GM recalls 1.5 mln cars in China over fuel pump bracket

SHANGHAI Sat Dec 28, 2013 12:38am IST

Lines of cars are pictured during a rush hour traffic jam in central Shanghai July 11, 2013. REUTERS/Aly Song/Files

Lines of cars are pictured during a rush hour traffic jam in central Shanghai July 11, 2013.

Credit: Reuters/Aly Song/Files

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SHANGHAI (Reuters) - General Motors Co's (GM.N) China joint venture is recalling 1.46 million cars due to a defect with the fuel pump brackets, in one of the largest safety recalls in the world's biggest auto market.

The cars are made locally by Shanghai General Motors Co Ltd, GM's venture with SAIC Motor Corp (600104.SS). GM said on Friday the bracket may crack after long-term use and in extreme cases could lead to fuel leaks.

The recall, which was announced on Friday by China's General Administration of Quality Supervision, Inspection and Quarantine, affects two of GM's most popular models in China, the Buick Excelle compact car and the Chevrolet Sail subcompact.

More than 1.2 million Excelle made between 2006 and 2011 and more than 240,000 Sail subcompacts built between 2009 and 2011 are in the recall.

Separately, Ford Motor Co's (F.N) joint venture with Chongqing Changan Automobile Co Ltd (000625.SZ) will recall close to 81,000 of its Kuga crossovers over a steering part, China's quality control agency said.

The leading U.S. automaker by sales, GM is facing stiffer competition in China from competitors such as Volkswagen AG (VOWG_p.DE).

Yale Zhang, head of Shanghai-based consulting firm Automotive Foresight, said GM was unlikely to sustain a big reputational hit in China because of the recall.

"GM has warned that the affected component might crack after long use and lead to fuel leakage, but in real life it doesn't appear to have happened," Zhang said.

"There are so many recalls these days, and some automakers call back products proactively more as a precaution," Zhang said. "In this case, the recall shouldn't affect GM's reputation in China that much."

Morgan Stanley analyst Adam Jonas estimated that in 2012 GM derived almost 30 percent of its global net income from its China affiliates, compared with 6 percent for Ford. The companies do not break out their earnings in China when they report quarterly and annual results.

U.S. carmakers in China have generally outpaced growth in the overall market, helped by popular models and partly because last year Japanese carmakers were caught up in anti-Japan protests over a territorial dispute between Beijing and Tokyo.

GM sold 2.89 million vehicles in China from January through November 2013, up 11.4 percent from a year earlier, while Ford sold 840,975 vehicles, up 51 percent.

Total China vehicle sales rose 13.5 percent January-November 2013 to 19.86 million, with car sales up 15.1 percent to 16.15 million, according to the China Association of Automobile Manufacturers (CAAM).

Automakers have become more proactive about safety recalls since Toyota Motor Corp (7203.T) recalled nearly 19 million vehicles worldwide from late 2009 to early 2011 because of claims of unintended acceleration.

Last month, Volkswagen's Chinese unit recalled 640,309 vehicles to check they were using mineral oil rather than synthetic oil to avoid gearbox-related electronic flaws. That was part of a broader global recall over a range of issues with several models. It also pulled 207,778 Tiguan compact sport-utility vehicles off the road due to a risk of a partial light malfunction.

GM makes vehicles in China in partnership with both FAW Group (000800.SZ) and SAIC. Ford has manufacturing and sales ventures in China with Changan Automobile and Jiangling Motors Corp (000550.SZ). (Reporting by Kazunori Takada; Additional reporting by Norihiko Shirouzu in BEIJING and Deepa Seetharaman in DETROIT; Editing by Ian Geoghegan, Toni Reinhold)

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