Govt plans to set up ombudsman to empower automobile owners and new buyers

Automobile buyers will soon have a grievance redress mechanism for their issues with manufacturers. The government plans to set up an automotive ombudsman to empower millions of automobile owners and new buyers.


The government is in the process of rolling out a National Automotive Policy and the ombudsman-led redress mechanism is one of the several proposals. The draft circulated by the Department of Heavy Industry for public and stakeholders’ comments last month did not have this clause; this was added early this week.


The draft policy seeks to establish an automotive ombudsman to address consumer grievances before adopting a legal recourse. The proposed ombudsman, according to the draft, might intervene in a variety of issues related to new car sales, service and repair of vehicles and warranties.


Besides the grievance redress mechanism, the draft also aims to set up a consumer feedback and rating system to document consumer experience at dealerships and service stations. The policy seeks to design and roll out a star-rating system allowing consumers to rate the performance of automobile dealerships, workshops and service centres, based on a set of pre-defined objective parameters. “These ratings would be made available in public domain,” the draft said. The policy wants to ensure that automakers, suppliers, service centres and workshops meet the ‘highest standards’ of service and repair.


R C Bhargava, chairman of Maruti Suzuki, said the idea of an ombudsman was excellent in theory. “Its success will depend on the functioning. The success of any institution depends on how people do their work. A good concept can become excellent or bad depending on the execution,” he said. However, he said the idea of rating dealerships was not a good one. “Since the success of a dealership depends on market forces, introducing a rating system would just add another cost of compliance.” India has had an ombudsman for banking sector since 1995 to address deficiency in banking services.  


By volume, India is the fifth-largest vehicle manufacturer in the world. It is the largest manufacturer of two-wheelers, three-wheelers and tractors, fourth-largest manufacturer of light commercial vehicles and fifth-largest manufacturer of heavy commercial vehicles. It is estimated that by 2020, the automobile industry in India will be the third largest in the world after China and the US. The country is also the fifth-biggest market for passenger vehicles — cars, utility vehicles and vans — and poised to become the third biggest by 2020. However, consumers do not have a dedicated forum to flag their grievances against manufacturers and dealerships.


India does not even have a mandatory recall policy for defective vehicles. The recall of vehicles has been a grey area under existing laws, and largely practised by manufacturers voluntarily. While most carmakers have been recalling vehicles for the last two decades, recalls of two- and three-wheelers and commercial vehicles are unheard of.


The Motor Vehicles (Amendment) Bill, awaiting approval of the Rajya Sabha, states that the government can order a recall if there is a defect in a vehicle that could harm the environment, the occupants or those on the road. A recall can also be initiated in case a percentage (to be decided when the rule is notified) of owners or a testing agency approaches the government. In such a case, the manufacturer must either replace the vehicle or reimburse the entire cost of the vehicle or repair it. There will be provisions for imprisonment and penalty in case of failure.

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