Two of China’s largest automakers have launched a recall in Australia that may set back plans to expand exports in the U.S. and European markets. The discovery of carcinogenic asbestos car parts in the engine prompted the recall.
Asbestos car parts Down Under
According to Dunne and Co., Great Wall Motor Co. and Chery Automobile Co. have recalled 23,000 vehicles after the banned asbestos parts were detected by Australian authorities. China had been testing the waters Down Under, so to speak, before expanding into larger markets. This recall may be a serious blow for Chinese automakers.
A significant setback
Michael Dunne, head of the automotive research firm Dunne and Company, spoke to Bloomberg by telephone. Michael, automotive expert on the Chinese market, said:
“It’s a significant setback for the individual companies and development of the industry. Chinese car companies will continue to push overseas, but you can bet that other countries that they are moving into, or are exporting to, are going to take a closer look on what’s on offer.”
‘Made in China’ stigma
This recall reinforces the “made in China” stigma that has hindered the Asian nation’s efforts in the U.S. market in the past. Furthermore, it fans fires started by previous safety issues with Chinese goods. Perhaps the most notorious was a 2008 incident in which milk, tainted with melamine, killed a minimum of six babies.
The fire-retardant asbestos is banned in 55 nations around the globe. It’s fibers are a known contributor to respiratory illness and some types of cancer, such as mesothelioma.
Last year, China exported a record number of vehicles, upped by 50 percent from the previous year. That was expected to be even higher this year. However, industry group, the China Association of Automobile Manufacturers, showed passenger vehicle deliveries did not meet predictions in July, after five months of gains. This latest setback may exacerbate that trend.
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Chinese automakers react
Chinese automaker Chery blamed the asbestos parts on workers who mistakenly used the the wrong lot of parts in vehicles going to Australia. Which implies that it does use them for other markets that do not have such bans.
Great Wall’s response was more forthcoming. Shang Yugui, a spokesman for the automaker said:
“We need to reflect at Great Wall. We became careless after our repeated checks showed that the asbestos parts won’t cause harm to the human body.”
According to Bloomberg, the automakers both signed letters to Ateco, the Australian distributor, assuring them that the cars were asbestos-free.
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