Italian automaker DR Automobiles has been fined 6 million euros ($6.4 million) for misleading consumers about the Chinese origin of its DR and EVO cars, Italy’s Antitrust Authority (AGCM) announced on Thursday. The company, based in the southern Italian region of Molise, assembles low-cost cars, including fully electric models, produced by Chinese car manufacturers Chery, JAC, and BAIC, using components imported from these companies.
According to the AGCM, DR Automobiles falsely marketed cars sold under the DR and EVO brands as made in Italy products, when in reality, they are mostly manufactured in China, with minor finishing and assembly operations carried out in Italy. This misrepresentation has led to the hefty fine imposed on the automaker.
In response to the fine, DR Automobiles stated that it would appeal the decision, arguing that it had never claimed its cars were entirely manufactured in Italy. The company’s founder, Massimo Di Risio, expressed disbelief at the ruling and asserted their intention to challenge it, confident of overturning the decision entirely.
Despite the setback, DR Automobiles announced plans to enhance operations at its Macchia d’Isernia facility in Italy by establishing a new production plant to facilitate the development of new models. This move indicates the company’s commitment to expanding its presence in the Italian automotive industry.
Italy has recently taken a firm stance on country-of-origin issues within the automotive sector. In a similar vein, Stellantis faced scrutiny last month when it removed the Italian flag from the rear bumpers of its Polish-produced Fiat 600 after accusations of misleading consumers about the origin of vehicles manufactured abroad.
The tensions surrounding country-of-origin issues extend beyond Italy, with ongoing disputes between China and the European Union over car imports. The EU has proposed tariffs to protect its production from what it deems unfair competition from Chinese electric vehicle manufacturers.
In addition to the misleading marketing practices, AGCM also highlighted concerns regarding DR Automobiles‘ spare parts unit, DR Service & Parts, which allegedly failed to provide an adequate supply of spare parts and after-sales service, potentially infringing on consumer rights. The fine imposed on the company also addressed this deficiency.
DR Automobiles and its spare parts unit have been given 60 days to address the issues identified by the authority and communicate the steps taken to rectify them. The company cited disruptions in the supply chain during the post-pandemic period as a contributing factor to the shortcomings but assured that the situation had improved, with average delivery times for spare parts now exceeding two days in the first quarter of 2024.
In conclusion, the fine imposed on DR Automobiles underscores the importance of transparency and accuracy in marketing practices within the automotive industry. The company’s response to the ruling, along with its plans for expansion and improvement, will be closely monitored as it navigates the repercussions of the AGCM’s decision. The ongoing scrutiny of country-of-origin issues reflects the broader challenges facing the global automotive market and the need for compliance with regulations to ensure consumer trust and protection.