CCI to decide whether car makers will be forced to sell parts in open market
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Several car manufacturing companies are involved in anti-competitive practices by limiting the sales of spare parts which enable their dealerships and authorised dealers to control and demand higher price. This was uncovered by the investigation department of Competition Commission of India (CCI). Director-General, Investigation, CCI, reported that certain automotive manufacturers limited their spare supply only to their network. The investigation went on for over a year and observed the after-market supply chain. The team had one-on-one conversations with several parties, including car companies, part suppliers and those who operate freely in the spare market.
While Toyota maintained that it will supply only to its network, companies like Volkswagen, Honda, Ford and General Motors said they will only comment after reading the reports. Deputy Managing Director, Toyota Kirloskar, Shekhar Viswanathan, said, "Clearly it is not anti-competitive. Only accredited people should be allowed to fix parts as it is in the interest of the customers." On the other hand, Ford's spokesperson said, "We will need time to review the development and understand the report before we can comment."
In March 2011, a customer raised the issue about the companies taking undue advantage of their position and selling spare only through their network, which resulted in high prices for components. This caused the CCI to take up this matter through its investigation division. New manufacturers in the Indian auto industry are more likely to follow this practice, whereas established companies like Maruti Suzuki, Mahindra & Mahindra and Tata Motors supply to the open market as well. CCI will now investigate the matter and hear all the parties involved before taking any decision.
If CCI rules against car manufacturers, they will be forced to sell parts in the open market and will have to limit the sales to authorised dealerships. This will be an advantage for the customers as the warranty would not get void if a faulty part is replaced by a company-manufactured component procured in the open market.
Car owners have been suffering due to this problem since quite a long time. They have to wait for a long time if the component is not in inventory and had to pay the asking price dealers quoted by dealers. The problem is even more serious for those who live in smaller towns and cities that lack official dealerships of global players. It is estimated that service and spare parts industry generates Rs. 15,000 crores every year.
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