Consumer Issues
The truth about Mercedes India-2: Absence of regulation

After filing several complaints with various authorities including the Competition Commission, Cama Motors, which raised a stink about Mercedes Benz, asks if there is any authority in India which can take a decision on such matters in customers’ interest

Ahmedabad-based Cama Motors, one of the oldest and most reputed dealers of foreign cars, has written several letters to the Competition Commission of India (CCI) asking it to investigate the dodgy business practices of Mercedes Benz in India. Cama Motors, a former dealer of Mercedes, which fell out with the auto giant, says it has gathered dozens of pieces of hard evidence and is awaiting an appropriate body to take on the job of verifing or rejecting it "in an atmosphere of fairness".  So far it has failed to find any such body.


The dealer has also filed complaints with Daimler AG, the German Embassy in India, the ministry of surface transport, ministry of heavy industries, the US Ambassador to India, the Federation of Automobile Dealers Associations of India (FADA), and the Automotive Research Association of India (ARAI). But till today, there is a complete silence from all the authorities concerned on all the grave charges of safety and other issues it has made. 


In his complaint to the CCI, Rustom Cama, executive director of Cama Motors alleges  “rampant malpractices” by Mercedes Benz regarding its aftermarket services. He says, barely a passing interest has been shown by the authorities, even though the safety issue has led to at least two deaths. In one case, the son of its customer died in a car accident becuase the airbag failed to inflate. When Cama sought the data relating to that episode, he received a letter from the company saying that the data was destroyed. Cama claims that he is in a position to prove that the report on the failed airbag was fake. 


Moneylife has all the documents backing the claims made by Cama Motors.

Another issue raised by Mr Cama is that of defective brake transmission. This is a more complicated case, where he says, Mercedes Benz is aware of the “defects in brakes transmissions", but carries out corrective action in secret  during “service campaigns” which require the car to be sent to the dealer/workshop. Customers have to leave their vehicles behind for “an unjustified period without explanation”, to allow all this ‘unofficial’ work to be carried out, otherwise they risk missing out on a life saving procedure, he alleges.


Interestingly, several readers have responded to the first report on Mercedes and its quality of service in India. One of them, Deepak Sanchety writes, “The problem is much worse with Mercedes. Their workshops do not have an inventory of common spares even for the current models. For replacement of something like a battery, your car may get stuck for weeks as the “workshop will source it from Pune”. For smallest of problems your car may need more than one visit to workshop as you may find after having paid the bill for repairs, the problem still persists. What is worse is when you send the car back to workshop; you will get other bill for another replacement of part for the same problem.”


“The car manufacturer does not have any control on dealers and workshops. So if you have any complaint against the workshop, there is nobody who would listen to you, be it the Indian Company or their Global HQ,” Mr Sancheti, who has worked with the capital market regulator and the income tax before starting his own corporate practice, added.


Mr Cama alleges that dealers are forced to sign one-sided agreements, which are “totally immoral and unethical” and include “non-disclosure pacts”. This leaves the dealer facing “commercial and reputational suicide”. Illegal activities were forced to be carried out by dealers with the name “additional customer satisfaction campaigns,” he said.


According to Cama Motors, there is a document where cars of the same series of chassis numbers have had their airbags replaced but such documents are maintained secretly by the company and such operations are carried out selectively by dealers.


It said, in 2007, Manish Patel, who was driving an E class Mercedes in Ahmedabad, lost his life when all three airbags in the front row failed to inflate. Similarly, in November 2011, Nirmal Saraf lost his life when travelling in a Mercedes S class as the airbag failed to open. In this accident only one airbag was inflated, unfortunately it was a vacant seat.


According to Cama Motors, in case of Manish Patel’s death, the company sent one engineer, Lothar Shuzzare from Germany to inspect the car. After repeated attempts, Mr Shuzzare and Mercedes Benz gave some incomprehensible technical data on a single sheet and now the company is saying that the data was destroyed since many years have passed. And yet, the same person was dispatched by the company to inspect the S class vehicle in which Nirmal Saraf died.


