VW Transmission Recall in China Could Cost More than $600 Million

Volkswagen AG's recall of 384,200 cars in China to replace defective transmissions could cost the company $184 million and perhaps more than three times that much, according to Bloomberg News.

The new services's estimate is based on a per-vehicle cost range of $480 to nearly $1,600 provided by IHS Automotive.

The recall was ordered by China's General Administration of Quality Supervision, Inspection and Quarantine. It says the campaign covers a wide range of VW models sold since 2008 and equipped with dual-clutch transmissions.

The agency says a malfunction of the DSG electronics may cause the vehicle to lose power, thus posing a safety threat. Consumers in China also have complained about unintended acceleration and excessive vibration in those cars.

VW has had problems before with its so-called DSG (direct shift gearbox) transmission, including two closely spaced recalls in the U.S. in 2009. Those campaigns replaced faulty sensors that caused shifting problems in 66,800 of the company's 2009-2010 Audi and VW models.

Several other countries, including France, Sweden and the U.K., have reported similar issues with the DSG transmission, though VW has never conducted a global recall.

Last year VW updated software in 500,000 DSG-equipped vehicles in China and extended the warranty on nearly 1 million such units to 10 years from two. The company insisted that reported problems of noise, vibration and failure to start in hot or humid weather were not safety risks.