Gearbox trouble has returned to plague Volkswagen in China, slowing the OEM’s plans for global market domination. The company plans to recall a total of 640,309 vehicles in China due to a problem with the synthetic oil used in the gearbox. VW has warned that an electric malfunction could result in conditions of high heat and humidity.
Most of the recalled vehicles – 621,563 units – are locally made. The remaining 18,746 are imported. The recall covers a range of Volkswagen and Audi models, including the Golf, Lavida and Beetle. As a fix, dealers will replace the fluid with mineral oil at no cost to owners.
While a notable recall in itself due to its size, it is also the second recall for VW’s China operations in just two days. The day before this news came out, China’s quality watchdog revealed that VW was recalling 207,000 Tiguan SUVs for a problem with the lighting. This recall is part of a larger one that covers 800,000 Tiguans (built between 2008 and 2010) across VW’s global markets.
Previous gearbox problems
This is also VW’s second major recall this year for a problem with the gearbox. In March, the OEM recalled 384,181 vehicles, which at the time marked the largest recall in the country so far, due to a problem with the dual-clutch transmission. The move cost VW an estimated US$600m to put right, not including any damage to brand reputation. This earlier recall covered a range of models, including the VW Golf, Magotan, Passat, Jetta, Sirocco, Touran, Sagitar and Audi A3, but only covered models in China and Southeast Asia with hot, humid climates.
Notably, the recall only came about after considerable public and government pressure. China’s quality inspector began looking into complaints about the transmissions in March 2012. Last May, in response to customer complaints, VW extended the warranty on the transmission technology from the standard two years to ten. However, it took a programme on China Central Television (CCTV) investigating unhappy VW owners before VW issued a recall.
At the time, Bloomberg quoted Bill Russo, President of automotive consultancy Synergistics Ltd, as stating: “It’s always reputationally damaging to have to deal with an issue that plays out in the public’s eyes. Will they take a hit? Of course. The issue is how can they recover from that and how quickly can they recover.”
Global ambitions
These latest recalls will certainly not help in that recovery, and China is not a market in which VW can afford to make too many mistakes. Last year, China accounted for nearly one-third of total group sales volumes. The OEM has been increasing local capacity and is targeting production of more than 4 million cars a year by 2018, by which time it also wants to lead the global industry in terms of sales.
Part of this global sales push involves the increased use of common parts and platforms. However, this practice could prove very dangerous if something goes wrong with one of these global parts, spurring massive recalls around the world’s markets.
For the moment, however, VW won’t be the only OEM with an increased number of recalls in China this year. The country recently amended its recall regulations and the revised standards came into force as of 1 January this year. Under them, the country’s safety watchdog has greater authority in terms of ordering safety investigations and imposing fines, and the maximum fine has jumped from Yuan 30,000 (US$4,935) to Yuan 200,000.
Megan Lampinen
