[anjan_c2007]

Maruti's appeal lies with the Supreme Court and has to be filed within 60 days. If the SC does not stay the fine payment, they will have to pay the amount even during the pendency of the appeal.

In fact, the CCI in August 2014 had fined 14 automakers Rs 2544 crores for restricting their OE spare sales to their ASC's and for not making these available in the open markets for other spare part dealers to trade in. Maruti topped the list even then, followed by other companies on which penalties had been imposed that included Mahindra and Mahindra Ltd, Tata Motors Ltd, Toyota Motor Co., Honda Motor Co., Volkswagen, Fiat, Ford Motor India Pvt. Ltd, General Motors, Nissan, Hindustan Motors, Mercedes and Skoda.

https://www.livemint.com/Companies/l...ar-makers.html

Originally Posted by fawad0222

Auto industry definitely needs strong regulations. Spare parts policy is another area which needs urgent intervention. Hyundai and many others don't allow their OEM parts to be sold outside and charge exorbitantly and avoid competition.

Hyundai's name doesn't figure in the old list of 2014 but it could land in trouble in future.

[GTO]

Although I am an extremely pro-consumer personality, this is an order that I disagree with. Car makers absolutely have the right to control the level of discounting by their dealers. Reasons:

- Brutal discounting can hurt the brand's image. No great brand was ever built on discounting. Just ask Audi India what happened.

- It eventually becomes a race to the bottom. Margins become slim, making dealerships unviable.

- Large dealers can eliminate weaker competition from same-brand dealers by burning money and offering killer discounts.

End of the day, it is every manufacturer's dream to sell each car at MRP. That's not always possible as we are a discount-inclined culture, but efforts must be taken to keep discounts real.

Anyway, the market alone is capable of deciding which cars are priced well (by buying them) or overpriced (by making them flops).

Originally Posted by Punatic

This is just sad:

Source: The Hindu Business Line

Nothing sad about mystery shoppers. They are the reason you'll have a good pre-sales experience in Maruti showrooms. Heck, if anything, brands like Tata should start employing mystery shoppers as their pre-sales experience sucks. From Kanad's awesome car salesman thread (Behind the Scenes: A salesman's life in a car dealership):

Originally Posted by blackwasp

A lady with a kid came late evening (6:30 pm or so) just as I was about to leave. I don't know why, but I decided to attend to them as the other sales guys were busy. Greeted her, showed her the cars as per her requirement and even got her car valuated. After some time, we went for a Test drive. She said she'd call me at her office at noon the next day for further discussion. I went home after the usual long day. Next morning, in the morning meeting, our manager called us up and said that we had been visited by a mystery shopper. The email he showed us from the Regional Office had my visiting card attached. They had sent in a report with parameters and a remark against them, some of them were - availability of doorman, valet and receptionist, greeting by sales person, test drive, evaluation, pricing and schemes, refreshments offered etc. Thankfully I didn't get any negative points but 2 things that were highlighted included the pantry staff (who bring tea / coffee) not wearing gloves and there was no music playing inside the showroom! The reason for music was due to the computer that played songs being turned off at 6 pm. The missing gloves issue was asked to be rectified. Such small attention to detail was totally unexpected.

Originally Posted by blackwasp

The company also conducts surprise checks / visits on the many dealerships sending people posing as customers and making a note of all the happenings. These are known as mystery shoppers and everyone is scared of them as the repercussions of getting their attention are severe. These mystery shoppers could be a single person, or a friendly couple to a full-fledged family with kids in tow. A monthly review report is sent to the dealers - the only time when you make out if you had been visited by a mystery shopper or not. These are especially critical when a new model is launched or a car has a long waiting period (e.g. Brezza, Dzire, etc.).

[VT-RNS]

My 2 cents:

When we bought the MS Baleno in our family in 2019, while my Dad was happy to get the car from the usual MS dealer in our area, I was keen to get quotes from other dealers across Mumbai, assuming that competition should allow for better pricing somewhere.

The rude shock was two-fold:
1) The first question you are asked is where is your location (where it will be registered). I didn't think too much, and gave the answer. To which, I am flatly told by another dealer that you need to contact "XYZ" showroom (our area dealer). When I dug deep, it was shared that MS has defined such "Areas".

2) The sales person at our local MS dealer was a nice guy. He proactively told me, when I mentioned to him I will look around for other dealers, that the discounts & pricing is all managed by MS and dealers had no room to change prices. I initially thought he is giving the usual sales talk, but I did get quotes from other dealers in Mumbai (I used to change by address depending upon Dealer location, read point 1 above) and it was shocking that the prices were matching within 5K of each other (with 10L OTR price).

What happened in the end?
We took delivery of the vehicle from the dealer nearby, and it was a smooth process. I have to give it to MS that despite their size, they still are customer focused.

But the pricing strategies left me shocked. I wish I had the foresight to complain about it to a consumer forum. Lesson learnt.

And I am pleased to see Maruti Suzuki being fined here. Hope they are not let go easily due to some legal smartness.
Sure, as a brand, you want to have some control. But I found MS to be extremely highhanded here.

