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Old 28th July 2015, 19:19   #1
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Default CCI fines Hyundai Rs 420 crore; Reva, Premier also face flak

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Coming down hard on carmakers found to be restricting sale of spare parts in open market, fair trade regulator CCI on Tuesday imposed a penalty of Rs 420.26 crore on Hyundai Motor India and asked two others -- Reva and Premier -- to 'cease and desist' from anti-competitive practices.
http://www.dnaindia.com/money/report...e-flak-2108961
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Old 28th July 2015, 20:15   #2
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Did Hyundai get the news early ??

Hope the increase in price for all Hyundai models (Leaving CRETA) was not to compensate this Fine amount.

Ohh I missed the exclusion of some essentials from the Elite I 20.

On a serious note I feel this is a good move. At least people will have choice to go to their trusted mechanics or DIY.
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Old 28th July 2015, 20:24   #3
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Default Re: CCI vs Car Manufacturers : Restricting over-the-counter sales of spare parts

Antitrust watchdog imposes $66 million penalty on Hyundai Motor

Business News | Tue Jul 28, 2015 7:52pm IST

The Competition Commission of India (CCI) fined the local unit of Hyundai Motor Co (005380.KS) 4.2 billion rupees ($65.8 million) on Tuesday after an investigation found it had engaged in anti-competitive practices.

The competition watchdog also found carmakers Mahindra Reva Electric Car Company, part of Mahindra & Mahindra (MAHM.NS), and Premier Ltd in violation of competitive practices but did not impose a fine on the companies, the CCI said in a statement.

Full Article: http://in.reuters.com/article/2015/0...0Q21NQ20150728

I am not sure how Mitsubishi/ HM is not there. They charge huge premium on parts/ labour and also do not sell parts over the counter. I am sure there are other manufacturers/ dealers who practice this. Is there any easier way to alert CCI about this? Searched their website but can't see any email id or a online form to submit any complaints. Anyone else knows?
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Old 29th July 2015, 07:20   #4
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Default Re: CCI vs Car Manufacturers : Restricting over-the-counter sales of spare parts

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Originally Posted by maheshramaling View Post

The competition watchdog also found carmakers Mahindra Reva Electric Car Company, part of Mahindra & Mahindra (MAHM.NS), and Premier Ltd in violation of competitive practices but did not impose a fine on the companies, the CCI said in a statement.
I'm not sure why this Bias only towards International Car makers. There were many more Local Manufacturers who were involved in this anti-competitive practice. CCI punish Indian manufacturers as well or everyone else are going to point fingers back at you.
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Old 29th July 2015, 12:07   #5
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Default Re: CCI fines Hyundai Rs 420 crore; Reva, Premier also face flak

You know what will happen next?

Today:
Customers cheer that the spares can be bought over the counter (say @Rs100) and serviced via cheaper alternatives (say from Abdul Garage @Rs10).
Hyundai will loose the service revenue (say Rs50).
Customers gain Rs 40 (they pay Rs 10 instead of Rs 50).

The Scene Next year:
Hyundai will increase the supply price of spares to make up the loss in revenues (to Rs 150).
Customers who cheered last year will be silent since the supply of spares is now Rs150, and Abdul Garage is still charging Rs 10 for service.

Oh and I have not even added the price of Rs420 crore FINE into the revised pricing of spares by Hyundai.

###

Public is such a short sighted idiot.
*sigh*

Last edited by alpha1 : 29th July 2015 at 12:11.
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Old 29th July 2015, 12:36   #6
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Default Re: CCI fines Hyundai Rs 420 crore; Reva, Premier also face flak

I was once told by a senior BHPian that one of his friends that work with Hyundai informed him that Hyundai reduced the number of paint coats for i20 some time after its launch just because people felt the car is overpriced.

Hey, Hyundai is smart. Don't expect idiotic moves like increasing spare part prices or labour charges.

After couple of months, just go and gently knock the door of an about to be delivered Hyundai car, you will be taken by "wow" by the smartness of the smart brained men in Hyundai.
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Old 29th July 2015, 13:19   #7
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Default Re: CCI vs Car Manufacturers : Restricting over-the-counter sales of spare parts

The Competition commission should ideally not be involved, since there ARE spare parts available in the market for each and every vehicle plying on the road (either directly from OEM or a copy). If this was not the scene in India, all the local garages would have shut their shops by now.

It is just that a certain kind of customers want only manufacturer branded spare parts. For them the problems is that they also have to avail the service from manufacturer along with the supply of the spare. Fair enough, now these will have a choice to buy branded spares and avail independent service.

But the who says that the manufacturer will not raise the prices of spares from next year?
;-)

Ideally the CCI should send a recommendation to the Central board of Excise and Customs to REDUCE THE CUSTOMS DUTY ON IMPORTED SPARES. That will drive up the competition.

Last edited by alpha1 : 29th July 2015 at 13:24.
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Old 29th July 2015, 13:29   #8
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Default Re: CCI vs Car Manufacturers : Restricting over-the-counter sales of spare parts

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Originally Posted by alpha1 View Post
But the who says that the manufacturer will not raise the prices of spares from next year?
;-)
If the OEMs form a cartel and raise the prices, that'll also be in the purview of CCI and they'll get another rap.
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Old 29th July 2015, 16:47   #9
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Default Re: CCI vs Car Manufacturers : Restricting over-the-counter sales of spare parts

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Originally Posted by Eddy View Post
If the OEMs form a cartel and raise the prices, that'll also be in the purview of CCI and they'll get another rap.
I think the best way out, if this is what the public want, is that India reverts to the centrally planned economy.

The Govt tells each manufacturer how much to make and what price to sell.
The same directive should be there for spares and how much to charge for services.

