The Hindu Business Line : Question & Auto

Are passenger cars that are made in India so perfect that they never need a recall? I haven't come across any company announcing a single recall programme, while it is a fairly common practice in the US.

Y. K.Agarwal

Passenger car companies, many of them being multinational manufacturers, have the advantage of hindsight, with manufacturing practices and process quality built over the years in other markets. But that still does not mean that their products are entirely free of any defects.

Indian car companies (both domestic and multinational) know that a recall programme cannot be conducted here in the same way as in the developed world, because of the lower maturity level of the market.

A recall programme in the US involves a clear public announcement of a possible defective part in the car that the company wishes to replace free of charge for the customer. This is actually a confidence boosting measure and, of course, with consumer activism and the potential legal fallout being what it is in that country, car companies actually hope to heighten awareness and improve their image as being responsible corporate citizens.

However, in India, the reverse is what is likely to happen. A publicly announced recall may send the company's image into a tailspin, pulling down consumer confidence in it and its products. Buyers here have to be dealt with more tactfully.

Despite the best pre-production efforts to check and revalidate the quality and longevity of every single component that goes into the making of a car, quality issues crop up after the car is sold. These can be related to electrical, air-conditioning, engine, brake, suspension and sometimes even chassis and wheel components that run the risk of failure due to defective manufacture.

An announced, elaborate recall programme can cost the company millions of dollars in free replacement bills and can be a big drag on its profitability. The possibility of a big legal compensation bill can be enough of a deterrent for companies to be extra cautious and announce recall programmes in spite of the costs involved.

Indian companies cannot afford an elaborate recall programme, both in terms of the costs involved and in terms of the loss of image. But that does not mean that there haven't been any recalls here. Quite a few carmakers have either had a privately announced programme or a more discreet recall plan involving check-up camps at the dealer level.

Many a recall merely involves replacements under the manufacturer's warranty programme. While in markets such as the US this may just be one-off where a few customers have had problems, in India, this may actually be a more common way of dealing with a large number of customers with similar problems.

Consumer activism and awareness is low in India and we, as yet, do not have an efficiently organised way of reporting back defects to the companies or to a quasi-government body. In developed markets, the system has been perfected and often the mechanism red flags issues related to potentially defective components. For example, in the US, the National Highway Traffic Safety Administration (NHTSA) takes an active role in improving consumer knowledge and directly solicits information regarding defects from car owners for further use.

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