While in the first case Mr Shuzzare inspected the E Class of the Patel family at the spot, in the second case he demanded the S class vehicle to be handed over the Daimler AG for a report. “His claim was that the technology of Mercedes Benz is analyzable only by their own people. He even mentioned that the police in Europe also have to come to Daimler for investigating accidents,” Cama Motors said.


It added, “This is the stand of a man who has already submitted a report of airbag performance of our customer’s car with fake data! The truth is that Daimler never releases the full code and knowledge of control unit software so that market ready, freely available and legal scanning machines can fully read and analyse the memories and other devices of the car”.


Cama Motors, along with Vimal Saraf and a representative of the Patel family on 19 April 2012 met the Additional Director General of CCI. However, there is not much progress.


The issues Mr Cama raises have deep implications. If a reputed car manufacturer can indulge in questionable business practices but a customer does not have anyone to turn to for redressal, it is high time to have proper checks and balances and more importantly a regulator who understands and can deal with today’s as well as future generations of automobiles.


Mercedes Benz India, however, has refuted all the allegations made by Cama Motors. In an email response, it said, “We strongly refute all the allegations levelled against us. We find these comments highly defamatory, vexatious and frivolous in nature and Cama Motors (our estranged dealer) is trying to tarnish our image; as such Mercedes-Benz India will pursue suitable legal course of action. We would also like to mention that a defamatory suit has already been filed against Cama Motors in Ahmedabad for similar defamatory activities carried on by him.”


Rustom Cama says, “The battle between Cama Motors and Daimler AG is not contingent on anybody’s support or help and we will pursue our duty to its end. However the lack of regulation and the sorry state of this country where even the Monopolies and Restrictive Trade Practices Commission (MRTPC) Act seemed better than its replacement cannot be handled by us. I am sure that the CCI does not even see itself as the relevant body for the range of issues raised by us and the ministries concerned have the impunity to disregard facts in spite of using the RTI act".


The battle may ultimately be fought in court, since Mr Cama has no intention of backing off and has spent considerable time and resources in piecing together information, purchasing testing equipment to prove his point and gathering evidence. 



Chris Haris

3 years ago

Mercedes is one of the best car manufacturing company over the years and still going great in Worldwide. Mercedes famous for its expensive luxury and sports car. It has been doing great business in Sub-Continent over the years. Mercedes Benz is one of the best luxury car that I have ever seen. The Automotive market of a particular car brand will be go well, if the management and regulatory system of the company performing the best they have. Mercedes is one of the best car manufacturing company over the years and still going great in Worldwide. Mercedes famous for its expensive luxury and sports car. It has been doing great business in Sub-Continent over the years. Mercedes Benz is one of the best luxury car that I have ever seen. The Automotive market of a particular car brand will be go well, if the management and regulatory system of the company performing the best they have.
Mercedes is one of the best car manufacturing company over the years and still going great in Worldwide. Mercedes famous for its expensive luxury and sports car. It has been doing great business in Sub-Continent over the years. Mercedes Benz is one of the best luxury car that I have ever seen. The Automotive market of a particular car brand will be go well, if the management and regulatory system of the company performing the best they have.


Yogesh Sapkale

In Reply to Chris Haris 3 years ago

Thanks for your comment, although it appears to be copy-pasted from the company site. Anyway.
Just explain, why this once iconic brand has lost its market share to BMW and Audi in India? Try finding answers and you will get the truth.

Parimal Raj

4 years ago

My experience with Merc ownership has been altogether different than what has been mentioned here. But rather than explaining those things, I would like to know why was the dealer silent for so long ? Why he came out with this when he was fired from dealership ?
As far as clutch plate is concerned, I think this must be age old story as new one comes with auto transmission, so no manual interference. Mine has 7speed 7G tronic auto trans & it is one of the best I have used, far better than my BMW.

