Record auto recalls in 2013

Buyers may feel more secure when shopping for cars after a new consumer protection law took effect last year. It carries stiff requirements on dealers for repair and even replacement of faulty vehicles. [Huang Jiexian / For China Daily]

Experts: New laws to protect consumers having an impact

Despite some bumps in the road, China's sweeping new auto warranty and consumer protection laws that took effect last year are having an impact in the world's largest and still-maturing auto market, according to industry data and experts.

The latest statistics from the General Administration of Quality Supervision, Inspection and Quarantine show automakers made a record 134 recalls of 5.3 million vehicles in 2013, an increase of 65.8 percent from 2012.

Foreign brands again led the way in the number of recalls, but seven domestic carmakers did recall a combined 450,000 vehicles, an increase of 36 percent over 2012.

Experts said that the increasing number of recalls is the result of a regulation governing defective vehicles that took effect on Jan 1 last year.

"The recall regulation has led to increasing transparency in product quality," said Qiu Baochang, director of the Beijing-headquartered Huijia Law Firm.

"For example, the 24th item of the regulation says companies that conceal defects can be fined of up to 10 percent of the value of all vehicles in an (eventual) recall.

"This means that a company could pay up to hundreds of million yuan for a violation," Qiu said. Bolstering the law is a separate new regulation to protect auto consumer rights that took effect last October.

It mandates that dealers repair or replace defective vehicles during the warranty period and carries heavy penalties for violations.

In cases of proven fraud, dealers could be required to refund the price of the car and give a new vehicle entirely free of cost to the victim.

But implementation has not been entirely smooth and consumer expectations at times unrealistic in an auto culture that is still young.

The website www.cheshi.com carried the story of a female customer surnamed Jiang in Laiyang, Shandong province who said she bought a new car for more than 400,000 yuan after the consumer rights regulation took effect. She later found that the front bumper had been repainted.

Fearing it might be a refurbished second-hand car, Jiang returned it to the dealership for a refund, demanding her money back and a new car for free as compensation.

The dealership agreed to the refund but refused to pay a penalty.

A woman surnamed Li in Langfang, Hebei province told the website www.hebradio.com that the airbag in her car failed during an accident, but when she turned to the dealer for compensation, she was asked to submit an appraisal from an authoritative third-party agency.

"The cost of the appraisal was higher than the cost of the airbag and it will take a lot of time. I don't think it's worth it," Li said.

The warranty regulation says customers can submit complaints to carmakers or dealers, or resort to third-party agencies such as local consumers councils.

The regulation also requires an appraisal of product quality and responsibility from an expert panel designated by a provincial-level quality supervision organization. But who should pay the cost is not clearly defined.

When the regulation first took effect, some consumers voiced concerns about potentially expensive expert appraisals that cost tens of thousand yuan.

Lian Jun, deputy director of the complaint department at the Hebei Consumer Council, said that a revised consumer rights protection law set to take effect on Mar 15 has new regulations on penalties for dealer violations.

"Dealers at fault who refuse to have a peaceful settlement with customers will have bad record in a nationwide credit ranking system. After three times its name will be publicized as problematic dealer," Lian said.

He said that the law also mandates that dealers will bear the cost of appraisals.

Analysts said the new regulations are not only good for consumers but also play an important role for automakers and dealers to improve brand image through offering better products and services.

Zhang Zhiyong, an independent auto analyst in Beijing, said that auto recalls should not be viewed as a punishment for automakers. Instead, it helps elevate brand image by showing responsibility to consumers.

"Toyota remained the largest automaker by sales around the globe after so many recalls. Great Wall had more recalls than domestic counterparts, but its sales increased 21 percent to 754,000 units in 2013, making it the leader among Chinese brands," Zhang said.

China is the world's largest auto market with production and sales both surpassing 20 million units last year, so no automaker can afford to ignore the market, said analysts.

But they added the significance should not only be reflected in the number of new models introduced, but also in responsibility for defective vehicles and in disputes with consumers.