Cheers!

[Punatic]

Originally Posted by GTO

Nothing sad about mystery shoppers. They are the reason you'll have a good pre-sales experience in Maruti showrooms.

Ah, but these are not mystery shoppers for ensuring a good pre-sales experience at all, are they? Quite the opposite, in fact. They are there to ensure that the customer does not get a discount beyond specifications.

[frewper]

Let me give one of the scenarios where this actually hurts the customer.

If companies like Maruti starts giving heavy discounts then smaller car companies that are struggling will struggle more. Imagine Ford and Fiat. For them additional discounts will just kill them. Fiat lets be honest, Ex. Punto was only bought by people who had a thing for cars. Anyone who was just looking for a car would buy a Hyundai or Maruti or a premium model like Polo if they wished.

Discounting kills competition and then once competition is killed off, they are free to have their own pricing later on. Once you are as big as Maruti, you can kill off competition easily.

[Dhillon]

Originally Posted by GTO

Although I am an extremely pro-consumer personality, this is an order that I disagree with. Car makers absolutely have the right to control the level of discounting by their dealers.:

I agree with GTO here. There has to be a maximum discount level that a dealer can offer. Otherwise the dealers start snatching customers from other dealers by offering more discounts and this eventually leads up to smaller dealer being forced to shut. This happens in same brand. I have seen this and I speak this from my experience working in the Auto industry from last 8 years.

Originally Posted by frewper

Let me give one of the scenarios where this actually hurts the customer.

If companies like Maruti starts giving heavy discounts then smaller car companies that are struggling will struggle more. Imagine Ford and Fiat. For them additional discounts will just kill them. Fiat lets be honest, Ex. Punto was only bought by people who had a thing for cars. Anyone who was just looking for a car would buy a Hyundai or Maruti or a premium model like Polo if they wished.

Discounting kills competition and then once competition is killed off, they are free to have their own pricing later on. Once you are as big as Maruti, you can kill off competition easily.

Very well said. Exactly what I wanted to write.
Even we as customers tend to bully the smaller brands by saying "Even Maruti & Hyundai are giving better offers than you."

[HP-BHP]

This practice is not new and definitely not limited to Maruti (within the automobile sector). The same applies to premium mobile phones, luxury goods (including Fast Moving Luxury Goods).

While logically the dealer has every right to sell the products which he brought from the manufacture at X+Rs. 1 (where X is the dealer price) or even at X-Rs. 1 (i.e. on a loss) if the pricing is sustainable for him in a long run but this practice hurts the brand a lot as customer perception towards the brand changes (i.e. the products should be available for discount). Audi has suffered a lot due to this.

Mystery shopping/shopper definitely helps the brand a lot. I am in the business which is related to this and I know that for sure that the only way for the brands to get the real feel of the ground reality is either mystery shopping (which is a preventive measure) or having a robust complaint management system (which is more like a post-mortem i.e. the damage is already done).

[N.A.GTC]

Originally Posted by shady_lawyer

I'm going to weigh in with my thoughts here and attempt to offer a layman's perspective. Company A manufacturers a car and bills the dealer Rs. 100 for it. That Rs. 100 is the ex-factory price which the manufacturer wants for its product. Let's assume taxes don't exist for this simple example. The dealer then pays Rs. 100X5 for the 5 cars to the manufacturer and has the car delivered to itself.

Lets assume the dealer margin on each car is Rs. 10, so the price on the websites etc you'll see is Rs. 110. Now assume the dealer wants to sell 3 cars Rs. 90 because he believes that it will fetch him more business, by being perceived as a place where people will get a good deal.

Good for consumers right? Now "A" says sorry no can do, you'll set at nothing less than 105. This is called re-sale price maintenance and in simple anti-trust law its illegal. No person is entitled to maintain price in the retail market, why because its as good as carterlisation, where each supplier says we'll each quote between Rs. 100-101 and then split the profit while applying for a tender. It artificially holds the price independent of market forces, which is what has been happening in the car market. Take any manufacturer and you'll find a refrain that cars are "over-priced". To some extent there is price-gouging by the manufacturers.

You've summed it up perfectly.

People on this thread seem to have forgotten that Dealers are separate from Manufacturers, and are actually free to sell at whatever price they feel fit.

And frowning upon this decision because it hurts the manufacturer's brand? If I want to sell off my iPhone and Airpods for 50 bucks each, that's just my loss, and it may hurt Apple's reputation, but that's no reason to restrict me from selling it at the price I desire! When I go to buy a car from the dealer, the transaction is between me and the dealer. The manufacturer is an outsider. And in this case, Maruti is very clearly trying to screw their customers - no sympathies for them.

[revmaxx]

200 crore is a lot of money. So there myst be something sinister in the way Maruti operates. The commission must have felt it as unfair trade practices. The consumers lost out.

[t2k4]

Originally Posted by GTO

Nothing sad about mystery shoppers. They are the reason you'll have a good pre-sales experience in Maruti showrooms. Heck, if anything, brands like Tata should start employing mystery shoppers as their pre-sales experience sucks.

