Consumer trust 'may be eroded'
A division of German premium car maker Volkswagen (VW) Group in China said over the weekend that it has identified nearly 2,000 imported vehicles that "could possibly" be affected by the worldwide VW emissions scandal.
The development comes as the company confronts a sharp slowdown in the world's biggest automobile market.
According to a statement VW sent to the Global Times on Sunday, 1,946 Tiguan vehicles imported by Volkswagen Group into the Chinese mainland were found to be using a version of the 4-cylinder Type EA 189 diesel engine that is involved in the problem.
The company is working to clarify "irregularities concerning certain software" used in some models with that type of engine, said VW, noting that it is "urgently" investigating "if any of these vehicles are indeed affected [by the scandal]."
No vehicles sold by its joint venture - Shanghai Volkswagen Automotive Co and FAW-Volkswagen Automobile Co - were found to be involved.
The scandal broke on September 18 when US pollution regulators said VW had falsified data of toxic emissions on some 500,000 vehicles sold in the market via programmed software.
That claim sparked probes around the world of VW cars equipped with the diesel engines in question. On Tuesday, the German automaker admitted the problem and disclosed that its internal investigation showed 11 million vehicles worldwide powered by Type EA 189 engines could have been fitted with programmed software that misled regulators. The company did not specifically list the involved markets.
Gasoline cars are popular in China, but this does not mean the scandal involving diesel-powered vehicles will have a smaller impact on its business in the country, VW's single-largest market, some analysts said.
"Chinese consumers' faith in VW will definitely be dampened by the scandal and cause further disappointment with the well-established global brand, which has already been harmed by several recalls over product defects in recent years," Feng Shiming, an executive director of Shanghai-based auto consultancy Menutor Consulting, told the Global Times on Sunday.
Last October, FAW-Volkswagen, the joint venture between VW and its Chinese partner FAW Group, announced a recall of 563,605 Sagitar cars and 17,485 imported Beetle sedans in China to ease local consumers' concerns over the safety of the models' suspension arms on the rear axles.
And in April 2013, VW launched a recall of 384,181 vehicles over a faulty direct shift gearbox (DSG) issue in China after a local media outlet, China Central Television, exposed defects in the company's DSG automatic transmissions.
Given these recalls, Chinese consumers have already started questioning the quality of VW products, said Feng, noting that the latest scandal would further erode trust.
In the first half of the current year, VW delivered 3.9 percent fewer vehicles in China than a year earlier.
Jia Xinguang, an expert at the China Automobile Dealers Association, did not totally agree with Feng, saying he still had some confidence in the prospects of VW in China.
"If VW can put the diesel scandal to an end as quickly as possible, the company's sales and brand value in China may not suffer as many repercussions as in the EU, the largest market for VW diesel cars," Jia told the Global Times on Sunday.
Jia noted that the German company will react quickly to the scandal under pressure from the German government.
German newspaper Bild am Sonntag said Sunday that local authorities have set an October 7 deadline for the scandal-hit VW to set out a timeline for making all its diesel vehicles in line with the country's pollution guidelines.
VW also said on Tuesday that it planned to set aside 6.5 billion euros ($7.3 billion) in the third-quarter accounts to cope with the scandal.
"VW's biggest challenges in China are still how to deal with the country's decision of scaling down government-car procurement and how to respond to the tepid local auto industry, which has been hit by the economic slowdown," Jia said, noting that VW urgently needs to diversify its production line to attract ordinary consumers.
In August, there were 1.66 million vehicles sold in China, represented a 2.98 percent decline compared to the same period in 2014, data from the China Association of Automobile Manufacturers showed.
