VW recalled 384,181 vehicles in China due to defective gearboxes, a move which will cost the German automaker more than $600 million.
The 384,181 recalled vehicles include models such as Audi A3, Sagitar, Magotan and Golf, according to China’s quality inspector. It has been estimated that the replacements will be priced between 3,000 yuan ($483) to 10,000 yuan per vehicle. This recall in VW’s biggest market, is a tough blow for the automaker which plans to become the largest automaker in the world by 2018.
The recall comes after China Central Television broadcaster presented Chinese customers complaining about the sudden acceleration, loss of power and abnormal vibrations at their VW vehicles. The automaker recalled all its vehicles with the seven-speed variety of its direct-shift gearboxes and LMC estimated the company might have sold around 680,000 vehicles with this problem.
“It’s always reputationally damaging to have to deal with an issue that plays out in the public’s eyes,” said Bill Russo, president of auto consultancy Synergistics Ltd. “Will they take a hit? Of course. The issue is how can they recover from that and how quickly can they recover.”
China’s quality inspector said that the gearbox problems started in March 2012 and in May the automaker extended the warranty for the transmission system.