Basic HTML Version
MOTORINDIA
l
July 2012
59
in the form of fake packaging or
in original packaging sourced from
mechanics or service stations
l
Higher margins: Compared to a
genuine auto component, a counter-
feiter earns 35-50 per cent on selling
counterfeit car parts, while for oth-
ers, this can be 55-75 per cent.
l
Lack of consumer education to
identify authentic parts and realise
the ill-effects of counterfeit parts
l
Supply constraints: Lack of
easy availability of genuine parts
for older variants of vehicles, and
sometimes even for new models,
leads to counterfeit sales. This may
either be a supply constraint at the
manufacturer’s end or a strategy at
the distributor level to achieve high
margins.
l
Lack of tools for law enforcement
According to the ACMA White
Paper, “Legislative Improvement to
Combat Counterfeit Auto Compo-
nents”, released in February 2011,
the counterfeit trade volume is es-
timated at INR 247.5 ($5.5 billion)
and accounts for 35 per cent of the
aftermarket in India.
Counterfeit auto component prod-
ucts affect the entire society, manu-
facturers as well as the Government.
Poor product quality can lead to
serious accidents and sometimes to
loss of lives. According to ACMA,
the use of counterfeit products re-
sulted in around 25,400 deaths and
more than 93,000 serious injuries
during 2009.
In India, the automotive compo-
nent sector provides direct or indi-
rect employment to more than eight
million people.
Counterfeit auto parts can harm
manufacturers by leading to:
l
Loss of revenue: Counterfeiting,
tampering and diversion of sales
are made at the direct expense of
auto component manufacturers who
make huge investments on develop-
ment and promotion of their prod-
ucts.
l
Liability: The manufacturer can
face potentially crippling law suits
as incidents of counterfeiting, tam-
pering and diversion, leading to ac-
cidental cases/health.
l
Brand integrity: While poor qual-
ity fakes damage the image of the
original equipment manufacturer
and endanger the lives of vehicle
occupants, highly accomplished pi-
rated products deprive manufactur-
ers, who invest a lot of money in
research and development, of their
legitimate earnings. It is also rele-
vant to note that sales of counterfeit
parts clinically affect the reputation
and goodwill of manufacturers.
Counterfeit auto parts can harm the
Government by leading to:
l
Loss of revenue: Sales of counter-
feit or diverted products bypass tra-
ditional channels, thereby depriving
the Government of tax revenue (see
Figure 2).
l
Funding of criminal enterprises:
The people who benefit most from
counterfeiting are criminals who
then use their proceeds to fund other
criminal activity or to further their
own enterprises.
What the brand owners can do?
Table 1: Most commonly counterfeited parts and accessories
Engine & exhaust
Suspension and Body and
Electrical
braking
structural
components
Oil filters
Steering arms
Sheet metals Alternators spares
Air filters
Tie rods
Bumpers
Head lamps
Distributor caps
Brakes
Windshields Tail lamps
Fuel filters
Brake linings
Wipers
Coolant and transmission fluids
Starter motor spares
Bearings
Oil pumps
Water pumps
Spark plugs
Piston and piston rings
Lubricants
Sealing rings
Source: ACMA / FICCI
Fig. 2: Loss of revenue to Government due to automotive
component counterfeiting
Financial year 2010
Value
Total market for auto components
INR 990 billion (US$ 22 billion)
Share of aftermarket
25%
Value of aftermarket
INR 247.5 billion (US$5.5 billion)
Share of counterfeit components
35%
Value of counterfeits
INR 87 billion (US$ 1.9 billion)
Excise duty
10%
Other taxes
15%
Loss to Government*
INR 22 billion (US $ 496 million)
focus on aftermarket