There are a few other things that have been causing problems for the Indian automobile industry other than slow demand and dipping sales. The country's automobile market has been suffering due to the recalling of vehicles that has taken place due to manufacturing defect. Notably, the biggest controversy of 2013, so far, involved American automobile giant General Motors, which admitted, sometime ago, to violation of testing norms. This admission to the government was followed by recalling of over a lakh units of Chevrolet Tavera. This caused widespread discontent among customers who have now started feeling reluctant regarding the purchase of a new car.
Now, according to reports, the government is in the final stage of devising a policy to provide reassurance to consumers. Reports suggest that this policy is going to make it mandatory for recalling cars in which manufacturing or technical defects are found. Although nothing has been confirmed yet, sources claim that the ministry is almost through with framing of this policy. It is being said that this policy is going to encompass stern provisions along with financial penalties for offenders, be it makers of passenger cars, commercial vehicles or two-wheelers.
Sources closed to this development claim that the government was completely infuriated with the General Motors fiasco, something that triggered a strict action on its part. Following this incident, authorities decided to set-up a committee that would probe into this issue and suggest the right punishment. Unfortunately, this is not the only recalling that took place as several other companies have been involved in the same, such as Ford, Nissan, Honda and Renault. Statistically speaking, units in excess of 3 lakh have been recalled, a number that is around five times the average existing in developed markets. Industry experts have claimed that this practice is not right for a market that is slated to be the largest in the world in next few years.
Industry experts feel that there is a need to make testing norms more strict and any failure of adherence to rules should result in stern actions. In addition, standards in India should be set according to international levels, which are followed in countries like United States of America, Germany and Japan. Automotive Research Association of India (ARAI), testing agency based in Pune, is working on provisions for recalling of cars, reports have claimed. Additional Secretary in Ministry of Heavy Industries, Ambuj Sharma, talked about the same in a recent interview. "There has been a need to broaden the perspective of recall to bring in best global practices ... followed in the US, Europe or Japan. We have asked ARAI to develop a standard recall policy for all vehicles that would be framed under the relevant motor vehicles rules and enforced," he was quoted as saying.
In a lot of ways, analysts feel, this incident has been a wake up call for authorities that make regulations for auto makers in India. Alarmingly, these norms, which forced General Motors to recall over a lakh unit of cars, have been prevalent in the country for just under a decade. This clearly indicates the level of negligence and loopholes that exist in the system in India. Even officials from the ministry have admitted to the need for tweaks in the system. Ambuj Sharma, speaking on the same, said, "There is need for a mechanism to plug loopholes in the system. A clear policy would define the scope and give more teeth to the government agencies for stricter compliance in automotive manufacturing."
Not only is this step required for the progress of the industry, companies need to get their act together in order to main customer assurance levels. It is being said that the ruling regarding mandatory recalling of cars with defects is going to be made soon. Experts feel that apart from necessary recall, such guidelines should also be set, which cover all aspects of the issue. In a market like India, protection of consumer interest is quite necessary for sustenance. Rakesh Batra, National Leader of Automotive Sector at global consultancy EY India, said, "It would help protect consumer interest. India is now a mature market and if there is a defect caused by slack design or poor manufacturing, then the manufacturer should be held accountable for that."