Now please see the following links -

BMW to pay $3M fine for US recall issues -

BMW North America agrees to $3m safety fine -

But still I trust my Beemer (BMW). Similarly, for me Mercedes remains my first love [hope my girl friend is not reading this ;) ] and no matter what is being said, my experience is fantastic and hence least bothered about it.
BTW, I feel 99% of comments made on this article are by those who have never owned a Merc, which is best to be ignored.

And those who feel Volvo is safe, also need to look at this video -

Apart from this, I would like to thank you Ms. Dalal for publishing my comment in your article on Worldspace Radio when it was discontinued.

Dr V S Prasana Rajan

4 years ago

Thanks for exposing the negligence of Mercedes. Also, enough prima facie evidence is available through the media, which will enable the public to access the same, and lodge a complaint with the magistrate under whose jurisdiction the HQ of Mercedes Benz is located, so that they are made accountable for their actions covered under Section 287 of the Indian Penal Code, 1860, dealing with Negligent conduct with respect to machinery.-- "Whoever does, with any machinery, any act so rashly or negligently as to endanger human life or to be likely to cause hurt or injury to any other person, or knowingly or negligently omits to take such order with any machinery in his possession or under his care as is sufficient to guard against any probable danger to human life from such machinery, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both."



4 years ago

Thank you for these set of articles . Makes me very wary about investing in such high priced cars.


4 years ago

Approach the High Court.


P M Ravindran

In Reply to Ravindra 4 years ago

From the frying pan into the fire?

Veeresh Malik

4 years ago

It is very interesting to note that Mercedes Benz is threatening suitable legal action variously. Should be certainly suggested that Mercedes Benz India Ltd., their associates, subsidiaries, parent entities, Directors, previous Directors, officers of the company and managers, et al, be prepared to come to the legal system of India with clean hands.

Such threats against the freedom of the press may have worked in other times and other regimes of the sort that Daimler / Mercedes-Benz have worked within. Here, this is India, and we have a tradition of standing for the truth.

For example, in the worst of the days during the Second World War, India maintained its traditions of not just saving Jews from persecution, but also safe-guarded their interests. What did companies like Daimler Mercedes do then, with their great "traditions", threaten the media some?

Mercedes benz India is well advised to mend its ways, apologise to the readers of MoneyLife, and clean up their act in India.


Deepak Gupta

In Reply to Veeresh Malik 4 years ago

I seriously doubt Mercedes actually wants to go to teh courts on this - that will only open up the entire history to further scrutiny and place it on public record!

SEBI and SBI questioned about underperforming scheme. Can SEBI do much?

Underperformance of mutual fund schemes is a serious cause of concern for investors. Fund companies opt for mergers while SEBI just looks on

In a recent case, the Bombay High Court has sought an explanation from SBI Mutual Fund about why one of its schemes— SBI One India Fund has yielded no returns— when its other funds are yielding reasonable returns to investors. According to a newspaper report, the court also issued a notice to the Securities and Exchange Board of India (SEBI), directing the market regulator to file an affidavit stating the exact nature of the regulatory framework in place to ensure proper management of mutual funds.


The fact that the Bombay High Court has admitted such a case speaks volumes for the regulatory approach and philosophy that India has adopted and the unintended consequences thereof. Equity funds disclose upfront that these are subject to market risks. Prima facie, it is common for equity funds to underperform over arbitrary start and end periods. But this is an interesting case. In the last thirty three-year rolling periods from 1 January 2007 to 30 June 2012, SBI One India Fund has underperformed the benchmark on as many as 27 occasions.


Very often fund companies merge their poorly performing schemes with others to escape scrutiny. In this case, SBI MF got the nod from the regulator to merge SBI One India Fund with SBI Magnum Equity Fund. There are many such schemes of other fund houses, would this lead to strict action taken by the regulator or would they just keeping merging schemes to hide their pathetic performance?


Moneylife is the only publication that has consistently highlighted underperforming fund houses. (Recent Articles: Equity Mutual Funds to avoid at all costsFund Performance: Worst Equity Funds.) What we have noticed is that most of the schemes which are consistently underperforming come from the same set of fund houses. Such gross underperformance over different periods can’t go unnoticed by the AMC and the trustees. But SEBI has not done anything about it. The only thing it could have done is question the trustees.


