Wednesday August 15, 2012, 12: 48 pm

Chinese Car Exporters Recall 23,000 Vehicles in Australia on Asbestos (Beijing)

BEIJING — Great Wall Motor and Chery Automobile, China's two biggest car exporters, recalled most of their vehicles sold in Australia after authorities found potential cancer-causing asbestos in some models.

Consumers should avoid "do-it-yourself" maintenance that may disturb contaminated engine and exhaust gaskets, the Australian Competition and Consumer Commission said Wednesday. The recall affects 23,000 vehicles, according to the statement.

Great Wall led shares of Chinese automakers lower in Hong Kong as the discovery of asbestos — banned in 55 nations because of the fiber's links to cancer and respiratory illnesses — undermines the nation's carmakers in their push to build their brands in overseas markets. Exports present the biggest opportunity for sales of Chinese-branded cars to grow as they face mounting competition at home, according to UBS AG.

"I believe this will change consumers' mindsets toward Chinese cars," said Cheam Tze Shen, auto analyst at CIMB Securities. "After all, better to be safe than sorry with regards to health issues especially if the vehicle is designated as your family car."

Great Wall, China's biggest maker of sport utility vehicles, fell 5.1 percent, the most in almost two months, to close at HK$16.48 in Hong Kong. BYD Co., Guangzhou Automobile Group and Dongfeng Motor all fell more than the Hang Seng Index's 1.2 percent drop. Chery, the biggest maker of indigenous-brand cars in China, isn't listed.

Shang Yugui, a spokesman at Great Wall, the biggest maker of sport utility vehicles and pick-up trucks in China, said the company became aware of the issue about a month ago and then stopped using the parts in question. The components were used in some vehicles sold in China and overseas markets, he said.

"We will actively proceed with the recall," he said. "The export market has been really good for us this year. The incident won't have much impact on our export and overseas expansion plans."

Workers at Chery, the biggest maker of indigenous-brand cars in China, mistakenly used a wrong batch of parts that wasn't supposed to be used in cars exported to Australia, spokesman Huang Huaqiong said. The companys select parts in line with government policies, Huang said.

Ateco Automotive, the Chinese carmakers' distributor in Australia, had received written assurances from the two manufacturers that no parts of the vehicles contained asbestos before imports began from Great Wall in 2009 and Chery in 2011, Daniel Cotterill, a public affairs official, said Wednesday in Sydney.

The recall represents the majority of the Chinese companies' vehicles brought into the country since imports began, Cotterill said, without giving a precise number.

A total of 15,355 Great Wall and 1,822 Chery vehicles were sold in Australia during 2010 and 2011, according to the nation's Federal Chamber of Automotive Industries, an industry group.

Ateco told Chery and Great Wall dealers to halt sales of the affected vehicles, according to the ACCC statement.

The discovery was "an absolute disgrace," Barry Robson, president of the Asbestos Diseases Foundation of Australia, said by phone from Sydney.

"There is a complete ban on asbestos products here in Australia and these people are flaunting it," he said. "They've got to remove those cars off the road. Not every brake mechanic or car mechanic will know about this."

The recall involves Great Wall's SA 220, V240, X240, V200 and X200 models; as well as Chery's J11 and J3, according to the ACCC's website.

Carmakers in China are expanding overseas to help offset slowing domestic sales as more plants open and local demand cools. Vehicle exports may rise about 50 percent this year, extending record shipments in 2011, according to the China Chamber of Commerce for the Import & Electronic Products.

Great Wall plans to double its number of overseas assembly plants to 24 by 2015 and raise total manufacturing capacity to 500,000 units a year, it said in April. The company plans to export 100,000 vehicles this year, or 18 percent of its expected total deliveries, Chairman Wei Jianjun said in March. Chery aims to boost annual exports to 1 million units in seven to eight years, the company said in 2011.

For Chinese automakers, compounded annual growth rates for overseas sales will climb to 25 percent from 2013 to 2015 and account for 30 percent of their profits by then, making exports their next growth drive, wrote Yankun Hou, a Hong Kong-based analyst at UBS, in a report July 25.

Asbestos is the name given to six natural fibers about 1,200 times smaller than a strand of human hair that can be woven like fabric. The strands have been used for the last 140 years in construction and their resistance to fire, heat and chemicals have also helped them gain uses in automaking. Evidence of the harmful effects of asbestos began appearing a century ago, and national bans were first enacted in the 1970s.

Harm occurs when the asbestos fibers are inhaled and can lead to the development of lung cancers, including a malignancy of the lining of the lungs and abdomen known as mesothelioma, which often causes stabbing chest pains and can be fatal within 18 months.

Earlier this year, the High Court of Australia ruled James Hardie Industries, a seller of building products, misled investors about funding asbestos-related claims. The company, which the Medical Research and Compensation Foundation to pay claims of people who were injured by asbestos products, said in 2009 that the fund was running out of money and that it might be unable to meet its claims within two years.

Fifty-five countries — including Japan and all members of the European Union, though excluding China — have nationwide bans on asbestos in factories, buildings and car parts. The U.S. Environmental Protection Agency selectively bans the material in products such as spray-on paint and pipe insulation.

All forms of asbestos are carcinogenic, according to the World Health Organization. The Geneva-based United Nations agency estimates that one person dies every five minutes from an asbestos-related disease somewhere in the world, causing 107,000 deaths annually.