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March 15 Gala, Sagitar Axle Gate and industry supervisio

Automakers again highlighted this year’s 3/15 Gala, CCTV’s investigative special that airs annually on March 15 aimed at exposing alleged corporate misconducts on China’s Consumer Rights Day.

The unlucky winners this year on CCTV were Dongfeng-Nissan, Shanghai-Volkswagen and Mercedes-Benz, whose 4S dealerships reportedly overcharged customers. Land Rover was singled out for an alleged faulty 9-speed AT on its popular Range Rover Evoque SUV. The TV show also exposed several small oil refineries in Shandong Province selling gasoline with hazardous chemicals.

The four automakers quickly released statements apologizing to consumers and vowing to resolve the issues. Land Rover said it had already started from January 19 to offer owners complimentary software upgrade for the problematic transmission. Interestingly, in the evening of March 19, the Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), China’s quality watchdog, posted a notice on its website requesting Land Rover to recall the affected vehicles and extend warranty of the transmission. Within minutes, Land Rover announced the recall of 36,451 Evoques and extended their transmission warranty to 7 years or 240,000 km.

China’s private ownership of automobiles has ballooned to record levels in recent years and so have owner complaints. Because automakers have been increasingly targeted by investigative reporters of CCTV’s 3/15 Gala, the annual TV program has become a nightmare for automotive and other companies. Executives have to sweat through the day wondering if their companies would be a target at the show. If not, a sigh of relief. If yes, then a mad rush to make amends.

But rarely do the exposed companies receive severe penalties or fines from the government and in some cases their products actually get a boost in sales as a result of the negative exposure (McDonalds and Apple were examples). Interestingly, the long-term effect of the show’s negative PR on the exposed companies has been minimal.

People also question the program’s impartiality in its investigative reports. There is a wide-circulated belief in the automotive circles that CCTV as a state-run TV may have avoided major consumer complaints over products of certain companies because they pay big money to advertise on CCTV. Analysts and the media have been wondering why broken axles on the Volkswagen Sagitar, the No. 1 consumer complaint listed by another CCTV program because it involved tens of thousands of cases, failed to be addressed on the 3/15 program. The answer to many of them is very simple: right before the TV program there was an ad for the New Sagitar, which claims that the car does not need to “show off its superb quality.”  

While the impartiality of CCTV is questionable, the real question that needs to be asked is what the government watchdog has been doing in the protection of consumer rights. The reported and unreported cases of unsafe products prove that there is lack of supervision on the part of authorities over product safety and quality. Without close supervision, effective administration and timely punishment, automakers tend to ignore legitimate consumer rights.

Most important, China lacks independent or third-party institutions such as the National Highway Traffic Safety Administration (NHTSA) and Insurance Institute of Highway Safety (IIHS) in the U.S. that monitor road and vehicle safety, emissions and the responsibilities of automakers on behalf of consumers. As China becomes a country on wheels, this is an important area for reform because automobile safety and emissions have a direct bearing on the life of hundreds of millions of people in China.

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