At a recent mutual fund summit SEBI chief UK Sinha had voiced his concern on the gross underperformance of mutual fund schemes and suggested that remedial actions should be taken. Recently we saw few funds being merged to hide fund underperformance and SBI One India Fund is one of them (Read: Fund mergers: What mutual fund houses do to hide underperformance ). The new scheme—SBI Magnum Equity Fund—has underperformed the benchmark just twice and this would hide the gross under performance of the other scheme, SBI One India.


Fund companies charge a fixed amount of 2.25%-2.5% from investors for managing their money and this is the performance. The least the investor would expect is returns on par with the benchmark. Unless SEBI takes active interest and introduces stricter norms, AMCs would continue their business as usual. Maybe the high court would be able to throw some light on what investors can expect.




4 years ago

JM Mutual Fund has perhaps the highest number of underperforming
schemes. Sometime earlier, it merged the worst performing JM Agri& Infra Scheme with JM Basic Fund to hide from public view and scrutiny. I wonder why SEBI allows such practice to continue?


4 years ago

SEBI has become one more white elephant . It has only added to more bureaucracy and is proving to be good for nothing. Corruption is rampant, some cases have come to light but many more are under carpet.

Ramesh Poapt

4 years ago

JM Mutual fund has many underperformed schemes.Escort MF has also such schemes.There are many other MFs/Schemes.Matter to be taken up seriously as under performance can be very well man made rather than market made.Regulations are not strict and malpractice is not unusual here!

