(Recasts, adds analyst comment, details)
SHANGHAI May 8 Great Wall Motor Co,
China's biggest maker of sport utility vehicles, said on
Thursday it would halt delivery of its newly-launched Haval H8
due to a quality issue, dealing a second setback to its
ambitions to compete in the premium market.
It is the second time in less than six months the Haval H8,
which sells for more than $32,000, has been affected by
technical and other problems.
Great Wall said on Thursday it would fix
glitches in the Haval H8 after customers complained of knocking
noises in the car's transmission system when driving at high
Sales would resume only after the product reached "premium
standards", the company said in a statement to the Hong Kong
"This demonstrates the company's weakness in developing
high-end products and in technical management," Great Wall said.
"Repeatedly delaying delivery of Haval H8 has hurt customers'
feelings, and we feel very guilty about that."
Great Wall shares, which were suspended from trading on
Thursday pending the announcement, will resume trading on
Friday, the company said.
In January the carmaker was forced to delay the SUV's
launch by three months because of style and quality issues.
The following day its shares in Hong Kong slumped as much as 20
percent while its Shanghai-traded shares touched six-month lows.
Dealers started taking orders for the SUV last month.
Chinese companies including Great Wall, Geely Automobile
Holdings Ltd and BYD Co Ltd face
increasing competition from foreign rivals in the low end of
China's auto market.
But local carmaker' efforts to compete in the premium end of
the market are constrained by consumers' perception that
indigenous brands are of lower quality.
Great Walls' latest setback would have an impact on its
sales, but that's not necessarily a bad thing for the automaker
in the long run, Namrita Chow, principal analyst at consultancy
IHS Automotive, said.
Unlike some Chinese carmakers who are over-optimistic, Great
Wall is "very, very cautious", Chow said.
"You want to protect your brand for the long term. You don't
want to see recalls afterwards," she said.
Earlier on Thursday, Reuters reported that most H8 dealers
had been told by Great Wall to stop taking new orders.
(Reporting by Samuel Shen and Kazunori Takada; Editing by
Kenneth Maxwell and Susan Thomas)