The ill-effects of counterfeiting on the auto-component industry

For the past few decades, there has been an unprecedented rise of counterfeit automotive parts in the automotive industry. The trend not just jeopardizes the health of the consumers but also brings down the growth of the manufacturers. Of late, authorities from across the world have seized huge amount of counterfeit automotive parts at different stages of the supply chain.

A large amount of such counterfeit automotive parts, confiscated by officials, are from China. In the last few years, the trade of counterfeit auto parts has jolted the automotive manufacturers across the world.

According to a report by FICCI on Illicit Trade, “The Indian auto component industry suffered a loss of INR10501 crores in 2014 due to grey market which increased from INR 9198 crores in 2012.”

Market experts cite various reasons behind the growth of counterfeiting in the automotive industry which include, ease of manufacturing, packaging and import of products, higher margins on the sale of counterfeit automotive parts, uninformed customers buying counterfeit automotive parts, availability of technology to copy products, lower cost of duplicate product and short replacement cycle of some products.

Due to the above-mentioned reasons there has been an exponential growth in counterfeiting of automotive parts and has deeply troubled the automotive industry, government and last but not least consumers. Let’s discuss these impacts in detail:

Impact on manufactures: Automotive manufacturers have to bear the brunt of counterfeiting. The sale of counterfeit automotive parts brings down the sale of genuine products drastically. Moreover, there is a loss to the image of the manufacturers due to faulty and poor-quality cheap products.

Impact on government: The Indian government lost INR 3113 crores in the year 2014 compared to INR 2726 crores in the year 2012. The government suffers a huge amount of losses due to evasion of taxes by forgers or counterfeiters.

Impact on consumers: Did you know that 20% of traffic accidents are caused by counterfeit automotive parts? The figure was revealed by Automotive Component Manufacturers Association (ACMA) a few years ago. So the most diabolic impact of counterfeit automotive parts is that it plays with the life of consumers.

motor vehicles

Now vehicles in India will come fitted with high security number plates

The Transport Ministry has notified to the Parliament that all motor vehicles will come fitted with tamper-proof HSRP (high-security registration plates) form April 1, 2019. The Ministry has stated that the HSRP including the third registration mark shall be supplied by vehicle manufacturers along with vehicle manufactured on or after April 2019.

Nitin Gadkari the Central Minister for the Ministry of Road Transport and Highways said that the proposal to change the concerned rule in Central Motor Vehicles Rules 1989 and the revision of HSRP Order 2001 was placed in the public domain for soliciting objections and was discussed later on.

The Minister said that the transport department officials of states, representatives from testing agencies like Automotive Research Association of India, Central Institute of Road Transport, Central Road Research Institute, and Society of Indian Automobile Manufacturers participated in the meet and supported the proposals.

Gadkari said that HSRP has certain security features and are protected against duplication. The plates are fastened with non-removable snap lock fitting system. He also said that manufacturers or suppliers of HSRPs if authorised by the concerned state may also supply the HSRP for old vehicles after placing the registration mark.

HSRP is a chromium-based hologram applied by hot stamping on the number plates both are at the front and back beside laser branding of permanent identification number while the third registration mark refers to a chromium-based hologram sticker affixed on the inner side of the vehicle’s windshield with the details of registration.


What are the negative effects of duplication in the automotive industry?

Counterfeiting in the automotive industry is a growing issue for both manufacturers and consumers. The Indian auto component industry will become worth Rs 7000 crores in the coming years. However, substandard automobile parts are leading to monetary losses for genuine manufacturers and are the cause of 20% road accidents which ultimately lead to life-changing injuries and deaths. Major counterfeiting is witnessed in the automotive aftermarkets where a customer hardly checks the genuineness of an original auto spare part.

Automotive parts are made to visually look like OEM (original equipment manufacturer) parts. The often bear the trademark, labels and packaging of the original product.

Now imagine a situation in which your car suddenly malfunctions, and you are in a hurry to attend an office meeting, the next thing you will do is to get the same it sorted with a mechanic. He will look out for the glitch and will replace the faulty part with a new one and you won’t ask him a single query- all that you want at this time is to get your work done in the least possible time. This is where you are duped with a counterfeit auto part most of the times which pose a serious risk to your safety.

Some of the highly counterfeited auto components include lamps, bearings, filters, brake linings, clutch and many more. Legitimate companies are finding it hard to battle dubious manufacturers who are manufacturing and supplying substandard auto components to different aftermarkets across various locations in India. Even filing police complaints against forgers is not proving to be a concrete solution and is not preventing the duplication of automobile parts.

Genuine manufacturers suffer heavy monetary losses due to counterfeiting. There is a drastic slump in the sales as consumers, especially in small town, prefer to buy an affordable product because renowned brands are a costly affair and thus, they refrain from them. In addition, with a number of counterfeit brands available for the consumer the choice is not restricted and he or she can opt for the cheapest option available.

According to a FICCI CASCADE report around 20%, road accidents in India are caused by counterfeit automobile parts. Failure of fake brakes, faulty bearings and even poor-quality tyres are responsible for sudden accidents and many people die every year due to them. Counterfeiting of auto parts is not a problem limited to India but has spread across the world. With the proper regulatory framework, consumer awareness and use of authentication technologies the problem can be tackled up to a high extent.