Recall of the Storm: Adding Insurance to Auto Parts

The upgrading of China’s auto recall system has once again become the focus of the market. In addition to focusing on the recall responsibility of vehicle companies, the recall of auto parts has also been put on the agenda.

Indeed, with the globalization and modularization of the automotive industry, automakers have become the last link in automotive production. Numerous auto parts can be built into a complete vehicle. Because of this, parts have become the culprit in the recall of many large-scale vehicle companies. There is a recall of Toyota Motor Cars. There was an old Ford tire case.

In 2010, Toyota recalled the door. More than 8 million Toyota vehicles in the world have been recalled due to a malfunction of the accelerator pedal, and the accelerator pedal has been produced by US auto parts supplier CTS. However, Toyota Motor is the most affected. For a time Toyota Motor's share price dropped and sales were greatly affected. In the last century, Ford Motor Co. also had a similar robbery. Due to 68 fatal flaws in Firestone tires, Ford Motor’s “Explorers” have repeatedly experienced rollovers. The United States federal government finally ordered Firestone Limited to recall millions of tires. Even though Ford Motor Co., once once strong, clarified the crime of improper design, its brand image was greatly reduced and it was left behind by General Motors.

This is by no means an accidental event. The developing Chinese auto industry also deeply understands the safety issues of auto parts. According to the recall communique provided by the AQSIQ Defective Product Management Center, in the past six years, recall announcements due to defects in auto parts accounted for 30%, and most unsafe vehicle use was due to parts quality problems.

In view of the globalization and modularization of auto parts production, the story of Toyota Motor and Ford Motor will be staged. The only difference will be the protagonist and the damage of the story. Of course, not only the consumers are harmed, but also the vehicle companies that purchase these auto parts are also victims. The auto giants have large sales, and the more spare parts they purchase, the more likely they will be devastated. The bigger it is.

Regardless of whether it is to protect the entire car company or protect the car consumers, it is necessary to include the auto parts in the relevant recall regulations. For example, vehicle companies directly compensate consumers and claim compensation from parts suppliers. Of course, the compensation ability of the parts and components companies is usually insufficient, and the phenomenon that the entire vehicle company is in a bad situation may occur. In order to deal with this risk, it is possible to solve this problem through insurance. During the two sessions in 2010, Zeng Qinghong, general manager of GAC Group, suggested that in view of the great risks that vehicle manufacturers and parts manufacturers are facing due to the recall of automobiles, effective measures should be taken in automobile production and sales for risk management. In the spare parts enterprises, car insurance related recalls are gradually promoted.

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