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VW shifts gears, issues record recall


Follows a warning by watchdog over its touted DSG transmission

German automaker Volkswagen Group last week announced its biggest recall ever in China to fix problems on its much-touted direct shift gearbox (DSG).

The company said in a statement that it will recall 384,181 vehicles equipped with the seven-speed DSG transmission beginning in April to replace the mechatronic unit and upgrade software.

Affected vehicles include several imported models as well as a wide range of locally produced cars, mostly made from 2009 to 2012 at Volkswagen's two joint ventures in China.

The company said that electronic malfunctions in the mechatronic control unit or low oil pressure inside the gearbox may result in a power interruption "in isolated cases". It noted that the recall will "effectively solve" the problem.

All vehicles produced and now on sale and those in dealer stock are not affected by the problem, the company said.

Troubled four years

The long-awaited recall came after consumer complaints about the DSG transmission over the past four years. Problems include abnormal noise, excessive shift shock, shift failure, with the worst reported problem sudden power interruption without warning and rapid acceleration when the power returns.

Though the complaints began as early as in 2009, Volkswagen only began free services at its dealerships in March last year, when it offered a software update. The company then announced in May it would extend the warranty on DSG transmissions in China to 10 years or 160,000 km - up from the previous four years or 15,000 km - to restore consumer confidence in the technology.

But some car owners complained that after the software update, the old issues remained while new problems like weaker performance and higher fuel consumption emerged.

Some customers said that it is more important to completely solve the problem and eliminate the potential risk of power interruption than to extend warranties, noting that otherwise it is like "driving a car with a time bomb".

The DSG problem received widespread exposure on the State-owned broadcaster CCTV on March 15, World Consumer Rights Day.

On March 16, the General Administration of Quality Supervision, Inspection and Quarantine - the nation's quality watchdog - said on its official website that it has informed Volkswagen it should launch a recall and will force the carmaker to do so if it doesn't fulfill its "legal obligation".

China implemented a new regulation on auto recalls at the beginning of the year that sharply raises penalties for automakers found hiding defects and avoiding recalls. The heaviest penalty is loss of production permits.

Huge cost

The cost of Volkswagen's recall will be "huge" and will certainly affect the company's business performance in China this year, said John Zeng, director of LMC Automotive Asia Pacific Forecasting.

He said that the price of one mechatronic unit is about 3,000 yuan. Replacing the unit on more than 380,000 cars will cost over 1 billion yuan in hardware alone, with additional expenses in labor and logistics.

As well, the company has to quickly adjust its production mix and increase the supply of other transmissions because customers are now reluctant to buy cars with the seven-speed DSG, said Yale Zhang, director of industry consultancy AutoForesight (Shanghai) Co Ltd.

"Volkswagen's competitors could have an advantage if the company fails to keep up the supply of alternative gearboxes," he said.

With 2.8 million vehicles delivered last year, Volkswagen is the largest passenger car producer in China, its biggest market worldwide since 2009.

With four new vehicle production facilities and three component plants in the pipeline, the company has plans to increase its annual capacity in China to 4 million vehicles in five years.

Zhang said that Volkswagen's long-term performance won't be greatly affected due to its well-established product lineup, facilities and dealer network.

"But it's still a warning bell to all carmakers in China to enhance quality control," he said.

Questions remain

The carmaker and its numerous dealerships in China are now busy preparing for the upcoming recall, yet questions remained whether the replacement of mechatronic unit and software upgrade will solve the problems once and for all.

Zhang Xiaotian, an IT engineer in Shanghai and also a Volkswagen car owner, said that he thinks the recall is just crisis management. He said he's not sure if it can fix the problem permanently.

Zhang bought a Volkswagen Lavida last year with a conventional automatic transmission.

"We heard my friend's story of how his Golf lost power on a highway and because of this we didn't choose the DSG version," he said.

"I was told that DSG just doesn't fit the road situation in China, where congestion happens a lot," he said. Similar views are widespread in online auto forums.

Song Jian, a professor at the department of automotive engineering in Tsinghua University, said DSG technology is not mature and Volkswagen actually hasn't found a good solution to the current problems.

"The problems don't occur in every car and not at all times - it appears in, say, only 1 percent of the cars at 0.1 percent of the time," he said.

According to a report by Menutor Consulting, it usually takes 10 years in mass production for a new technology to mature. "It's the same for turbocharged technology, for the gasoline-electric hybrid, and it will be the same for dry-type dual-clutch transmissions (such as the DSG)," said the report.

"We are not criticizing new technologies, but we wish the manufacturers would limit the damage and keep a friendly attitude to solving problems when they promote new technologies," it said. "China is not an adventure playground for them."

Yang Xiaoliang, a VW owner in Zhangjiakou, Hebei province and whose car is among the recalled vehicles, said he really hopes the recall can eliminate the potential risk of power interruption.

"It's not a problem for just DSG owners - it's about the safety of all people on the roads," Yang said. (From China Daily)


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