Team-BHP (https://www.team-bhp.com/forum/)

-   The Indian Car Scene (https://www.team-bhp.com/forum/indian-car-scene/)

-   -   Market for fake auto parts continues to thrive in India (https://www.team-bhp.com/forum/indian-car-scene/152065-market-fake-auto-parts-continues-thrive-india.html)

The Automotive Component Manufacturers Association (ACMA) estimates that fake auto parts account for 30-40% of the total parts sold in India. The total valuation of auto parts (in retail outlets) in India is worth about Rs. 35,000 crore. Out of these, the value of counterfeit parts could be in the region of Rs. 10,500-14,000 crore. Three years ago, the value of these parts was estimated at Rs. 8,500 crore, which indicates that the market for fake spare parts is growing.

The most common among these fake parts include clutch, filters, lamps wipers, bearings, steering arms, brakes and brake linings and are available for a range of vehicles including two-wheelers, cars, SUVs and commercial vehicles (trucks and buses). Some of the parts in this list are critical for the safe operation of vehicles. ACMA has claimed that about 20% of the total road accidents in the country could be caused by the use of counterfeit parts.

Fake parts are priced a good 20-30% cheaper than genuine parts. The ease of manufacturing these parts, packaging and importing and the higher margins on their sales, results in retailers and mechanics opting for them over genuine parts. Additionally, the short replacement cycles of certain parts, supply constraints faced by original equipment manufacturers and legal shortcomings are responsible for the market for counterfeit part growing despite several crackdowns.

Vehicle manufacturers too claim that the use of counterfeit parts affect the vehicle's performance and subsequently, its brand value. Some of them have started conducting raids on the premises of manufacturers of fake spare parts. However, in the absence of stringent laws and mandated safety standards for after-market products, the import of counterfeit parts is going to be difficult to check.

Source: Business Standard

One of the ways to reduce counterfeit parts sales is over the counter sale of original parts by manufacturers. This is not practiced in India (barring MSIL, Tata and Hyundai – recently started). Every car lover would like to see the car in perfect working condition, and thus if original spare parts are made available in the market, people will start opting for them. In most of the cases people shy away from dealers is because of long drawn process of repair which requires opening of job card, time spent etc for a 5 minute task (done by a roadside mechanic).

It’s a competitive market and the OEM / car manufacturers will have to come out of this behaviour in order to be a responsible corporate citizen rather than just looking at sheer profits from every possible way !

Cheers

30 to 40%? I'm surprised by these numbers primarily because very few owners go outside authorized service stations to get their cars serviced these days. When the owners have paid lakhs for their cars, its unlikely they'll risk getting it serviced outside. I'm talking about the core car sales customer who typically buys a car with a budget of Rs. 4 lacs to Rs. 10 Lacs.

I have a feeling ACMA is inflating their percentage estimates (for shock value).

What if the dealers themselves are untrustworthy? What options do the owners have? They then have to stick with service centers such as Bosch etc.

Please read about my recent experience:

http://www.team-bhp.com/forum/long-t...ml#post3456019

Many people vouch for their FNGs on our forum itself. I don't think everyone prefers to go to a dealer. Even at an FNG the owners would not risk going for fakes but what if the guy puts it in anyway. The fear is always there and hence the hunt for a 'reliable' FNG is tiresome. It is easier to shift to a FNG for a brand which sells the spares OTC.

Moreover, since they have included the bus/truck/commercial segment as well, this figure might not be too far fetched IMO.

More money is made by dealers when they service cars and not when they sell new cars. Making original parts available in the open market will affect them in a big way. They may not like the idea of genuine spare parts being sold over the counter and are going to show some resistance which even to the manufacturers won’t be a good idea.

It appears there is a kind of unwritten agreement between dealers & manufacturers where first the manufacturer milks the customer through the sale of a new car (with huge profits involved) and latter hands the customer over to the dealer to let them extract whatever is left over the time span of several years. Original parts are replaced at inflated prices and to add to the woes you are charged with even more inflated labor charges.

Genuinely priced genuine spare parts and real world labor charges, if implemented, no car buyer would ever want to get their car serviced outside the authorized service center.

What is the definition of "Counterfeit"? ACMA itself does not provide a definition. They are instead insisting for a definition of Counterfeit & Spurious to be incorporated in the M.V. Act.

See these points from an ACMA report of 2012.

