The Chinese automotive industry is under pressure to improve its technology and quality to support its growing customer base. The country is now seeking to introduce large financial penalties, which is intended to improve management, supervision and safety in the sector.

The state council released new regulations on October 30, 2012, which includes tire makers in the recall system for the first time. The new Administrative Regulations on Defective Automotive Product Recalls have been compiled to address the concerns of vehicle quality. The new regulations will be effective from January 1, 2012.

The new regulations have mentioned that domestic and international automobile manufacturers will face fines of 50,000 to 200,000 yuan if they fail to submit recall reports. The penalties on car makers will be as high as 1 percent to 10 percent of total sales revenue of defective vehicles.

The penalties will be levied if the manufacturers do not stop producing and selling defective vehicles, conceal the problems, or refuse to carry out recalls. If the defect is serious, the manufacturing license of the automaker might be revoked.

Analysts have said that the new rules would increase revenue earned in penalties by millions of yuan, and will act as a deterrent to non-compliant automakers.


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