Defective gearboxes could cost German automaker, Volkswagen, 3.7bn Yuan in recalls.
Volkswagen has recalled a record number of vehicles in China to replace faulty gearboxes - a move that may cost the German company more than 3.7bn Yuan ($600m). Recalled models include those built solely by Volkswagen and also with its Chinese joint ventures.
VW's China HQ Image: VW China |
The news comes hot on the heels of Volkswagen’s announcement that it would build several new plants in China, increasing its annual capacity to over four million units by 2017.
According to the company website, the popular Golf, Magotan, Sagitar and Audi A3 models are amongst those being recalled.
Research from LMC Automotive, a consultancy, estimates the recall cost per car could range from 3,000 yuan ($483) to 10,000 yuan ($1,610).
The recall is a serious blow to Volkswagen’s reputation in China, which it believes to big its biggest market. According to Volkswagen China spokesman Christoph Ludwig “there have been no injuries or accidents reported due to the DSG gearbox problem, as far as we know.”
John Zeng, managing director at LMC Automotive, reckons quality concerns surrounding foreign brands might coax Chinese consumers into considering domestic alternatives. At the very least, he continues, it will prompt people to choose import models, “because they realise that on quality levels, the import models are very different from locally made ones.”