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CCI Imposes Penalty on 14 Car Makers

Discussion in 'Fiat India News' started by zenwalker, Aug 25, 2014.

  1. asimpleson

    asimpleson Esperto

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    Selenia WR is repacked and clearly company and dealer both have been handsomely covered in the same. Sometimes FS may also not be the best solution. Maybe Selenia is better formulated with just the right additives for the MJD. Yes Mobil got the best industry endorsements like extensive tests with Mercedes engines etc., but that's besides the point. You are correct, sane pricing is required. The very reason I prefer Helix HX7 SS grade a much more pocket friendly and great product from Shell.

    Every garage or SC has good and bad set of people. But if management is corrupt handful of honest employees too cannot do much. With business targets set for employees who try their level best to sell product and services often least required, oftentimes at the cost of botching up something working well already.

    Any legal gurus care comment on the differences between this and MRTP. This one has more teeth and bigger jaws I guess.

    http://www.cci.gov.in/index.php?option=com_content&task=view&id=12
  2. Murphy_Fiat

    Murphy_Fiat Superiore

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    Trivandrum
    Trivandrum
    Linea T-Jet
    The Competition Commission of India has imposed a total penalty of Rs. 2,544.64 crore against 14 car companies for taking undue advantage of their position and not allowing the market for spare parts and after sales to grow.

    The car companies usually sell spare parts only through their dealer network, often resulting in high and arbitrary prices.

    “The 14 car companies were found to be indulging in practices resulting in denial of market access to independent repairers as the latter were not provided access to branded spare parts and diagnostic tools which hampered their ability to provide services in the aftermarket for repair and maintenance of cars,” an official note said.

    The companies are Honda Cars India (Rs. 78.47 crore); Volkswagen India (Rs. 3.25 crore); Fiat India Automobiles (Rs. 29.98 crore); BMW India (Rs. 20.41 crore); Ford India (Rs. 39.78 crore); General Motors (Rs. 84.58 crore); Hindustan Motors (Rs. 13.85 crore); Mahindra and Mahindra (Rs. 292.25 crore); Maruti Suzuki (Rs. 471.14 crore); Mercedes-Benz India (Rs. 23.08 crore); Nissan Motors (Rs. 1.63 crore); Skoda Auto India (Rs. 46.39 crore); Tata Motors (Rs. 1,346.46 crore); and Toyota Kirloskar Motors (Rs. 93.38 crore).

    I think this will reduce the spare parts rate and we can easily get the spare parts from outside other than dealers as well.

    Mod Note: Post merged with the existing thread.
    Last edited by a moderator: Aug 26, 2014
  3. puntophile

    puntophile Amatore

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    91
    Indirapuram NCR

    Likely and Unlikely : both. While CCI judgement prohibits restriction of sales and availbility in the free market, the Indian laws allow manufacturers to set pricing as per their norms! It is not an essential commodity whose prices need to be regulated. What might happen is, free availability may not be an issue anymore, but prices may not be less. In India, there is a hogwash called MRP, which can be anything you want the manufacture to print! Then it is upto the buyer who can negotiate a discount! Many times, mark ups are as high as 1000%. Screw for example: a M3 Philips screw costs no more than 15 paise in the bulk market, while it is sold at 6 Rupees in ASS. the same filter for Punto P1.2 and Tata Indica P1.2 : 402 for former, 165 for latter! It is all about what MRP you print and make it available! Selenia K in drums cost just about 330/liter to dealer/ASS!
    Last edited by a moderator: Aug 26, 2014
    prabhjot likes this.
  4. prabhjot

    prabhjot Esperto

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    delhi ncr
    Which is why the CCI is naive in ignoring the fact that market-failure in ASS and spares is to a large degree a function of market failure (over-concentration) in sales. The two or three dominant players are able to price-gouge on the spares and service front because of their market and pricing power (Maruti and especially Hyundai and Honda), while the small, bit players (pretty much everyone bar the 3 dominant East Asian firms) try and ensure profits for their struggling dealers by offering them big margins on spares and service.

    The aftersales and service dysfunctionality in India is mostly because they are as much given to economies of scale as manufacturing. Which implies that unless one breaks the stranglehold in sales of the 2-3 dominant firms one cannot ensure that companies will be willing to share the benefits of scale/volumes with car owners via cheaper + better ASS and spares.

    The CCI needs to investigate the car sales market for over-concentration: the absence of an even minimal level-playing field, EVEN if this is not the result of cartelization but is the consequence of consumer behavioural errors (severe herding on a scale not seen in any other car market in the world, failure to gather full information about, to study products and ASS practices and prices etc).
  5. asimpleson

    asimpleson Esperto

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    Agree with the points made, and to most extent they echo the sentiments of @bediman and more. What exactly gives the impression Prabhjot that CCI is ill-prepared or as you point out 'needs to investigate'; they do know counter arguments I am sure. At the very least a debate will be there between industry reps., lobbyists and government officials and some interested public. Still is it a bad move? Certainly not. There is certainly a trend here that they have pointed out which goes against the larger benefit of customers, especially of Fiat and such others.

    The key question is what laws are broken or deemed broken and should there be some extra legislation that can have clear guidelines further patching any more loopholes against restrictive trade practices or detrimental competitive practices against essential goods or services denial (indirectly if I may argue).

    Reminds me somehow of a message on Morality, Ethics, Sentiments, Rights and how they are justified and valuable but never at the cost of breaking or taking the law in hand. Just in case you or anyone has not seen it, highly recommend the movie "You don't know Jack" and the closing dialogues esp. of Judge Cooper who understands the act and sentiment but carries out her duties nonetheless sending a clear and hard hitting message.
  6. renlouis

    renlouis Amatore

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    Aleppey
    Grande Punto 1.3
    Guys, are the F.A.S.S es sell spares at a price higher than the MRP mentioned?

    Another thing is reasons for voiding warranty the CCI pointed out. I have 2 questions...
    1. Does Fiat void warranty if we add something like non OEM Horns to the car from a shop even though the horn is compatible?
    2. If the same is done by F.A.S.S guys even though sometimes cutting wires is inevitable, then warranty is made void?
    Last edited: Aug 28, 2014
  7. Ravi

    Ravi Staff Member Janitor

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    6,001
    Bangalore
    Grande Punto 1.3
    CCI order to ensure car spare parts market is less costly - Source

    I feel Fiat will not bother on this news, the effect will be bigger players and they will fight it out anyway.
    Even in case of penalty, Fiat may have to pay peanuts, compared to other big players.
  8. renlouis

    renlouis Amatore

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    111
    Aleppey
    Grande Punto 1.3
    But then even peanuts do matter when the sales of Fiat vehicles in India is considered.
  9. asimpleson

    asimpleson Esperto

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