The last time I wrote about the need to regulate the plying of electronic rickshaws in Delhi, the issue had not taken centre stage in the way it is now. The death of a 2 year old in East Delhi last week along with Delhi Traffic Police’s claim that e-rickshaws have led to 29 accidents and at least 2 more deaths in the past, has made it more serious and urgent. Read more
When it comes to providing safety features in cars, and we are primarily talking of small cars here, it is a pure case of passing the buck. The manufacturers say the consumers dont want it. The consumers crib that the manufacturers dont provide it or even when they do, the cost is exorbitant. And the government isn’t able to make up its mind on what to do. Read more
Blame it on the burden of expectations or our rockstar Prime Minister Narendra Modi’s own exhortations to rise above petty politics but the decision to allow e-rickshaws in Delhi is proof enough that the NDA 2.0 rule has started on the wrong foot. Read more
Would rural development minister Gopinath Munde be still with us if he had strapped on his seat belt on Tuesday morning?
In between all the madness surrounding the elections, news reports of two separate cars catching fire in Delhi grabbed headlines in the last few days.
In 2013-14, the most ubiquitous car on Indian roads–Maruti Alto–completed a full decade of dominance in the market. It first reached the pole position in 2004-05 when it ended the more than two decade rule of its predecessor Maruti 800. It is not a mere coincidence that as it celebrates 10 years of leadership in the year that also marks the end of the road for the M800. Read more
Globally, vehicle recalls are a part and parcel of automotive business. Every responsible manufacturer does so for reasons as grave as potential brake failures or airbag malfunctions to seemingly trivial stuff like a defect in the power window switch.
An estimated over 40 million vehicles have been recalled worldwide in the last 10 years (see table). Most of these are in developed countries like US, Canada, Mexico and Europe where there are stringent checks and balances on non reportage of defects in a vehicle.
In the last 5 years for example, recalls have become a major flashpoint in the US. In 2009, Toyota Motor Corp, which had just become the largest car maker in the world, faced a Congressional probe for delayed response to problems with brakes and floor mats in vehicles that could cause the accelerator to become unstuck. It subsequently recalled 10 million vehicles in what remains the largest such exercise till date.
In a mirror image of the Toyota conundrum, General Motors is facing much flak from US for delayed response to an ignition problem on its Chevrolet, Pontiac and Saturn vehicles that could prevent the airbags from getting deployed. The company apparently knew about the problem back in 2007 but dilly-dallied on its response. At least 30 accidents and 13 fatalities have been reported due to this in the last 10 years. GM now faces embarrassment and a potential million dollar penalty. A speedy response could have saved some lives.
What these instances prove, more than anything else, is that for all the technological prowess car companies harness, mistakes happen. From a Porsche in Germany to a Proton in Malaysia or Geely in China, everybody has to recall cars at some point of time or the other. No manufacturer can claim to make zero defect, perfect cars. And there is no shame in recalling a bad apple. It only shows you are responsible.
But for long, recall was considered a bad word in India. Till 2010, there are very few instances of manufacturers voluntarily recalling their cars here. The absence of mandatory recall laws meant there was no compulsion either. It created a vicious cycle. If some company went out of their way to recall a car out of transparency, it was seen as a sign of poor quality, bad practices and faced the ire of consumers. It made manufacturers cagey about recalling cars.
Nobody can claim we have perfect cars in India. In terms of quality we are perhaps not even half way there as US or Europe. And not all of it can be brushed under the carpet on price. We live with fewer features and lower safety and emission standards that bring down the price of vehicles anyway. If sophisticated factories in Germany or Detroit cannot make defect free vehicles, there is no reason to believe a factory in India can do the same. Sounds condescending, but so be it.
In the past, manufacturers would also identify defects and some would even replace the parts quietly when the cars came to the service stations for periodic maintenance. It served their purpose (a clear conscience perhaps) and to some extent that of consumers as well. But not all cars go to authorised service stations in India and so that discreet way was not foolproof. The need for a mandatory recall provision has been felt for long. And for long, it never materialised.
