Volkswagen has announced a recall of about 2.6 million cars worldwide, including 640,000 in China, a crucial growth market.
The recall affects a range of models that may have problems with lights, leaking fuel lines and the wrong type of engine oil.
It includes 800,000 of its Tiguan SUV model, one of VW’s best-selling models globally this year.
The recall is one of the biggest in VW’s history.
Some 640,000 cars are being recalled in China, where VW produces cars for the local market, as well as selling imports.
Volkswagen has announced a recall of about 2.6 million cars worldwide
China is now the biggest car market in the world, an important source of demand for global carmakers looking for growth to offset declines in European car sales.
VW says it wants to double its manufacturing capacity in China to four million cars a year by 2018, helping it to become the biggest car company in the world by sales.
The recall is a setback for those ambitions, although the faults appear to be relatively minor.
There are concerns that the affected Tiguan cars have faulty fuses in their lighting circuits.
A further 239,000 Amarok pick-up trucks may have leaking engine fuel lines.
Another 1.6 million cars and vans may have problems caused by the use of a synthetic oil in their gear boxes.
These include 640,000 vehicles produced in, or imported to, China between 2009 and 2013.
VW has already recalled more than 380,00 vehicles in China this year because of gearbox problems.
However, the size of the recall is dwarfed by Toyota’s recall of 10 million cars in 2009 and 2010, amid fears over sticky accelerator pedals and floor mats.
Volkswagen has decided to recall 384,181 cars in China to replace a part of their gearboxes, its largest recall in the country to date.
Last week, Chinese state television showed Volkswagen consumers reporting sudden acceleration and loss of power.
Volkswagen said the direct-shift gearboxes could cause a power interruption, but drivers could remain in control and stop.
China is the biggest market for Volkswagen.
Volkswagen has decided to recall 384,181 cars in China to replace a part of their gearboxes
The recall, which starts on April 2, includes the Passat, Bora, Touran and Golf models amongst others, the company confirmed.
Volkswagen currently has two production joint ventures with China’s SAIC Motor and FAW Group.
The German carmaker sold 2.8 million cars in China in 2012, and said it planned to increase production to 4 million vehicles in the country in the next 5 years.
Volkswagen has agreed a deal to buy the remaining 50.1% stake in Porsche it doesn’t already own by the start of next month.
VW will pay 4.46 billion Euros ($5.6 billion) plus one VW common share to acquire the stake.
Volkswagen and Porsche had agreed in 2009 to merge by the end of 2011, but have since faced legal obstacles.
The deal is likely to reduce costs and boost VW’s earnings as it seeks to become the world’s biggest carmaker.
Volkswagen and Porsche had agreed in 2009 to merge by the end of 2011, but have since faced legal obstacles
“The accelerated integration will allow us to start implementing a joint strategy for Porsche’s automotive business more quickly and to realize key joint projects more rapidly,” said Hans Dieter Poetsch, chief financial officer of Volkswagen.
Both the firms had been seeking to accelerate the merger. However, one of the stumbling blocks for the deal was the likelihood of a big tax bill for both the firms.
Volkswagen had acquired a 49.9% stake in Porsche in 2009.
According to various reports, if it bought the remaining stake before 2014, the two companies may have had to pay more than 1 billion Euros in taxes, making the move less attractive.
Analysts said that by structuring the deal as one which involved the payment of one VW common share to Porsche, the firms may be able to avoid that bill.
They said that such a move means that the deal may see it being classified as a restructuring of the company rather than a takeover.
“It’s a great deal for Volkswagen, both financially and in operative terms,” said David Arnold, an analyst with Credit Suisse.
Meanwhile, Volkswagen said in a statement that “the accelerated integration model that has now been agreed can be implemented on economically feasible terms”.
Once completed, the deal will bring an end to one of the most dramatic takeovers in the car manufacturing industry.
Porsche had been trying to takeover Volkswagen for many years.
Its attempt failed in 2009 as it fell short of acquiring the required 75% stake.
The global financial crisis and the slump in the global automotive sector made it difficult for the carmaker to raise enough money to buy the required stake.
But none the less, Porsche accumulated large amounts of debt in the process and was sued by investors who accused it of misleading them.
In a turnaround of events, the firms agreed a deal in 2009 under which Volkswagen agreed to takeover Porsche.
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