Self-Regulation Foundation of Indian Auto Safety

MUMBAI – Auto recalls were rare in India as recently as 2010.

But in the past three years, greater awareness of industrywide practices, a focus on consumer rights, a new emphasis on law enforcement and the presence of leading global automakers in the country have resulted in more than 1 million voluntary recalls of  light vehicles.

Sensing the pulse of the market and displaying a long-term vision, the Society of Indian Automobile Manufacturers in 2012 introduced a voluntary code on vehicle recalls. The industry group in part was responding to new government efforts to enforce recalls.

Under the SIAM code, recalls for inspection, repairs or replacement of parts for light vehicles and/or for compensation to owners where necessary, have exceeded 1 million in three years, compared with fewer than 300,000 recalls in the previous decade.

The largest such action was ordered in September by Honda Cars India, which recalled 224,000 older CR-V, Civic, City and Jazz models to replace defective airbag inflators. The previous largest recall was in September 2013, when Ford India recalled 166,000 Figo hatchbacks and Fiesta Classic sedans to fix problems in the power steering hose and rear suspension.

These and all other recalls have involved defective parts, fitment or software, with the exception of General Motors India’s recall of 114,000 Tavera multipurpose vehicles in July 2013. The action arose from falsification of emissions certificates, which also led to the firings of employees and managers involved in the fraud. GM since then has struggled to regain its lost market share and repair its damaged reputation.

Volkswagen, which has admitted to falsifying emissions levels in its diesel cars sold in the U.S., is India’s latest recall target.

Indian television station CNBC-TV18 reported Thursday Volkswagen India likely will recall 100,000 vehicles with diesel engines that failed to comply with Indian emissions standards. The automaker is expected to order the recall of 80,000 cars with imported engines and 20,000 built locally before Nov. 8.

Herbert Diess, CEO of the VW brand, says at this week’s Tokyo auto show that the German automaker hopes India will accept a plan similar to its agreement with European authorities to test and fix the EA 189 diesel engines affected by the emissions scandal.

Patchwork of Regulations

Market response is the major force for ensuring vehicle fitness in India, as the country has no specific law or procedures for recalls or liability for compensation. But the Motor Vehicles Act enforces compliance with emissions, safety and performance standards.

A technical committee and a committee on implementation, both run by the government, ensure prototype vehicles meet all the norms. In addition, the Bureau of Indian Standards reviews emissions and safety compliance and acts as a liaison between the government and the automakers.

But those agencies have only an advisory role, contributing to the perception that procedures for establishing and enforcing standards often are weak.

An effort in 2010 to pass a law providing for fines of up to Rs1 million ($15,300) for noncompliance with safety standards did not succeed. Another law pending in Parliament would authorize the government to order a recall if 100 signatories petition for the recall of any particular vehicle.

A study by a private law firm notes India has three other laws addressing product liability: the Consumer Protection Act, Indian Contract Act and Sale of Goods Act. The latter two statutes provide implied warranties regarding the quality and fitness of goods sold, including motor vehicles. Under these laws a consumer can seek compensation or damages, but case law reveals few transactions involving cars.

While government regulation may be spotty or ineffective, self-regulation by automakers is the Indian consumer’s strongest protection.