China market retained auto sales crown(3)

Warranty regulation

In October, the General Administration of Quality Supervision, Inspection and Quarantine held a public hearing on a draft regulation covering automobile warranties. If adopted, the measure would entitle car buyers to free repair, replacement and even return of faulty cars in the first two years or 40,000 kilometers of ownership.

The most controversial clause in the draft states consumers have the right to return a vehicle within 30 days due to serious quality problems such as severe cracking in the car body, non-functioning brakes or steering and oil leaks.

Under the current system, customers can in practice never demand a replacement or return a car once they buy it.

Representatives of both consumers and auto companies at the hearing agreed that a third-party agency is needed to inspect claimed quality problems and judge disputes.

Following the hearing, the General Administration of Quality Supervision, Inspection and Quarantine said it will take time to revise the draft and will release a final law, but did not give a timetable.

Duties on US-made cars

The Ministry of Commerce announced anti-dumping and anti-subsidy duties on some vehicles imported from the United States with engines larger than 2.5 liters starting from Dec 15 and lasting two years.

Affected automakers include General Motors, Chrysler, BMW, Mercedes-Benz and Honda.

GM and Chrysler face anti-dumping duties of 8.9 and 8.8 percent as well as anti-subsidy duties of 12.9 and 6.2 percent.

The US units of German automakers BMW and Mercedes-Benz will have anti-dumping duties of 2 and 2.7 percent imposed. Honda's US operations will also be subject to a 4.1 percent tariff. Other carmakers are also subject to the levies, but the ministry did not name them in its announcement.

The decision was seen as China's response to US tariffs on China-made tires.

Analysts said Chrysler will be most affected since it has no local production and relies solely on imports for sales in China.

But they note the impact is not likely to be big because Chinese buyers of large imported vehicles are not extremely price sensitive as they already pay a hefty 25 percent import duty.