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Auto industry's recall system to impose heavy fines

By LI FANGFANG  (China Daily)

07:53, November 01, 2012

China is seeking to improve its automotive industry's recall system, releasing national regulations outlining heavy financial penalties intended to improve management, supervision and safety in the sector.

The new regulations were released by the State Council on Tuesday and included tire makers in the recall system for the first time.

The amended Administrative Regulations on Defective Automotive Product Recalls have been compiled to address rising concerns about the quality of vehicles, and will be effective from Jan 1, the State Council said.

According to the new regulations, both domestic and international automobile manufacturers will face fines of 50,000 to 200,000 yuan ($8,000 to 32,000) if they fail to submit recall reports.

The penalty will be as high as 1 to 10 percent of total sales revenue of defective vehicles if manufacturers do not stop producing and selling problematic vehicles, conceal the problems, or refuse to carry out the recall.

If a case is serious enough the manufacturing license of the automaker may be revoked, according to the new regulations.

The previous rules outlined in the General Administration of Quality Supervision, Inspection and Quarantine in March 2004 fined the automobile manufacturers between 10,000 and 30,000 yuan if they refused to recall defective vehicles.

Analysts said the amended regulations will increase penalties by hundreds of million yuan, which will act as an effective deterrent to automakers.

"No automaker can ignore such a high penalty. The new regulations will greatly improve quality awareness among all automakers in China," said Jia Xinguang, an independent auto analyst in Beijing.

"It will also help boost the standard of after-sales service for all vehicles, locally produced and imported.

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