BMW recalls 140,000 cars in China

BMW has recalled more than 140,000 vehicles in China, less than a week after a planned expansion plan was criticised by the country’s environment ministry.

The German carmaker’s China joint venture, BMW Brilliance, said the recall was voluntary and stemmed from a fault affecting the steering systems of 5-series vehicles manufactured over the past four years.

"As soon as we found the defect we reported it to the government," said BMW Brilliance, which operates a factory in the north-eastern industrial centre of Shenyang. Last week, China's environment ministry refused to sign off on the factory's plans to double annual production capacity to 400,000 vehicles while also expanding an affiliated engine plant.

Water corrosion

The ministry criticised BMW Brilliance for submitting an “insufficient” environmental report and failing to meet government pollution-reduction targets. BMW said the ministry’s “opinion” was not final and would not delay the €1.1 billion project.

BMW’s sales in China, its biggest market, rose 15 per cent in the first half of the year to 183,000 units. BMW Brilliance accounted for more than half of this total.

Analysts said the recall, due to water corrosion from a faulty seal, appeared less serious than that issued by Volkswagen in March.

“In terms of financial impact it’s basically zero,” said Robin Zhu, analyst at Bernstein Research. “In terms of brand damage it’s also negligible.”

Volkswagen recalled more than 380,000 vehicles in March after CCTV, China’s main state television channel, aired a report about a long-standing gearbox problem. – Copyright The Financial Times Limited 2013