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Old 19th December 2014, 15:50   #1
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Smile Auto firms plan insurance cover against increasing recall costs

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.

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