Volvo recalls over 200,000 cars to fix fuel leak issue

STOCKHOLM (Reuters) - Volvo Cars, which is owned by China’s Zhejiang Geely Holding Group [GEELY.UL], is voluntarily recalling about 200,000 cars after it found an engineering issue that could potentially cause fuel leakage in the engine compartment over time.

The group said its probe had identified that some vehicles may have small cracks inside one of the fuel lines in the engine compartment, which along with a pressurized fuel system may over time lead to fuel leakage in the engine compartment.

About 219,000 cars of 11 different models produced in 2015 and 2016 had been affected, the Swedish company said, with the highest number of impacted cars in Sweden, the UK and Germany. The Swedish recall was first reported by daily Aftonbladet.

Volvo sold 503,127 cars in 2015 and 534,332 cars in 2016.

“There are no reports alleging injuries or damages related to this issue. Volvo preventatively recalls the cars to avert any possible future problems,” Volvo said in its statement.

The company’s fortunes have been revived since Geely bought it in 2010 and its popular new premium models now compete with larger rivals Daimler (DAIGn.DE) and Volkswagen (VOWG_p.DE). It sold a record 642,253 cars in 2018.

However, a prolonged U.S.-China trade war has inflated raw materials costs and resulted in a slowdown in Chinese demand for cars. That has forced Volvo to spend to retool its global factories to limit the negative tariff impact and led it to postpone its plans to go public indefinitely.

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This month, Geely Automobile (0175.HK), the main listed unit of the Geely empire which owns Volvo, forecast flat sales this year, as China’s most successful carmaker struggles with slowing economic growth and more cautious consumers.

A Volvo spokesman declined to comment on Wednesday on the cost of the latest recall.

The company made its largest recall ever in 2004, when it called back 460,000 cars to fix wiring in an electronic control module for the cars’ main cooling fan.