no threat to safety.

In March 2012, Volkswagen offered a free software upgrade to owners of DSG vehicles, and two months later the company offered to extend the warranty of these models from four years to 10 years.

"Volkswagen should have recalled these defective models a long time ago," said Liu Zhi, a 30-year-old man in Beijing who drives a Volkswagen Bora sedan, adding that the DSG problem had not gone away after he upgraded the software.

Experts noted that the current recall may involve hardware replacement, which could cost the company millions of yuan.

"Sales of vehicles equipped with the DSG gearbox will surely be affected in the future as well," Zeng Zhiling, director of LMC Automotive Asia Pacific Forecasting, told the Global Times Sunday.

Volkswagen sold around 2.81 million cars in the mainland and Hong Kong in 2012, up 24.5 percent year-on-year.

Zeng noted that despite a slightly tarnished image in the short term, sales of the company as a whole will not fall significantly in 2013 as the brand still has a very strong presence in China.

Su Hui, deputy director of the auto market division at the China Automobile Dealers Association, said that the DSG transmission still represents advanced technology, but that the current defects should be corrected before it is used in more new models.

A domestic auto brand, JAC Motors, was also exposed on the CCTV program, which said that the steel used on some of the company's vehicles can be easily eroded.

"I think the program will have a bigger effect on JAC, as it will add to consumers' distrust of domestic brands.