How Hazardous can Counterfeiting be in the Automotive Industry?
When was the last time you were allured to buy an expensive watch of Rado available at a lower price? Did you give a second thought as to why the said brand is offering something at such a low price, or you simply gave into your desire of owning a Rado irrespective of whether it is a genuine product or a counterfeit one? Well, the problem of counterfeit products goes far beyond everyday FMCG goods. It even impacts crucial industries such as pharmaceutical and automotive, where fake products can have fatal ramifications.
The Counterfeit Menace
Counterfeits can be defined as products that are fraudulently imitated to take advantage of the superior value of the original product. Counterfeiting in lay man’s term is known as ‘fake products’ or unauthorized replicas of the real product. Counterfeiters manufacture and distribute substandard products under the original brand’s name. It is illegal and by purchasing these goods, consumers in a way support these activities.
In India, the counterfeit market alone causes massive tax losses of INR 40,000 crore and the entire market is estimated to be valued at INR 1 lakh crore. Counterfeiting is so rampant in India that in Kerala these goods are sold as ‘gulf imports.’ Counterfeiting exists due to consumer demand for cheaper alternatives and huge discounts.
In terms of looks, these fake products closely resemble the original ones. The only differentiating factor between them is the price. These goods are priced quite low which compel consumers to fall prey to such products. Counterfeiters thrive on the aspiration of a consumer wanting to own a high-end brand.
Counterfeiting is also vastly seen in the pharmaceutical industry, wherein the counterfeit medicines with the same brand name and packaging but not manufactured by the original manufacturer are sold as real products. This could prove fatal for the patient if they consume these drugs which may not yield desired results. The same disastrous effects of counterfeiting are also witnessed in the automobile industry.
Problems in the Automobile Industry
The automobile industry in India is one of the fastest-growing sectors. In fact, it is often known as the indicator of economic growth and development. As more middle-income consumers aspire to buy vehicles, the automobile sales and the auto parts after-market segment have seen overwhelming growth until recently.
The automotive industry in India has been a major victim of counterfeiting. According to sources, the counterfeit auto parts industry is valued at a whopping INR 22,000 crore. Such a massive scale of counterfeiting has a direct and severe impact on the Original Equipment Manufacturers (OEMs). Counterfeiting is dangerous in the automotive industry as it risks the lives of the passengers.
According to a FICCI-Cascade report, nearly 20% of the road accidents occur due to the presence of these poor-quality spurious spare parts in the vehicle. Let us look at some of the most commonly found counterfeit products in the vehicles:
· Brake Pads: Fake brake pads made out of compressed grass and sawdust have been detected. This reduces the braking ability as these fake ones disintegrate under pressure.
· Airbags: Airbags that are meant to save the lives of the passengers in the vehicle during a collision have been found to be counterfeited. The fakes ones, unlike the original ones, do not meet the required specifications and are not appropriate to save lives.
· Engine: Counterfeit engines do not deliver optimum performance and also pose a fire hazard. Fake filters also lead to excessive pollution.
Wheels, steering, electrical components, and even body parts are counterfeited to be sold at cheaper prices compromising the safety of the passengers. Using counterfeited auto parts can drastically impact the performance of the vehicle. There is a drop in the engine power, especially when accelerating heavily which heats the plugs and cause them to melt leading to engine damage. These counterfeit parts are neither approved by safety authorities nor are tested for safety making them a huge safety hazard.
The source of these counterfeit auto parts exists not only in India but also in China which is a major manufacturer of these spurious products. So, while OEMs produce the auto parts using state of the art technology and premium quality raw materials to ensure safety, counterfeit products are made with the sole intention to make more money. Poor checking, lax regulatory frameworks, and inadequate intellectual property protection add to the misery.
Counterfeit products not only impact the consumer or the company in terms of finances, but it also tarnishes the brand image of the original manufacturers. The customer who purchases a product assuming it to be an original product is bound to be left dissatisfied with the performance of the counterfeit products. Automobile brands end up losing the brand equity that is built over the decades.
Possible Solutions
Counterfeiting can be prevented only with collective action by car manufacturers, government agencies, and consumers. The concerned government agencies also need to devise strict laws that punish those involved in counterfeiting. A more vigilant agency dedicated to preventing counterfeiting and better coordination between agencies will be essential. Additionally, consumer awareness will also play a key role in ensuring that the end-user in the supply chain detects and avoid counterfeit purchases.
Car manufacturers who already conduct raids should increase the frequency of such raids to detect fake products stocked by the wholesalers and traders. The industry needs to work collectively and not make this about protecting their own brand image. Additionally, companies should consider using advanced technologies that allow them to monitor their products across the entire supply chain.
At O4S, our product tracking solutions will help you secure the entire supply chain from your manufacturing plant right up to the retailers. Your consumers can also scan the QR code on the product to ascertain the authenticity of the product. Reach out to us to know more about customized solutions available for your brand.
