What’s the impact the New Regulations on Recall of Defective Auto Products Works?

“Regulations on the Administration of Recall of Defective Auto Products” (“Regulations”) was promulgated on Oct. 10, 2012, and will come into force on Jan. 1, 2013. Being the new regulation which has a higher legislation hierarchy than “Provisions on the Administration of Recall of Defective Auto Products” (“Provisions”), it has stipulated new articles, such as the highest penalty is 10% of the value of defective auto products, the sharing system of auto-product information within multiple departments, the initiative investigation right of the national quality supervision department, which catch the eyes of public consumers. How does the New Regulations work? Will Regulations impel the manufactures to recall defective auto products effectively? Will it make it easier for the consumers to deal with the recall of defective auto products, by the new rights, new system and new penalty? Our opinion is “Regulations cannot run by itself, the current system cannot help a lot.”

Firstly, Article 24 of Regulations stipulates the manufactures encounter any of the circumstances such as failing to stop producing, selling or importing defective auto products; hiding the information of defects or refusing to recall in accordance with the order shall be impuxo a fine of from 1% to 10% of the value of defective auto products. However, the variance from1% to 10% is big and there are no exact criteria for the penalty ranking under a certain circumstance, how to define the penalty is a question..Probably that the manufactures may be punished at a lower rate by “communicating” with the departments. In addition, Article 23 and 24 in Regulations have stipulated the different circumstances for punishment, such as the manufacturers which have breached the provisions of Regulations in a serious way should be revoked on license by relevant bureau, but it doesn’t define what the serious situation is. That is why Regulations may be only a “regulation”.

Secondly, same as Provisions, Regulations stipulates in voluntary recall and mandatory recall, the widely highlighted concern is the investigation right of the authority at the initial stage of the mandatory recall procedure. The initiative investigation right of the authority is obviously positive, but it doesn’t regulate the practice in, for e.g., how long shall the authority to respond to complaint or how many complaints are due for authority to start an investigation in one batch of auto defects complaint, etc.. Since there is no standard to identify when to start an invetigation, the public cannot identify or supervise the initiative investigation right of the authority.

What’s more, the new provision doesn’t regulate the execution system for technical appraisal, which is the core of recall procedure of defective auto products. In practice, AQSIQ has not set up a technical appraisal branch, and there is no any total independent 3rd party to conduct the technical appraisal of auto.

In Dec. 2012, Beijing Zhongji Automotive Expert Testimony Agency (“BJAETA”) was established, which is wholly invested by China Automotive Technology and Research Center (“CATARC”). However, CATARC is used to have cooperation with many manufactures by providing the authentication and experiment service of automotive to them, the impartiality of its subsidiary BJAETA may be doubted. And generally speaking, China don’t have an assorted standard for legal automotive expert testimony, nowadays, the testimonies take the relevant technical standards of automotive and the relevant testimony standards of traffic accidents for reference, such as “The technical expertise of safety performances of vehicles involved in traffic accident” （GA/T642-2006）and etc.. Furthermore, Regulations does not stipulate the details of the sharing system for auto products information.

To sum up, Regulations may impel the manufactures to strengthen the management of quality currently, but it may not bring deeper effect to the industry. Besides, it is said that the provisions on the 3 guarantees (for repair, replacement and compensation of faulty products) of auto products’ liability of consumer,manufacture, and seller, maybe promulgated soon, then it will bring a huge impact to the relevant enterprises in the automotive industry.