Thankfully though, there has been a marked change in stance in the last 4 years. Largely due to the deluge of recalls in the US and the explosion of media in India, manufacturers have become more confident about recalling cars here. The consumers today are more aware about recalls happening in other parts of the world and more willing to accept it as a goodwill gesture when it happens in India.
A decade ago, the recall of 972 units of the Ford EcoSport barely a week after its launch would have meant hara-kiri. Today, there has been absolutely no impact as consumers are emboldened by the fact that they are taking home a safe vehicle and that the manufacturer would still be working to find out if there are any belated defects even after it has exchanged hands.
Since 2010, almost 800,000 cars have been recalled in India. Last year was a watershed year of sorts with at least 11 instances of recalls. A lot of ground then, has been made. And as the Ford EcoSport’s example clearly suggests–recall isn’t a bad word anymore.
Yet a lot more ground still needs to be made. Our cars may not be as sophisticated as the ones in US and Europe and as consumers we may not be as paranoid as in US either, but there are still a lot of issues that need attention. Home grown car makers like Mahindra and Tata are still averse to calling their service campaigns as recalls. Famously, Tata never called its exercise to retrofit more safety elements on the Nano as a recall even when prima facie, it was one. Similarly, Mahindra vehicles are notorious for inconsistent braking. Yet, there has been only one instance when it has actually offered to replace them carte blanche.
Even on Wednesday, when Toyota recalled 6.58 million vehicles globally, its Indian subsidiary shied away from using the R word. And it happened a day after Maruti remained tight lipped about a problem in its compact sedan Dzire that merits a recall.
After four years of progression, this new found fear of the R word is not only regressive but also perplexing. I just hope it is not the start of anything more sinister.
A modern day car is a tech savvy piece of metal. And every passing year even the most mundane car is increasingly becoming savvier. Depending on what car you are in, you maybe spoilt with simple things like bluetooth telephony and steering mounted controls that do away with the need to taking your hands away from the steering wheel, to sophisticated systems like seat masseurs and Wifi hotspot that can transform your car into a spa or an office space respectively. Read more
Early morning on Sunday, a 25 year old youth, high on alcohol and a misplaced sense of power, rammed his speeding car into an auto driver and then into a road side tea stall. By the time the Chevrolet Cruze came to a stop, two people were dead and three others grievously injured. Read more
The government’s decision on Monday to reduce excise duties on cars, SUVs and MPVs across the board was so unprecedented that it has created a peculiar problem for the industry.
While the reduction in taxes was much needed and the industry had been lobbying hard for it over the last 6 months, the inventories piled up at with the dealers that were charged at the higher rate of duty is a headache for the manufacturers. And as the sales have been underwhelming over the last 7-8 months, unsold stocks are high both with the dealers as well as the companies’ own supply chain.
On an average, any car maker carries with itself an inventory of 2 weeks and in an ideal situation–10 days. But estimates suggest that currently the inventory level is at least 6 weeks and in some cases stretches to over 10 weeks. In effect, there are some companies where stocks dating back to 2013 are still unsold with the dealer.
On any given day, these cars are a problem and could be very difficult to liquidate. And in cases like this one, when taxes go down, it assumes significant financial implications. While the company and the dealer has paid a higher duty for the car as excise duty is charged at the factory gate, when it actually gets to the intended customer for delivery, the prices would change and customer would be obliged to pay the lower value. It is a situation that results in a windfall when excise duties go up but it turns into a loss to be absorbed when they go down.
Considering that around 150,000 cars are stuck as inventory across the country and the average ex-factory sticker price of a car is Rs 6 lakh (mind you it would include the marquee super cars as well), the entire industry is sitting at a potential loss of Rs 360 crore. This amount would either have to be absorbed by manufacturers entirely on their own, or in conjunction with their dealers. Or, some manufacturers could be inclined to pass on only part of the excise duty reduction to the consumers to account for the loss in inventory.
The peculiar problem is the reason most of the companies have gone into a huddle and were not able to decide by how much prices ought to be reduced. As a car buyer, if you were waiting for the budget you may now laugh your way to the bank at the expense of your manufacturer.