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article imageChinese carmakers face market challenges after asbestos recall

By Leigh Goessl     Aug 16, 2012 in Business
Over 20,000 cars made by two Chinese carmakers have been recalled by Australian authorities after it was discovered asbestos was found in some of the vehicles' components.
According to BBC News, 23,000 cars made by Chinese manufacturers Chery Automobile and Great Wall Motor Company were recalled in Australia. Deemed as an unsafe substance and prohibited since 2004 in Australia, the asbestos was found in engine gaskets and exhaust systems of the affected cars.
An investigation was launched after customs officers found asbestos inside the cars. The distributor in Australia, Ateco Automotive Pty. Ltd., has agreed to recall the vehicles. According to the Australian Competition and Consumer Commission (ACCC), the asbestos does not pose any risk to routine drivers, but does caution car owners to not perform any do-it-yourself work on the affected areas.
"Asbestos is a prohibited hazardous substance and these engines and exhaust systems should only be worked on by qualified personnel using appropriate safety procedures," said ACCC deputy chair Delia Rickard in a statement.
The statement also outlines all the actions Ateco is taking to ensure no more asbestos-tainted vehicles are shipped from China.
"All affected consumers will be contacted directly by Great Wall and Chery. In addition, they will provide training, warning stickers and safety advice to repairers. The ACCC will monitor the recall and Workplace Health and Safety Authorities will monitor the workplace safety issues," Ms Rickard said.
This recall, according to the Wall Street Journal, is a setback for Chinese automakers, as the China-based manufacturers try to sell their cars in "developed markets." According to Business Week, Australia was China's "testing area" for larger markets.
Additionally, the companies are trying to compete against competitors exporting cars into the Chinese consumer market. The asbestos recall is going to be an obstacle to overcome
“It’s a significant setback for the individual companies and development of the industry,” said Michael Dunne, head of industry researcher Dunne & Co., in a telephone interview with Business Week. “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.”
Reportedly, Great Wall said the company became aware of the asbestos issue and stopped using those parts in April.
“We need to reflect at Great Wall,” Shang Yugui, a spokesman at Great Wall, said, reported Business Week. “We became careless after our repeated checks showed that the asbestos parts won’t cause harm to the human body.”
Great Wall shares fell 5.1 percent in Hong Kong trading on Wed. Chery is privately held.
More about China, Autos, car recall, Australia, Asbestos
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