When carmakers mislead…

Do you know? India has won the global car race by beating Japan. By virtue of this win, India is now the 3^rd largest car market in the world. While beating the pandemic miseries, India witnessed a strong bounce back in the demand for personal mobility and last-mile deliveries that helped it to overtake Japan in car sales for the first time ever.

According to the Society of Indian Automobile Manufacturers, new vehicles delivered in India totaled 4.25 million between January and December 2022. In 2018, around 4.4 million vehicles were sold in India, but the volume dipped below 4 million in 2019, due primarily to the credit crunch that hit the nonbank sector that year. It further plummeted below 3-million mark in 2020 due to Covid-associated lockdown. 

However, sales recovered in 2021 to approach 4 million units, but the shortage of automotive chips weighed on growth. A report by Nikkei Asia stated that the easing of the automotive chip crunch in 2022 provided a springboard for a recovery. Along with Maruti Suzuki, Tata Motors and other Indian automakers, sales grew during last year.

Notably, India already is the largest market for Suzuki outside of Japan. It also figures in the top three markets for Hyundai and Kia and Skoda Auto. Today, the vehicle density in India is on the rise. According to a report, it has increased from 15 cars per thousand in 2010 to 36 cars per thousand in 2022.

The growing light vehicle market in India has opened investment opportunities for global players. Several automakers have already started investing heavily in various segments of the industry. According to the India Brand Equity Foundation (IBEF), the industry attracted Foreign Direct Investment equity inflow (FDI) worth US$ 33.77 billion between April 2000-September 2022, accounting for 5.48% of the total equity FDI during the period. There are several investment announcements made recently by automobile players. For example, in January 2023, MG Motor India revealed the plan to invest US$ 100 million to expand capacity and eye 70 percent growth in 2023. In December 2022, Mahindra & Mahindra announced to invest Rs 10,000 crore (US$ 1.2 billion) for an EV manufacturing plant in Pune. In November 2022, Maruti Suzuki India announced plans to spend nearly Rs. 7,000 crore (US$ 865.12 million) on several projects this year, including the building of its new facility in Haryana and the introduction of new models.

Notably, the Government of India encourages foreign investment in the automobile sector and has allowed 100% FDI under the automatic route.

To be precise, the automobile industry is booming in India and is going to play a pivotal role in the health of the country’s economy if all goes well.

However, the other side of the story is not healthy at all. The end consumers of the products of the automobile companies are at the receiving end as what is promised to them is not delivered by the companies, especially in the car segment. Let me explain my own case, though there are innumerable cases to explain the point.

A few years back, an advertisement lured me to purchase a fully automatic car, well known by the brand name as Maruti Ignis Zeta AMT. The compact structure of the car, introduced by its manufacturer, Maruti Suzuki, as ‘Urban SUV’, with a mileage claim of almost 21 kilometers per litre of petrol was not a bad deal to go for. In the present times, when fuel prices are on fire, the parameter of the car being fuel efficient is of paramount importance when you decide to buy a car. The mileage of over 20 Kms/litre suits a middle class person like me.

Even as the electronic features of this “Urban SUV’ are delightful, the claim of the car maker on the fuel efficiency front proved false and is a serious issue. In the first two years, the mileage didn’t go beyond 13-15 Kms/litre of petrol. Though I raised the issue with the dealer, I was told that it would improve once the car completes a run of 10000 kilometers. However, after crossing this ‘benchmark’ the mileage didn’t improve. Once again, the dealer convinced me that it would achieve a mileage of over 20KMs/Litre once the vehicle crosses a drive of 20000 KMs. Even as it crossed the revised benchmark, the car still performs poorly when it comes to fuel consumption. Today, it’s not more than 17 KMs/litre.

It has been a common situation with car owners to find their cars failing to deliver as per the promised mileage. There are many instances where aggrieved car owners dragged the car makers to the court for making false fuel efficiency claims and in many cases the companies were directed to pay the compensation to the consumer. However, the majority of the consumers feel helpless for lacking guidance to go against the car makers to seek compensation.

Pertinently, it’s not the false mileage claim that has been harming the consumers, lack of some features highlighted as attraction by the company also mars the interest of consumers. For instance, the opening of airbags failed in an accident etc. A company getting consumers into buying their products through false claims of fuel efficiency and other features is as good as robbing people of their hard earned money on recurring basis for none of their fault.

As we know that owning a car in the present times is not a big deal as the finances are available in a hassle free manner. Hardly a negligible percentage of people purchase their choice of car without going for a loan facility. Otherwise, most of them take a route of loans from banks and other financial institutions. Here it’s a double edged sword for the consumers as they have to shell out interest on the loan as well as the extra fuel expenses on a recurring basis.

It’s ironic that the situation being so rampant has been missing the attention of regulators of the automobile industry and we have not found any kind of consumer awareness in this regards so far. The consumers have been left at the mercy of car makers and their dealers. Otherwise, this is simply cheating and a criminal act on part of the companies for deceiving the gullible consumers.

Needless to mention that cheating is a criminal offence under the Indian Penal Code. It is done in order to gain profit or an advantage from another person by using some deceitful means. The person who deceives another knows for the fact that it would place the other person in an unfair situation. Any dishonest concealment of facts which can deceive a person to do an act which he would not have done otherwise is also cheating within the meaning of this Section 415 of the Indian Penal Code.

In fact, regulatory loopholes in the automobile sector are visible, which have facilitated corporate greed and a limitless hunger for more profit. There is dire need to bring stricter regulations to curb the cheating practices of the car makers. There should be no hesitation for stating this kind of cheating as a criminal offence.

(The views are of the author & not the institution he works for)

DISCLAIMER: The views and opinions expressed in this article are the personal opinions of the author.

The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.