Volvo's latest fender bender
- Source: Global Times
- [08:15 December 01 2010]
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By Chen Xiaomin
Volvo Cars launched its largest recall in China since 2004, dampening the ambitions of Chairman Li Shufu, who already faces a long list of urgent problems ranging from production positioning to uncertainties over a management reshuffle.
The recall, made public late Monday, involved 18,848 imported models including the XC60, C30, plus Chang'an Ford Mazda assembled S40 and S80L. The problems sited include potentially faulty airbags, engine software and cooling system materials.
Since August 2, when Zhejiang Geely Holding Group finalized the $1.3 billion cash deal that included a $200 million note to acquire Volvo, this has been the second recall involving over 10,000 vehicles.
Sun Wei, Volvo China's marketing director, was not available to comment on how much Volvo would spend on recall repairs and what influence the news would have on Volvo's brand image.
According to announcements filed by Volvo and Chang'an Ford Mazda with the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), a total of 440 written complaints were received across the world, while no related injuries have been reported.
Local media reports Tuesday said the recall might incorporate other Volvo models, yet maintenance personnel from several Beijing-based Volvo dealers said they haven't received recall notices on either of the two imported models, the C70 and XC90.
Li, chairman of both Geely and Volvo, vowed to pull Volvo Cars out of the red in 2011 and ramp up production to 600,000 vehicles over the next three to five years.
Three months after the acquisition attracted worldwide attention, the plain-spoken entrepreneur said in a forum that he and Volvo's management are divided on what models Volvo should be made locally in China.
Li was quoted by portal sina.com as saying he wanted to make long-wheelbase vehicles like many other automakers, but Volvo's management back in Sweden believe green vehicles would win Volvo more market share in China.
Zeng Zhiling, director of J.D. Power Asia Pacific Forecasting, told the Global Times that localized vehicles and their market positioning will decide the fate of Volvo's future performance in the country.
"They need to find a balance between sales volume and brand positioning to avoid any damage to its brand," said Zeng.
Jin Yongsheng, an industry watcher with Sinotrust Co, said Volvo must localize models such as the XC60, which has less street-side competition and quicker growth potential.
