In a bid to increase road safety standards, the Society of Indian Automobile Manufacturers (SIAM) has introduced the Voluntary Code on Vehicle Recall effective from July 1. Put together after a consensus was arrived at with member automobile companies over 18 months, the code places the onus on the manufacturer to recall a defective vehicle be it a two-wheeler, car or a commercial vehicle. For CBU imports, the importers concerned will bear the responsibility.
SIAM president S Sandilya says the code has been developed after studying the regulations existing on vehicle recall globally. While the USA has provisions for taking punitive actions against defaulting companies, many western countries also have policies to protect consumer interest, he adds.
SIAM’s Voluntary Code on Vehicle Recall will address potential issues that exist in a motor vehicle that do not meet safety requirements due to a manufacturing defect and subsequent remedial actions. The vehicle will be covered under safety recall for seven years and will target the first buyer. The decision on recall will take into account the degree of seriousness or severity of any possible hazard involved.
According to SIAM, examples of safety-related defects which fall under the code are:
• Malfunction of steering components that cause complete loss of vehicle control.
• Defects in the braking system that cause significant loss of braking function.
• Malfunction in fuel system-related components that result in unintended fuel leakage or unintended acceleration.
• Cracked or broken wheels that result in loss of vehicle control.
• Failure/malfunction of seats, seat backs, seatbelt mechanism or head restraint system that expose occupants to immediate danger.
• Problems in the wiring system that cause loss of complete lighting.
According to the voluntary code, the OEM will have to display the recall information on its website. This communication will also be sent to the vehicle owners. Besides, SIAM and the government ministries such as the Ministry of Heavy Industries will also display the information of the recall. Sandilya says that SIAM is still in the process of talking to ministries about it and is also holding talks with them on the mandatory code.
For better clarity, this is how the code will work. A defective vehicle will be rectified by the manufacturer through its dealers free of charge. The responsibility for the defective component, however, will rest not with the component manufacturer but the vehicle manufacturer, and does not affect the aftermarket.
In case the manufacturer fails to announce recall or rectify the damaged part where clear evidence of a material or design defect is visible, the Union government will have the prerogative to initiate punitive action. This could include a fine or a more stringent penalty in case of deaths due to accident, says Sandilya.
He elaborates that to come under the voluntary code, a reasonable volume of vehicles with manufacturing or design defects should be identified. He, however, does not quantify the volume.
OEM opinion
Officials from Maruti Suzuki who attended the introduction of the code say they are open to accepting both the voluntary as well as mandatory code of vehicle recall. “Even without the vehicle recall code, Maruti follows a recall policy in case of any defect in car parts. It is, therefore, the government’s choice whether it wishes to make it mandatory,” a Maruti official remarks.
PawanGoenka, president, automotive and farm equipment sector, Mahindra & Mahindra, describes the voluntary recall code as yet another initiative by the industry to bring responsibility upon itself. “M&M has participated in the process along with most other OEMs. We believe this is the right thing to do,” he says.
Most OEMs typically correct any safety related faults but unlike many other developed nations, there is an apparent stigma in India against calling such repairs ‘recalls’, he adds.
“The consumer has to understand that recalls are not so uncommon in the auto industry and start accepting such occurrences. This will also make the industry become transparent about recalls,” feels Goenka.
India has safety standards that are verified during the homologation process. Goenka believes that the voluntary process should be given a chance to work. If it does not serve the purpose, the government should step in. “However, if it has to come into force right away, we are not against it,”he affirms.
In consultation with the government
SIAM has launched the Voluntary Code on Vehicle Recall to align itself with technical global regulations and to spell out guidelines in the absence of any structured framework at present.
The voluntary code works on the premise that if the manufacturer fails to take action on defective vehicles, it will impact its image and market demand adversely. Moreover, cost of parts and labour in rectifying the vehicle defect will lead to increased costs for the OEM and will be adequate penalty for the automaker.
“SIAM will not be a regulatory authority and will only ask the automobile companies why they are not complying with the voluntary code. Only the government has the prerogative to take appropriate steps against the company,” clarifies Sandilya. He adds that since the code has been worked out in consultation with the government, so no differences of opinion with the ministries concerned are likely.
But does this not make the Voluntary Code on Vehicle Recall into a toothless tiger as OEMs can go scotfree or not take any suitable stand on rectification of defective vehicles if they so warrant? Even SIAM has indicated that should the government draw up an alternate mandatory code on vehicle recalls, it will not be averse to it. But will SIAM accept it?
In 1988, the Sundar Committee appointed to recommend modernisation of the Motor Vehicles Act (MVA) had failed to suggest a formal ‘auto recall policy’ or an administrator for it but had instead recommended punishment for offences related to manufacture of faulty vehicles. This penalty included imprisonment of up to three months or a fine of up to Rs 100,000.
Director general, SIAM, Vishnu Mathur says that a formal vehicle recall policy is followed across the world. The difference is that in a mandatory policy, the government gives the direction as in the US.
In Japan, a proper vehicle recall policy has evolved from the 1960s while in India the evolutionary process has to start. In Europe, a voluntary code of recall is followed wherein companies have to decide on the recall and then inform the government. Since no direct government intervention is involved here, India’s policy is closer to the European model. However, while in these countries the recall policy exists and penalty can be imposed, India is yet to take its first steps in this field.
In India, says Mathur, companies shy away from naming a problematic issue as a recall, preferring to call it ‘product upgradation’ as the government is not involved in it and neither is there a recall policy in place.
Commendable as the initiative is, manufacturers must know that they have to be ready to bear the significant costs involved especially if the number
of vehicles recalled are big. In a larger context, the code, even though voluntary, should spur OEMs and their suppliers to focus even more on better manufacturing practices and quality control.
SHOBHA MATHUR