The Competition Commission of India’s (CCI) decision fining auto makers and directing them to make available vehicle spare parts and tools in the open market will come as a big relief to all car owners.
Fourteen companies including Honda, Volkswagen, Fiat, BMW, Ford, General Motors, Hindustan Motors, Mahindra & Mahindra, Maruti Suzuki, Mercedes-Benz, Nissan Motor, Skoda, Tata Motors and Toyota Kirloskar have been fined Rs 2,545 crore for “violating trade norms in the spare parts markets.” Besides hauling them up for anti-competitive practices, they were also ticked off for controlling the operations of various workshops and service stations which are in the business of selling automobile spare parts, and after sales and blocking sale of spares. Technological information, diagnostic tools and software programs required to maintain, service and repair advanced vehicles too were not freely made available by them.The Commission observed that this led to unfair practices and monopoly by not supplying parts to independent repairers and effectively impeded their ability to compete with authorized dealers.Car owners who have borne the costs silently have been forced to take their vehicles to the authorized dealers’ workshops and pay huge sums of money, when small mechanics would replace parts and offer service for 35-50% of the amount charged by the authorized workshops. The prices charged by authorized dealers’ for service are exorbitant and burn a hole in the owners’ pockets due to increased maintenance cost of vehicles.
Some of the overseas suppliers of parts for cars did not have any agreements with local subsidiaries to restrict sale of parts in open market, but still they did not sell the parts in the market. Only some car makers, expressly restrict the ability of their authorized dealers to sell spare parts over the counter, besides restricting the access to diagnostic tools to the authorized dealers. Many companies cancel vehicle warranty if any of their cars are repaired by an independent repairer in the post warranty period to the extent of even fitting additional horns or do electrical works.Even by restricting competition at authorised dealers’ workshops, the commission found that they priced the top 50 spare parts ranging from an unbelievable 100 per to 5000 per cent higher. In simple terms, car owners end up paying between double to 50 times the cost of the most commonly used spare parts.
The car manufacturers who make 24 per cent on car sales make 55 per cent on service.The CCI order has now directed the 14 manufacturers to make spare parts and tools available through an efficient network, in the open market without any restriction, at reasonable prices. The CCI has also directed manufacturers not to cancel warranties if the consumer avails of services of independent repairers.
Goan auto owners too have suffered under this monopolistic regime. Earlier one car company’s spare parts were available at many spare part vendors in the cities and towns. But in the last instance it had a single dealer in Ponda. Then the car maker like other foreign auto makers, also stopped providing the tools with new vehicles. The other automakers, especially the overseas ones would not sell their spares and tools outside of their auto dealers’ chain.More critically, in case one had a breakdown out of the city, one was forced to call for the recovery vehicles of these companies since no independent mechanic could be called to repair or tow the vehicle without spares and tools. Towing charges would itself range from Rs 3000 upwards, depending on the distance where one was stranded.The automakers of course can appeal this order in court, however car owners would keep their fingers crossed that CCI’s order will be upheld by the courts, since it will cut maintenance and service costs considerably. Automakers should also realise that practices which are unfair will only result in their alienation. Presently, independent mechanics who were previously trained by car companies are now operating on their own. If companies cut prices to a reasonable level and stop fleecing customers, car owners will only be too willing to come to them. Otherwise it will be a case of killing the goose that lays golden eggs.
