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Experts slam voluntary auto recall policy

Code specifies if car maker fails to recall, govt can intervene

BS Reporters  |  New Delhi 

The Society of Indian Automobile Manufacturers (Siam) on Monday notified a ‘voluntary code on vehicle recall’ for passenger vehicle, two-wheeler and commercial vehicle manufacturers. It stipulates the conditions and procedures required to be followed on detection of any manufacturing flaws in products.

However, unlike its counterparts in America, Europe or Japan, the guidelines do not include provisions for penalising auto makers in the event of non-adherence to the code. “The recall code has been framed with consensus of all members. would adhere to it voluntarily to rectify defects in vehicles and secure their own brand image. The expenses they incur to replace faulty parts as a part of the recall exercise do not require any additional penalties to be put in place,” said S Sandilya, president of Siam.

According to the guidelines, manufacturers may notify recall of vehicles voluntarily to rectify safety defects arising from malfunctioning of steering components, brake systems; faults resulting in unintended fuel leakage, cracked or broken wheels and problems in wiring systems that result in loss of complete lighting.

The policy would be applicable on vehicles for seven years, in addition to the warranty extended on products by manufacturers. However, “it would be the sole discretion of the vehicle manufacturer’s judgement’ to decide whether the number of vehicles affected is sufficient to justify evoking these guidelines”, Siam stated in the code.

The absence of a regulatory mechanism to enforce vehicle manufacturers in taking corrective action in the event of engineering flaws has made observers raise questions about the effectiveness of the code in addressing consumer grievances.

In the US, for instance, a National Highway Traffic Safety Administration investigates consumer complaints and issues mandatory notifications to recall and fix technical irregularities in vehicles. Penalties are imposed on non-adherence to issued notifications. In China, car manufacturers selling defective products with the intention to deceive are, in addition to obligating a product recall, subject to a fine between Rmb10,000 and Rmb30,000, depending on the seriousness.

Siam has recommended that if a manufacturer failed to announce a recall where clear evidence was available, the government could issue appropriate directions. However, a statutory mechanism is yet to be put in place by the Union ministry of road transport and highways. The latter is working on forming a National Road Safety Management Board that will have rules to regulate a vehicle recall policy.

“A voluntary recall policy cannot work. It can only work if there is a regulator to monitor the recalls and there should also be penal provisions,” said S P Singh, senior fellow and coordinator of the Indian Foundation of Transport, Research and Training, an independent body lobbying for a mandatory recall policy.

A committee set up in September 2009 to review the Motor Vehicles Act, 1988, suggested the imposition of a fine of Rs 1 lakh on a manufacturer producing defective vehicles. The National Road Safety and Traffic Management Board Bill proposed a Rs 10 lakh penalty.

V G Ramakrishnan, senior director (automotive and transportation – South Asia and Middle East), Frost & Sullivan, said: “Earlier, not too many global models were available in India and recalls were hardly made. But with the growing in size, it is only a matter of time before the government would attempt to put in place stringent regulations to monitor manufacturing processes and address consumer complaints related to automobiles. This is a pre-emptive initiative to address those concerns.”

The burgeoning Indian automobile market has seen a rise in frequency of cases involving engineering flaws in new-generation cars, raising concerns on safety of passengers. In September last year, Honda Siel recalled 72,115 units of the sedan City, to replace faulty power window switches. This was preceded by the country’s largest car maker, Maruti Suzuki India Ltd, recalling 13,157 units of compact cars Swift and Ritz and the sedan Dzire to inspect and fix engine defects.

Tata Motors’ had voluntarily decided to install additional safety features in at least 70,000 units of its small car, the Nano, in November 2010, following several instances of the vehicle catching fire. However, it refrained from terming the exercise a ‘recall’. Later, again, the company communicated with 140,000 Nano owners to bring back their cars to replace starter motors in the vehicles.

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First Published: Tue, July 03 2012. 00:07 IST
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