###

By the way, I think you did not get my point, especially about the text quoted.
Hyundai purchases oil filter for Rs 1000 from Purolator.
Hyundai sells this to customer for Rs 2000.

Tomorrow, because of this directive Hyundai may start pricing the oil filter for Rs 2500. Purolator still sells the oil filter to Hyundai for Rs 1000 only as earlier.

Also note, all this while Spurolator is making identical part and selling in the market for Rs 1500.
So technically neither Purolator nor Hyundai holds any monopoly. And therefore no role of CCI.

But let us force CCI to take up the case. What can CCI do in this case? Check the ERP records of Hyundai and establish the entire cost of supply chain and then ask Hyundai why they are making 60%gross margin instead of 50% gross margin earlier? Perhaps CCI will then mandate that 20% gross margins is a reasonable margin, and no one should try to earn more than that.
If this is the case desired by the public, let me repeat my second line:

"The Govt tells each manufacturer how much to make and what price to sell. The same directive should be there for spares and how much to charge for services. Licenses should be used to enforce this regime and anyone found violating should be taken to the court"

In other words, lets revert to Marxism.

Quote:
Originally Posted by CliffHanger View Post
Hey, Hyundai is smart. Don't expect idiotic moves like increasing spare part prices or labour charges.
... gently knock the door of an about to be delivered Hyundai car ...
In either case, the now cheering and applauding public is the one that will receive the short end of the stick.

Last edited by alpha1 : 29th July 2015 at 17:09.
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Old 29th July 2015, 17:02   #10
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Default Re: CCI fines Hyundai Rs 420 crore; Reva, Premier also face flak

All the manufacturer who gives a warranty to their products has the right to restrict counter sale to that product till the warranty is over. Once it is over then its up to you guys. Still there are lot of car companies who have complex electronics which the Abdul garage wont be knowing about. Finally if some things goes wrong then the customer ends up paying more ( for all the things Abdul garage did to his car).

Its all useless tactics. So who defines the price of sarees, pants ,shirt etc. Its the seller. No body is forcing you to buy that if it is above your limits. It should be the way we should look at things.
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Old 29th July 2015, 17:57   #11
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Default Re: CCI fines Hyundai Rs 420 crore; Reva, Premier also face flak

In the case of pant or shirt or saree - if the price is higher, I will go to some other shop and buy it. But - here, I am not able to buy it from elsewhere. I am particularly talking about Mitsubishi/ HM & Skoda (to an extent) and might be the case of other manufacturers.

On one end - I am at the mercy of the dealer to buy this part only through them and on there another end - I am forced to pay through my nose both for the part & labour because they have profit margin of 50 to 200% (for e.g., Pajero Wheel hub cap retails something like USD30 to 35 outside India is being sold by HM dealers in India for INR 5000 which is like 150% markup and it would be more because the cost of the product would not cost more than INR 1000 - even if it is manufactured outside India).

I am looking for abdul garage simply because of the restrictive trade practices by these manufacturers/ dealers and that's what i condemn. Greed for making money in short term using such malpractices - is the source for issue - not just in automobile industry but across the board.

If the dealers/ manufacturer had a fair trade practice of making the part available in all places at a reasonable profile margin - it's a win-win for everyone.
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Old 29th July 2015, 20:01   #12
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Default Re: CCI fines Hyundai Rs 420 crore; Reva, Premier also face flak

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Originally Posted by alpha1 View Post
You know what will happen next?

###

Public is such a short sighted idiot.
*sigh*
Instead of calling the public as idiots at large I feel its a step taken in the right direction to give people more autonomy towards deciding where they want their cars to be serviced with person care rather than dealing with unresponsive a** service personnel.
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Old 29th July 2015, 21:14   #13
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Default Re: CCI fines Hyundai Rs 420 crore; Reva, Premier also face flak

I am a Hyundai i20 owner and support this fine wholeheartedly Other manufacturers who are engaging in similar practice should be fined too. In the USA I could get my car serviced with original spare parts either from Hyundai dealer or Firestone or Pepboys or even the local garage.

But here in India Hyundai is not satisfied earning out of me during the purchase itself but wants to keep me as a captive during my entire ownership period. This is simply not done!!!
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Old 30th July 2015, 09:10   #14
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Default Re: CCI fines Hyundai Rs 420 crore; Reva, Premier also face flak

I think somewhere some action was required and it should be seen with a clear intent. The manufacturers should also know that the system is watching else what is the point in having statutory agencies like CCI. They have been essentially established to ensure that restrictive trade practices should be reduced to the best possible extent.

Many of the members have speculated that the companies can jack-up prices, which may or may not happen as the companies are also operating under stiff competition. Almost all of us have observed different prices on a coke can when bought from local store v/s from a mall / cinema hall and even airlines but at the end of the day, a fair price product is available at many places.

Availability of genuine product is the right of customer and choice of garage post warranty again falls in the same category.

A freedom to select service provider is what these actions would result into. If the companies are so concerned about their complex / sophisticated machinery, they will act positive and will consider review of labour charges at their dealerships.

Good move !
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Old 30th July 2015, 09:19   #15
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Default Re: CCI vs Car Manufacturers : Restricting over-the-counter sales of spare parts

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Originally Posted by stanjohn123 View Post
I'm not sure why this Bias only towards International Car makers. There were many more Local Manufacturers who were involved in this anti-competitive practice. CCI punish Indian manufacturers as well or everyone else are going to point fingers back at you.
How does two wrongs make a right? Why them if not them. The point is they should be fined if they are involved, dead and simple, irrespective of the fact whether the 'other one' is fined or not. The courts are always open.
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