) decided to recall 384,000 vehicles in China, following media
reports that indicated quality problems with the vehicles,
especially their gearboxes. The recall would include Sirocco,
Golf Wagon, Jetta, Magotan, Touran and Passat models that were
imported or manufactured in China between December 2008 and March
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Volkswagen revealed that there could be a problem with
direct-shift gearboxes, which may lead to power interruption.
However, the company stated that the driver could remain in
control of the vehicle despite the problem. Volkswagen will
repair the gearboxes and install the latest software upgrades in
the vehicles free of cost.
China is the biggest market for Volkswagen and the automaker
occupies the lion's share of that market among all other
automakers. Volkswagen sold 2.81 million vehicles in the country
in 2012, occupying 14% of the market. Sales in year went up 24.5%
Volkswagen is the latest automaker that joined the gang of
automakers making frequent safety recall of vehicles. Among them,
Toyota Motor Corp.
) is the largest, recalling more than 20 million vehicles
globally since Nov 2009.
The string of recalls has led Toyota to face numerous personal
injury and wrongful death lawsuits in federal courts. Last year,
the Transportation Department of U.S. slapped a fine of $17.35
million on Toyota due to late response regarding a defect in its
vehicles to safety regulators as well as late recall of those
According to the department, it was the maximum allowable fine
under the law for not initiating a recall in a timely manner. The
latest fine adds to $48.4 million imposed by the U.S. government
on the company in 2010 due to late recall of millions of
Other automakers that recalled vehicles recently include
Ford Motor Co.
) and a Japanese automaker
Honda Motor Co.
). This month, Ford Motor announced recall of 7,150
vehicles due to a problem with the child lock on the left rear
door. About 5,650 vehicles will be recalled in the U.S. The
recall involves redesigned 2013 Escape crossover, which has been
recalled multiple times last year.
Honda Motor also announced global recall of 250,000 vehicles due
to a problem with the braking system in certain models. The
problem lies with the Vehicle Stability Assist control unit in
the vehicles that can cause the car to brake when the driver does
not press the brake pedal.
Volkswagen AG, a Zacks Rank #4 (Sell) stock, posted an impressive
41% rise in net profits to €21.7 billion ($28.7 billion) in 2012
from €15.4 billion in the prior year, driven mainly by the
accounting boost received from the addition of Porsche into the
company's well renowned 12 brands.
Revenues escalated 21% to €192.7 billion ($254.9 billion), driven
by impressive vehicle deliveries in the year that topped 9
million units globally for the first time in the company's
history. Vehicle deliveries grew 12.2% to 9.3 million units in
2012, driven by strong demand in North America and Asia,
partially offset by weak sales in Europe.