The car repair industry in Australia criticised on Thursday the decision by the Australian Competition and Consumer Commission (ACCC) not to require the recall of 24,000 made-in-China vehicles with asbestos fibre parts.

Instead of a mandatory recall, the ACCC would allow car owners of Great Wall and Chery automobiles to request from the Australian importer a warning sticker on the engine bay until its next service. However, the ACCC allowed car buyers who want a replacement part to have their vehicles fixed by the importer.

The affected models were identified as Chery J11 and J3 models and Great Wall SA220, V240, X240, V200 and X200 models.

Ateco Automobile, the importer, said all replacement gaskets and new car imports would asbestos-free.

With the discovery of the asbestos fibre, chances of more Chinese car exports to the U.S. and Europe are reduced as regulators may be stricter with vehicles from China as they did with toy and milk exports from the Asian manufacturing giant over toxic elements used in production.

An industry research group, Dunne, said the discovery of the asbestos fibre content on the two Chinese brand vehicles is a significant setback for the Asian country's automobile manufacturing industry which used Australia as testing ground for larger markets.

China is seeking other markets due to excess production domestically and competition from foreign carmakers such as General Motors and Volkswagen. In the first half of 2012, China exported 236,200 vehicles, a 16 per cent rise compared to a year ago, according to the China Association of Automobile Manufacturers. The bulk of the car exports were shipped to Russia, Iran, Algeria and Iraq.

News of the discovery of asbestos fibre caused shares of Great Wall Automobile to drop 5.1 per cent in Hong Kong on Wednesday trading. Great Wall enjoyed a 59 per cent rise in its export volume in 2011 to 79,000 units while revenue from Australia sales grew 41 per cent to $114.9 million. In April, Great Wall reached the 20,000 mark of vehicle sales in Australia.

"Chinese car companies will continue to push overseas, but you can bet that other countries that they are moving into, or are exporting to, are going to take a closer look on what's on offer," Bloomberg quoted Dunner head of industry research Michael Dunne.

Ban of products with asbestos had been made by China's car export markets such as Algeria, Chile, Uruguay and Egypt.

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