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Carmaker Recalls Mazda6 Sedans

FAW Car Co Ltd, the Shenzhen-listed arm of China's biggest automaker First Automotive Works Corp (FAW), on Friday recalled 30,000 Mazda6 sedans because of problems with fuel tanks and vent pipes.

The recall affects Mazda6 sedans produced at FAW Car's plant in northeast China's Jilin Province from December 26, 2002 to March 25, 2004, the company said.

The problems are likely to result in fuel tanks distorting and even melting.

"We care about the customers' interest very much and these sedans will be repaired free of charge if problems are found," said Tang Lizhong, an official of FAW Car. "So far, we have not received complaints from customers."

The move coincides with Mazda Motor's recall of 130,500 cars in overseas markets.

FAW Car's recall is also the first of its kind in China since the Chinese government issued automobile recall regulations on March 15, which will be officially implemented on October 1.

Over the past two years, a slew of foreign automakers, including Honda Motor, Mercedes-Benz, Mitsubishi Motor and Nissan Motor, have recalled faulty vehicles sold or made in China.

Although it is a common practice in developed markets, automobile recalls are new to Chinese customers.

"FAW Car's move will affect its results this year because the recall will damage Mazda6's image and sales and it will also cost a lot to repair those sedans," said Li Chunbo, an auto analyst with Citic Securities Co.

FAW Car has an inventory of more than 5,000 Mazda6 sedans, according to Li.

However, FAW Car remains confident of Mazda6 sales this year.

"We will be able to achieve our sales target of 50,000 Mazda6 sedans this year, up from 24,000 units last year, despite the recall," Tang said.

The company has sold more than 20,000 Mazda6 sedans so far this year, Tang said.

FAW Car will launch seven new Mazda6 vehicles equipped with 2.0-liter or larger engines by the end of next year, he said.

The company is making the 2.3-liter Mazda6 under a technical licensing deal with the Japanese carmaker, as well as the self-developed Red Flag sedans.

"The recall will not have great impact on Mazda6 sales because the problems have not caused serious outcomes," said Jia Xinguang, chief analyst with the China National Automotive Industry Consulting and Development Corp.

"The recall will possibly be positive for Mazda6 sales as FAW Car appears honest and has acted voluntary."

FAW Car applied to China's General Administration of Quality Supervision, Inspection and Quarantine on Thursday to recall the Mazda6 sedans.

Four years ago, Mitsubishi was banned from exporting some of its Pajero sport utility vehicles to China because the company discovered fatal problems in vehicles sold in China.

Mazda is also producing its 323 sedan and Premacy multi-purpose vehicle at a joint venture in south China's Hainan Island with FAW.

The Japanese carmaker aims to gain a 5 percent share of China's booming car market.

Sales of Chinese-made passenger cars grew by 75 percent to 1.97 million units last year.

FAW Car reported 211.1 million yuan (US$25.5 million) in total profits during the first quarter of this year, surging 221.26 percent from the same period of last year.

The company's shares tumbled by 0.43 yuan (5 US cents) to close at 6.24 yuan (75 US cents) on Friday, their lowest so far this year.

(China Daily June 19, 2004)

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