• Composition (%age of value):
• Other manufacturer :15%
• Imported parts :8 %
• Counterfeit parts : 36 %
• OEMs : 22%
• OESs : 19 %
  Source : ACMA report 2012

OEM, OES only make up for 41% of the parts supplies.

Regarding the 8% of imports, i'm sure T-BHP members have contributed to a large part of that figure clap:


Another reason that 59% of the parts are purchased from aftermarket sources (not dealers) is because the automobile Manufacturers themselves have created this situation with their monopolies on part supplies. If only they would sell their parts at most Non-Dealer outlets. They could increase their sales of parts by at-least a good 25% on the whole.

ACMA should fund a survey to find out how many people are willing to purchase original parts if they were available outside the dealer. Afterall, how many of us have spent a good hour to get a bottle of Original Steering fluid at a dealer? I have at Honda. They wouldn't sell it to me without having the car entered into the system, making a job card, and then releasing the power steering fluid from stores, and the rest of the procedure to get the car back. :deadhorse

ACMA must realize that the sales policies of their members are part of the problem. If original parts were made available at decent prices, a large part of this problem would diminish. Castrol & Mobil sell their top end engine oils in such huge quantities at Non-Dealer outlets. This is a clear indication that Vehicle Owner's will spend money on genuine products if they are readily available.

INTROSPECTION; that's what ACMA need to do as a first step to this menace.

Many Maruti models use TVS Girling brake-pads. You get them as Maruti-Genuine-Parts (MGP) as well as non-MGP-but-original TVS-Girling. Needless to say MGP would be priced higher. In this case, would the TVS-Girling ones without the MGP-stamp be considered as fake?

Edit: Got the answer in the post above this. Thanks

Another very important point which I skipped!!! My Bad..

Most manufacturers consider the spare parts business to be a money making machine.

Example: ROOTS Horn (OEM supplier to Mercedes).

The same horn, exact same specs, same manufacturer, without the STAR embossed onto it, is available for Rs.700/- MAX for the pair, + installation of a generous Rs. 200/-. Total : Rs. 900/-

Now, buy that same horn from a Mercedes A.S.S and its Rs. 2878 (300% markup). Add Labour of a preposterous Rs. 2043 & we are at a wonderful total of Rs. 4920/-.

See the difference for the exact same horn...Rs. 4020/-.

Now, these are luxury brands and you are expected to pay a premium. But where do you draw the line between paying a premium and being ripped off?

Just as ACMA wants the Government to insert a definition of "Counterfeit" in the M.V. Act. The Govt should also take a note of these trade practices of the manufacturers and define 'Spare Part Monopolies & Pricing Fraud' in the same act. Having a monopoly over a product does not allow you to rip off customers!!!

ACMA has a great argument against any part which is sold after-market. OCCUPANT SAFETY.... well, if they are so obsessed with our safety how about making the parts available to us at reasonable prices. I'm not asking them to start a charity, just be reasonable in their pricing.. don't go around selling a Rs.100 part for Rs.400..

Remember Mr. Burns from the Simpsons??

If these figures come from the ACMA, I would not like to take them at face value. Lets not forget that the OEM compenent manufacturers have a vested interest against the so called 'fake' spare market.

Point 1
The reality is that many components are sub contracted to third or even fourth party suppliers. Every supplier at every stage keeps his margin while the tax component adds up, inflating the price. Now if that third or fourth party supplier releases that very same part in the market in his name and at his price(which is obviously much less than the OEM selling price), is it fair to call that part fake or sub standard?

Point2
Repair and maintenance is a major money spinner for both car manufacturers and their vendors. They on their part do everything to dissuade customers from going to FNGs, dont release spares in the market(and earn CCI's wrath for it) and even write warranty contracts accordingly. As such, IMO any such claims by them should be taken with a pinch of salt. Can all of this not be seen as scare-mongering on their part, in an attempt to 'convince' you to keep filling their coffers?

Point3
Everybody here knows just how customer-centric dealers and authorized workshops really are. We've all had our share of horror stories and this forum is full of them. It will not be fair to say that a majority of dealers openly indulge in serious malpractices in absence of any verified data. But by the same logic and with general experience of me and you, the same cannot be denied either. The notion that dealers, service centers and basically all things 'authorized' are the only good things for your vehicle and everything else is bad, fake or fraudulent, I refuse to buy it.

Instead of taking out such campaigns, I'd rather like to see them making 'original' parts available at local spare shops and at sane price. A more humble approach by them can actually result in something meaningful.

Definition of counterfeit is still a grey area.

