Customers facing service problems and spare parts shortages for their cars could soon be protected by law.
Automobile manufacturers may have to provide maintenance and spare parts for vehicles for five years after they withdraw the model or shut shop. A new car model is launched in India every month.
Daewoo Motors Ltd (which sold the Matiz and the Cielo), Premier Automobiles Ltd (Premier Padmini and 118NE), Hero Puch Ltd (mopeds) and scooter manufacturer LML have either closed shop or gone under.
The new law has been suggested in the 10-year automotive mission plan, which is being finalised by the government.
"We have received suggestions in this regard. There have been cases of automobile companies closing down operations. To address the problems faced by the hapless customer, some corrective measures are being initiated," an official from the ministry of heavy industries and public enterprises told Business Standard.
The Federation of Automobile Dealers' Associations has been receiving complaints from Matiz and Hero Puch owners on spares and service and has been referring them to different government agencies.
To govern the obligation among manufacturers, dealers and customers, the federation has been pushing for such a law.
"There is no balance in the Indian market. Automobile companies come out with models without any legal obligation on the shelf life of their product. This is leading to unnecessary litigation and disputes once these models are phased out. In the globalised Indian automobile market, a franchisee law will crystallise the roles of the manufacturer, dealer and customer and ensure smooth growth," said Binod Agarwal, president of the federation.
Automobile manufacturers will also have to improve their service and expand dealership networks to meet customer expectations.
If an automobile company closes or discontinues its service operations, the supply chain of dealers-vendors-retailers will ensure services to customers.Taking a cue from similar laws in the US and the UK, manufacturers will ensure service and spare supplies for a stipulated period and abrupt closure of automobile companies could invite hefty fines and seizure of assets by the government.