Swaraj Baggonkar Moneycontrol News
When millions of cars around the world were being recalled to get their airbag units fixed, India stayed largely clear of the massive exercise. But the country had its own recall-related issues that were both life-threatening and otherwise.
Today we take a look at what constitutes a recall in India, which is often a touchy subject for car makers given the underlying brand impact. But first let us take a look at all the major stories that made headlines in the automotive space this past week.
Maruti Suzuki Q1 results
India's largest car maker Maruti Suzuki reported a 27 percent year-on-year rise in its standalone net profit for the June quarter to Rs 1,975.3 crore, missing estimates of 18 analysts polled by Reuters, who had pegged the company's bottom line to come in at Rs 2,272.7 crore.
The Delhi-based maker of cars and sports utility vehicles recorded a standalone total income of Rs 22,731.2 crore for the quarter, 11.1 percent higher than in the corresponding quarter last year.
Hero Motocorp Q1 results
India's largest two-wheeler maker, Hero Motocorp, posted a marginal 0.5 percent year-on-year fall in standalone net profit to Rs 909.7 crore for the quarter ended June. For the same quarter last year the company's profit was Rs 914.04 crore.
The Delhi-based maker of motorcycles and scooters recorded a standalone total income of Rs 8,809.8 crore for the June quarter, an increase of 10.3 percent year on year.
Bajaj Qute retail launch
After being mired in controversy for more than six years, Bajaj Auto's Qute will finally be made available for sale next month, with the company already having started deliveries of the quadricycle to dealers.
Bajaj Auto dealers in Kerala and in the North East have already placed orders for the four-wheeler as it is 'technically' possible to offer the Qute for sale in these markets, the company said.
Mahindra to launch 21 ICV models
Mahindra & Mahindra unveiled a new range of intermediate commercial vehicles (ICV) under the brand Furio, which will see 21 launches over the next 1-2 years.
Using a new platform, the Mumbai-based company spent Rs 600 crore for developing the new vehicle architecture that will help plug the product gap in its existing range.
The new products will address the 6-16 tonne segment and will be aimed at buyers who cater to vegetable transport, e-commerce deliveries, auto parts shipments, and such other businesses.
Hyundai reluctant to add capacities
The country's second largest car maker Hyundai Motor India will sweat its existing production lines, which are already operating at full capacity, before lining up investments for further capacity addition after 2020.
At a time when market leader Maruti Suzuki is expediting work on opening the second and third lines at Gujarat with an investment of Rs 10,000 crore for adding 500,000 units new capacity, Hyundai has decided to push back discussions of a new plant until the onset of Bharat Stage VI (BS-VI).
When recalls come knocking
This week Maruti Suzuki (MSIL) announced the recall of more than 1,200 Swift (566) and Dzire (713) cars to inspect and replace a possible fault in the airbag controller unit. The cars were manufactured between May 7, 2018 and July 5, 2018.
This is the second recall announced by the company in the last two months and is also the second time that both Dzire and Swift have been recalled since their launch in May and February last year, respectively. The premium hatchback Baleno was also a part of the recall announced in May.
While Maruti has termed the current exercise a recall, it had refrained from calling it that in May. The company had then called it 'a service campaign to address a potential inconvenience to the customer'.
Unlike in the West, where car makers are heavily penalised, India does not have an official recall policy and neither is there a proposal under consideration to fine faulty vehicles.
But who is to be held accountable if the car with the defect meets with an accident after the recall is announced? Also what constitutes a recall, when should it be described that way and why are there increasing instances of recalls in India?
Less than 50 percent of any car is made by the car manufacturer and the rest is sourced from parts suppliers. Each car maker has anywhere between 300-800 parts suppliers, in addition to an almost equal number of suppliers who act as backup.
When a supplier is not able to meet a specified requirement in time, the company tries to arrange the same from the second set of suppliers. It is possible that these plan-B supplies do not go through the same set of testing and validation as the chosen set due to time constraints and are thus, most vulnerable to defects.
Often the real maturity of a component is highlighted at the later stages of its life cycle, after continuous use spanning several months and years. Also, real world usage of components may differ than those used during their testing. This may result in greater wear and tear.
Some manufacturers define recalls as those that are due to life-threatening situations. All others fall under the broad umbrella of 'service campaign'. Since India does not have an official recall policy, the picture gets blurred for defining responsibility in the unfortunate event of a crash when the car was one that was being recalled.
As it is not possible to service all recalled cars at once, especially when the recall number runs in thousands, they are often called in batches that are spread over weeks and months. It is during this period that car drivers and car occupants are exposed to maximum risk. The car owner will only have to sit and wait for his turn to get his car fixed.
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