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Auto firms plan insurance cover against increasing recall costs

Discussion in 'Insurance & Loan Reviews' started by ghodlur, Dec 19, 2014.

  1. ghodlur

    ghodlur Esperto

    Its a known fact that every major car manufacturer in India has recalled cars due to technical issues either known or reported. With the government thinking of making recalls mandatory for the domestic market by passing a legislation and Motor Vehicle act being modified to include the recalls, car manufacturer and auto parts suppliers are contemplating of buying Insurance cover against the increasing costs involved in the recall process.

    SIAM had introduced a voluntary code in July 2012 for the manufacturers to initiate recalls for issues, since then almost 6L cars have been recalled by manufacturers to address the recall issues. Maruti Suzuki has spent close to 65 Cr to address the recall expenses. Vehicle recalls directly had an adverse impact on the Auto parts manufacturers as their bottom line are severely impacted with the claims from the manufacturers.

    More details of the manufacturers dilemma related to recall expenses is mentioned in the link. This is a positive step in the right direction if a Insurance cover is in place which will prompt car manufacturers to initiate recall with the customer being directly benefitted in terms of better safety and maintenance costs.

    limraj likes this.
  2. limraj

    limraj Esperto

    Linea 1.3
    Another one from the insurance guru. Thanks for sharing.
    I am just worried if this would mean an increase in price for the car or spares.
    ghodlur likes this.

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