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Recall problems for Guangzhou
Auto
Guangzhou Auto hits a
speed-breaker with power steering and
oil pump troubles.
BY OUR AUTOMOBILES CORRESPONDENT
March 22, 2007: China-based Denway
Motor arm Guangzhou Automobile has
suddenly been forced to slam the
brakes, with power steering and oil
pump problems posing a major threat.
This has led to the carmaker recall
close to 500,000 vehicles, which is
about half its output over the past
four years.
The company is recalling three models
namely Accord, Odyssey and Fit, said a
report. Significantly, these three
models are manufactured by the joint
venture with Japanese carmaker Honda.
Guangzhou Honda, the joint venture set
up between Guangzhou Automotive
Industry Corp and Honda in 1992, had
posted total sales of one million
vehicles between 2003 and this date.
However, the positive side of the
story is that the financial impact
would be minimal as the company, which
is China’s sixth largest carmaker,
only needed to bear some
administration expenses. Other recall
costs would be borne by the car-parts
suppliers, the report added.
Meanwhile, another report added that
Guangzhou Automobile Group has lined
up plans to go public this year. The
company is believed to have started
the procedures in this regard and also
has submitted its listing plan to
regulators for approval. Guangzhou
Auto hopes to raise $600-800 million
via the proposed IPO.
The carmaker also has plans to unveil
a prototype of an internally-developed
brand sedan by the end of the year,
for launch by 2010.
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