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Chery Auto Widens Recall to Six Countries After Asbestos Found

Chery Automobile Co., China’s biggest car exporter, said it will widen a vehicle recall in Australia this month to five more countries after finding potential cancer-causing asbestos parts in some models.

Chery will recall a total of 18,875 vehicles in Brazil, Uruguay, Chile, Argentina and Singapore, according to Huang Huaqiong, a spokesman for the closely held Wuhu, China-based automaker. The carmaker and Great Wall Motor Co. (2333) on Aug. 16 recalled 23,000 vehicles in Australia after customs authorities detected the banned material in engine and exhaust gaskets.

“The same supplier that provided the parts for the cars made for Australia also mistakenly provided us parts containing asbestos that went into these other cars,” Huang said by telephone today, declining to name the supplier.

The widening call-back raises concern quality control may be inadequate at Chinese automakers as they increase exports to emerging markets and target expansion into developed countries amid intensifying competition at home. Vehicle exports from China may rise about 50 percent this year, extending record shipments in 2011, the official trade chamber estimates.

“The recalls may damp consumer confidence in China-made cars in the short to medium term, but the impact won’t be major,” said Jeff Chung, an analyst at Daiwa Capital Markets Hong Kong Ltd. “Chinese automakers have been counting on cheap pricing as one of their major edges in overseas markets and the recalls won’t weaken their advantages.”

Tiggo SUV

Chery, which sells to more than 80 countries and regions, said at the time of the Australian announcement that workers had mistakenly used a wrong batch of parts that wasn’t meant for cars to be exported to Australia. The new round of recalls covers the Tiggo sport utility vehicle and A3 compact cars sold in the five countries, according to the company.

The carmaker sold a record 160,200 units overseas last year, a 73 percent increase from 2010. In the first six months of this year, the company exported 94,494 units, on track to meet its full-year target of 170,000 units, according to a statement on its website.

Great Wall, the biggest maker of SUVs and pick-up trucks in China, hasn’t announced further recalls for asbestos parts since Australia. No consumer had requested a change of vehicle because of asbestos in Australia and exports haven’t been affected, Xu Hui, Great Wall secretary, said in Hong Kong on Aug. 27.

The company will issue recalls in line with the regulations and laws of the markets where it sells its products, Shang Yugui, a spokesman for Baoding, China-based Great Wall, said by telephone today.

The official Xinhua News Agency reported the Chery recall yesterday.

To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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