Vehicles damaged in explosions at the Port of Tianjin in August last year. Hundreds of the affected vehicles sold at auction recently.(Photo: China Daily/Chen Zhuo)
More than 500 vehicles damaged in massive explosions at the Port of Tianjin in August last year went on the market this month through auctions in the city and in Qingdao, Shandong province.
According to reports in several media outlets, 150 Jeep Grand Cherokees and Wranglers were put up for auction on Jan 19 in Qingdao by an after-sales and wrecked car auction company named Tengxincar.
A day earlier, 400 Jeep Grand Cherokees and Wranglers were sold in Tianjin through an auction held by a local firm. The starting prices for the vehicles were between 160,000 yuan ($24,345) and 190,000 yuan, much lower than the models' retail prices of 579,900 yuan to 1.2 million yuan for a Grand Cherokee and 429,500 yuan to 539,900 yuan for a Wrangler.
All of the vehicles were sold. National Business Daily confirmed the cars were damaged in the Tianjin blasts, with broken windshields or damaged paintwork.
Jeep's parent company Chrysler China made an announcement in December, saying that 3,435 of its vehicles that were damaged in the explosions in Tianjin could not be repaired or guaranteed to provide driving safety.
It said 2,114 had been destroyed and the company was working on appropriate ways to deal with the rest. Jeep said those vehicles would not come with any warranty and were banned from being sold by any of its authorized dealers.
Chrysler also published the identification numbers of all vehicles on Jeep's China website.
"Chrysler did not take part in those auctions. The ownership of those vehicles has been transferred to insurance companies, and they have the right to dispose of their assets," National Business Daily quoted a spokesman for GAC FCA as saying on Jan 21.
The spokesman said the company promised to keep those vehicles out of the market but could only supervise vehicles that enter the market through authorized dealers, and not through other channels.
Yu Haichun, vice-director of the law school at the University of International Business and Economics in Beijing, said insurance companies have the right to dispose of those vehicles.
Yu said the residual value of such vehicles belongs to the insurance company after it has paid compensation to the insured automakers. The badly damaged cars would be scrapped, and the insurance company could choose how to dispose of the rest, he said.
Jia Xinguang, a senior analyst with the China Automobile Dealers Association, said the cars were likely to be bought by price-sensitive customers who could not afford the retail price. They would be willing to repair the vehicles in return for owning them at a much cheaper price, he said.
"Selling those cars is all right as long as the customers are warned in advance, and the damage on the cars can be fixed," Jia said.
A dozen automakers were affected by the blasts in Tianjin, including Volkswagen, Renault, Jaguar Land Rover and Toyota. The total loss for the automakers has been estimated at more than 2 billion yuan.
More than 10,000 vehicles were damaged or destroyed. Some media outlets estimated the total loss to be more than 4 billion yuan.
Fitch Ratings said in a report a week after the blasts that the insured losses from the blasts in the Port of Tianjin were likely to range from $1 billion to $1.5 billion, and auto insurance was predicted to be a major source of all claims.
