India becoming a global hub for fake auto parts

Market more than trebles in the past seven years.

Rapid growth in the automobile industry has seen the market share of fake spare parts more than treble from 12 per cent to as much as 37 to 47 per cent in the past seven years, according to a study by the Indian Market Reseach Bureau (IMRB). The study, endorsed by the Society of Indian Automobile Manufacturers (SIAM), also shows that India is steadily becoming a hotbed for fake component manufacturing for the rest of the world too, with such products making appearances in US warehouses of car maker DaimlerChrysler.

The auto-component industry is roughly worth Rs 41,000 crore, which puts the fake market between Rs 15,170 crore and Rs 19,270 crore. Fast-moving components like air filter/cleaner, spark plugs and brake pads are favourites among the counterfeit dealers because these are in high demand and consumers look for cheaper options (see table).

Said K K Gandhi, executive director (technical), SIAM: "It's usually the volume players who are impacted by such malpractices. Fake auto parts reduce original manufacturers' margins drastically, besides affecting the performance of the vehicle itself because they cause a sharp drop in fuel effeciency."

Gandhi added that most of the fake components were freely available at roadside garages where they were sold at 45-50 per cent cheaper rates than the orginal cost.

The IMRB findings are corroborated by manufacturers.Two-wheeler maker Bajaj Auto says over 30 per cent of the components sold are fake. "The consumer thinks it is genuine and buys it, but it is the trader who makes the big money with margins of 40-70 per cent. And in many cases with components like the brake shoe and engine components being replaced with fake parts, you run the risk of serious accidents," said Ramakrishna Adiga, the company's general manager, spare parts.

Luxury car makers have not been spared either. Last year, a government team raided a Noida-based manufacturer of fake auto spare parts, and seized components worth Rs 1.6 crore bearing the Mercedes logo from the manufacturing site. Five people were arrested, including the owner.

According to Anubhav Jain, brand manager, Daimler Chrysler India, the malaise has become global. "When we raided a warehouse in the US, we were surprised to find all the products had actually come from India." A recent study by Mercedes in that country showed that more than half the fake components was brought directly from India.

In commercial vehicles, Volvo India is facing a challenge in terms of the impact of fake parts on its buses. As Jan Vandooren, vice-president (South Asia), Volvo Bus, pointed out: "The fake spare parts industry is growing phenemonally in recent times "" by around 35 per cent a year. And because of the rampant use of such parts the life of a Volvo bus gets depleted."