In a general sense, 'counterfeit' covers everything that is sold with a label that the maker is not legally authorized to put on the product. Examples include "XYZ authorized" or "ABC Approved" labels.

Products from the OEM suppliers or after-market part manufacturers who put their own branding and makes a part with the same spec as the OEM part would not be treated as counterfeit in the general sense.

The designs of some of these parts like headlamps/tail lamps are patented by the respective car companies and in such cases, anyone who makes such a part without a license from the car company would be treated as counterfeit due to patent laws, even if they don't mention anything like "original spares" or similar wording.

This is the reason the wiper blades of Bosch have a different design when compared to the OEM wiper blades. Bosch is only making generic wiper blades which would suit multiple car models and the rights for this design would be with Bosch.

However, it is up to the car companies whether to approve Bosch or similar after-market parts in their vehicles when it comes to warranty claims.

On the contrary, I'd say that the number is underestimated, primarily because of the 'cash' (aka black money) business that's hard to keep a tab of.

India has about 15 crore registered vehicles (source). Compare that to the total number of vehicles sold in the last 4 years, and the 'in warranty' vehicles are basically a small % of the total number on the road.

Once a car crosses the 4 / 5 year mark, few people send it to the authorised service station. Unlike BHPians who'd stress on quality, most owners simply look at the cheapest repair option available.

One area we shouldn't overlook is idiots who consciously pick a fake part over genuine (reason = cost).

Reminds me of this time that Auto Hangar quoted 30K for the Merc's engine mounts. Got the exact same part from the exact same manufacturer outside for approx 7K.

This is not just an Indian problem. It's a true global problem. In the west it is very similar. Some of these fake parts at least look very good and convincing. there have been many instances where fake parts were found in the official dealer and repair fascilities as well.

I saw a documentary some time ago, where they tested these fake parts. Visually the looked identical and even the package was near identical to the original. But when put to the test, many of the fake parts broke and or simply did not function as advertised. Especially when you think brake parts, steering and or suspension components, you don't want to comprimise on safety. But you might as it is getting increasingly more dificult to tell fake from genuine parts. Only when you put them to the test, will the difference show.

I've never understood why I can buy say an original Bosch fuel pump for my Alfa Romeo Spider for say Euro 50 from an independent parts supplier and when I get the same identical Bosch pump from Alfa Romeo, it is four times as expensive. Admittedly, it comes in a Alfa Romeo box rather then a Bosch box, but it is the exact same part.

Probably something to do with volume of stock and turn over volumes. Still, very few dealers carry all the various parts. But then again, in Europe you could probably get any part from any manufacturer delivered within 24-48 hours. I loved the Autozone of this world in the USA. They would stock just about everything for just about any (American) car. And every second street corner has an Autozone or similar.

Jeroen

@Shreyans_Jain:-
Thank you. 1. You have absolutely put things in proper perspective. The authorised network of service centres and OEM have a high over head cost and they try to pass it on to customers. Also, to keep the dealers happy, the OEMs also have a dual price mechanism and the price of OEM spares offered to the dealer is in many cases cheaper by 30% compared to what the dealer charges the customer. Indirectly, the OEM allows the dealer to make windfall profit at the cost of the end user. In most cases, unsuspecting customer pay up with out questions since they associate the cheaper but same quality spares available outside in the after market with spurious or low quality rejects, which is incorrect in majority of cases.
2. In many cases warranty issues, lack of awareness, low risk taking ability and some times shear snob value drive the customers to go only to authorised service centres and pay high price for spares.
3. It would be interesting to explore where commercial taxi fleet operators take their cars for servicing once it is out of warranty, since they will be hard nosed about savings and margins.
4. About fifteen years back the cars were not of so many variety and were not so complex and we could go to a friendly road side mechanic and get a sincere jobs done economically. This is not the case nowadays. Especially with electricals a wrong approach by a novice car electrician may cost us dearly. And the OEM authorised centres precisely play on such weakness.

It is a popular belief that car dealers don't make much profit on the sale of a new car, and make money out of servicing.

The two newer cars in my family, Chevrolet and Ford, have gone to the service centre for work, even after the warranty expired, and have had huge bills being paid for. On the other hand, owning a Landcruiser, and a Prado, I have never visited Toyota, and my service bills are mostly half of the newer cars in the family. So much so that my father is also interested in buying a used Toyota now.

Auto companies and ACMA are out of sync with a common man's needs. A premium of 4000 rupees on a 900 rupees horn, as stated above, makes no sense, even to luxury car owners.