Couldn't agree more; Mystery Shopping concept has been around for decades and is relevant in many industry verticals and sub-verticals of Retail, including at large department chains, brand jewelry stores, franchise stores, etc. It is a B2B exercise undertaken by the the brand owner to improve the B2C experience.

Only if the powers that be at Toyota India HQ would send some shoppers to holistically audit Toyota Bharat's Pre-Sales experience. IMHO, gloved up tea delivery and music experience at a car dealership only matters if the actual transaction parameters - opaque booking system, forced insurance purchase, forced accessories purchase and non-trackable vehicle dispatch - are fixed and in order. If the basic unit of transaction is broken, applying lipstick to the pig is not going to help.

[lsjey]

The Competition Commission should be using some logic to calculate the fine amount. Can experts throw some light on this logic? I presume that the amount would have been arrived at based on the number of times the anti-competitive practices were committed. But an opinion of experts in this area will help.

Regards,
lsjey

[N.A.GTC]

Originally Posted by lsjey

The Competition Commission should be using some logic to calculate the fine amount. Can experts throw some light on this logic? I presume that the amount would have been arrived at based on the number of times the anti-competitive practices were committed. But an opinion of experts in this area will help.

Regards,
lsjey

This is what the CCI Order states:

57. Under the provisions of Section 27(b) of the Act, the Commission is empowered to impose upon an entity contravening the provisions of Section 3 and/or Section 4 of the Act, penalty as it may deem fit, which shall not be more than ten percent of the average of the turnover of the entity for the last three preceding financial years.

58. Having considered the nature of the infringing conduct and the post–pandemic phase of recovery of automobile sector, the Commission takes a considerate view and deems it appropriate to impose a penalty of ₹200 crores (Rupees Two Hundred Crores) only upon MSIL, as against a maximum penalty permissible under the provisions of the Act, which may extend upto ten percent of the average of the turnover of the entity for the last three preceding financial years.

[AZT]

The reason small dealers can survive is because big dealers cant under cut them on price. Imagine a scenario like Jio telecom launching where one party had such deep pockets that it could price everyone else out. Where was the CCI then, when competition was being wiped out in that sector.

People are frustrated because cars are expensive and rulings like this just play on that sentiment, pure misdirection. Let's all ignore the tax component and blame Maruti for not allowing discounts, that's why prices are high. I would legit be surprised if the Supreme court doesn't strike this down or put it on hold for now.

[Geta]

Originally Posted by N.A.GTC

You've summed it up perfectly.
If I want to sell off my iPhone and Airpods for 50 bucks each, that's just my loss, and it may hurt Apple's reputation, but that's no reason to restrict me from selling it at the price I desire! When I go to buy a car from the dealer, the transaction is between me and the dealer. The manufacturer is an outsider. And in this case, Maruti is very clearly trying to screw their customers - no sympathies for them.

I beg your pardon but I want to highlight these points:
1) U own your iPhone and airpods and you may wish to sell it for a very low price. Fair argument. But the dealer here doesn't own the car he is selling. Nor has he 'purchased' it from the manufacturer. He is just lending them a space to showcase their wares and his service personnel.

2) Even if you own a thousand iPhones and you sell them all at a deeply discounted price, Apple will take note of it and will take legal recourse if it affects their business in your locality. I don't think you can simply purchase a thousand iPhones as an end user and sell them again at deeply discounted prices as it is illogical for a single person to purchase a thousand iPhones for personal use. It will only be looked at as an attempt to bring down iPhone's brand image, and I feel the manufacturer has every right to prevent any wilful sabotage of his brand's appeal.

[N.A.GTC]

Originally Posted by Geta

I beg your pardon but I want to highlight these points:
1) U own your iPhone and airpods and you may wish to sell it for a very low price. Fair argument. But the dealer here doesn't own the car he is selling. Nor has he 'purchased' it from the manufacturer. He is just lending them a space to showcase their wares and his service personnel.

That does not seem to be the case. MSIL's submission before the CCI was that discounts "do not impact MSIL". They further submitted:

Ultimately, the sale of vehicles of MSIL remains largely unaffected, and at most the significant and direct effect is only on its dealers. Therefore, there cannot be any significant motive for MSIL to indulge in such alleged RPM. Vehicle supply by MSIL to each of its dealers is undertaken on a principal-toprincipal basis and is not a commission based sale. Hence, once MSIL supplies the vehicle to the dealer, the title of the vehicle passes to the dealer.

They were essentially making a monopoly, which is ALWAYS bad for consumers. Yeah, discounts are bad for the brand and its image and blah blah, but bruh neither the society nor the law exists to serve corporate interests. Companies cannot be allowed to curb free and fair market, simple.

Interestingly, some of the emails quoted in the CCI order are just hilarious. For instance:

E-mail dated 24.12.2013 sent by Commercial Business Head–NCR of MSIL to dealers in NCR

It has come to my notice that some Dealers are trying to do some violation of market discipline norms … as the month-end is approaching.
Let me inform you that we will mercilessly initiate MULTIPE Penal action, if required, to stop this menace at any cost.
The message is clear