A beefed-up vehicle warranty law that takes effect in China on Tuesday is likely to raise costs for smaller local players that may add to pressure for eventual consolidation in the nation’s fragmented car industry, Reuters reported on Monday. The new “lemon law” gives Chinese consumers nearly as much protection as enjoyed by their counterparts in the United States to obtain free repair of faults or replacement of defective vehicles. Big global manufacturers such as General Motors or Toyota Motor Corp are well-equipped to take the regulations, which are no more stringent than those they already face in their home or international markets, in their stride, the report said. But for some indigenous players, especially smaller, little-known car makers with less rigorous quality control, the tougher requirements could sharply increase warranty-related costs, it said.
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