Nifty, Sensex may rise further: Tuesday Closing Report

The Nifty may see a staggered upmove 

The market closed marginally off the day’s high supported by a fall in headline inflation and support from global markets. Yesterday we had mentioned that the Nifty has to break out of the range of 5,300 and 5,377 for further direction. Today in the second half of trade, the index broke the upper range and settled above it. We may now see the benchmark making a staggered upmove in the range of 5,445 and 5,345. The National Stock Exchange (NSE) saw a volume of 54.42 crore shares. The Indian market will remain closed on Wednesday on account of the Independence Day holiday.
The domestic market opened almost unchanged from its previous close as investors were focussed on the headline inflation numbers, due to be announced later in the day. Markets in Asia were higher in morning trade on hopes that, after a spate of dismal economic indicators, policymakers across the world will gear up to spruce growth.
Back home, the Nifty opened five points down at 5,343 and the Sensex started off at 17,632, down one point from its previous close. The market was volatile in early trade on selling pressure from realty, capital goods and healthcare stocks.
Meanwhile, the rupee depreciated by 29 paise to 55.63 against the dollar in early trade on increased dollar demand from importers and a lower opening of the equity market. The rupee had lost 6 paise to end at 55.34 against the dollar yesterday.
India’s exports declined by 14.8% year-on-year to $22.4 billion in July this year due to the global demand slowdown. Imports too contracted during the month by 7.61% to $37.9 billion, leaving a trade deficit of $15.5 billion, government data revealed.
During the April-July period of 2012-13, exports have shrunk by 5.06% cent to $80.4 billion. Imports during the period dipped by 6.47% to $153.2 billion.
The dismal trade figures for July resulted in the indices touching their intraday lows in late morning trade. At this point, the Nifty fell to 5,329 and the Sensex dipped to 17,572.
However, a drop in inflation numbers for July brought a cheer to the market, lifting it from the lows and into positive terrain in noon trade.
Headline inflation declined to 6.87% in July as the rate of price rise of the food articles category eased a little, although pressure remained on potato, pulses and rice as well as manufactured items. 
Inflation, as measured by the Wholesale Price Index (WPI), was 7.25% in June and stood at 9.36% in July 2011. Overall, food inflation declined to 10.06% in July, from 10.81% in June.
The benchmarks witnessed a further upmove on positivism in the global markets as the key European indices opened in the green and those in Asia extended their gains towards the end of the day’s trade.
The gains enabled the market hit its intraday high in the post-noon session with the Nifty touching 5,387 and the Sensex going up to 17,753. The indices held on to their gains in the late session on support from oil & gas and banking stocks.
The market closed marginally off the highs on a decline in headline inflation for July and supportive global cues. The Nifty settled 32 points (0.61%) higher at 5,380 and the Sensex finished trade at 17,728, a rise of 95 points (0.54%) over its previous close.
The advance-decline ratio on the NSE was positive at 871:802.
The broader indices underperformed the Sensex today. The BSE Mid-cap index rose 0.30% and the BSE Small-cap index gained 0.25%.
BSE Oil & Gas (up 1.27%); BSE Bankex (up 1.08%); BSE Metal (up 0.83%); BSE PSU and BSE Auto (up 0.71% each) were the top sectoral gainers today. The losers were BSE Realty (down 0.73%); BSE Healthcare (down 0.34%) and BSE Power (down 0.07%).
The top Sensex gainers were Tata Motors (up 2.85%); Tata Steel (up 2.63%); Jindal Steel (up 2.47%); ICICI Bank (up 2.05%) and ONGC (up 1.82%). The main laggards were Sun Pharma (down 2.10%); HDFC (down 1.78%); Sterlite Industries (down 1.27%); Bajaj Auto (down 0.97%) and Hindalco Industries (down 0.91%).
The top two A Group gainers on the BSE were—Adani Enterprises (up 4.68%) and Indraprastha Gas (up 3.63%). 
The top two A Group losers on the BSE were—Alstom T&D (down 3.99%) and Suzlon Energy (down 3.95%).
The top two B Group gainers on the BSE were—Creative Eye (up 20%) and Goodluck Steel Tubes (up 19.81%).
The top two B Group losers on the BSE were—Pitti Laminations (down 19.93%) and JTL Infra (down 18.20%).
The top gainers on the Nifty were Tata Motors (up 3.31%); Ranbaxy Laboratories (up 3.30%); IDFC (up 2.85%); Tata Steel (up 2.67%) and Axis Bank (up 2.66%). The key losers were Sun Pharma (down 2.33%); HDFC (down 2.08%); Hindalco Ind (down 1.24%); Sterlite Ind (down 1.23%) and BPCL (down 1.15%).
Markets in Asia settled on a firm note on better-than-expected June quarter GDP numbers from Germany and France, which eased some debt related concerns. This apart, the minutes of a Bank of Japan meeting, revealed that the government was committed to economic growth and would take necessary steps, when necessary.
The Shanghai Composite gained 0.30%; the Hang Seng surged 1.05%; the Jakarta Composite rose 0.46%; the KLSE Composite advanced 0.40%; the Nikkei 225 climbed 0.50%; the Seoul Composite jumped 1.27% and the Taiwan Weighted settled 0.58% higher.
At the time of writing, the key European indices were up between 0.27% and 0.67%.
Back home, foreign institutional investors were net buyers of stocks totalling Rs339.76 crore on Monday while domestic institutional investors were net sellers of equities aggregating Rs176.34 crore. 
UK-based travel major Thomas Cook Group plc (TCG) has concluded the sale of 76.69% stake in its India operations to investment firm Fairbridge Capital (Mauritius).  The sale was approved with 99.99% votes by shareholders of Thomas Cook Group, Thomas Cook India (TCIL) said in a filing to BSE. TCIL rose 0.17% to close at Rs60.70 on the NSE.
State-run Life Insurance Corporation of India (LIC) has sold 2.68% stake in cement maker ACC for Rs187.75 crore through open market operations. LIC had 10.51% stake or 18.77 crore shares in ACC prior to the transactions that took place between November last year and August 10 this year, both at the BSE as well as the NSE, the cement firm said in a regulatory filing today. Following the transactions, LIC’s shareholding in ACC, in which Swiss major Holicm has the majority stake, has now come down to 7.82%. ACC was down 0.35% to Rs1,355.50 on the NSE.
Pharma major, Cipla, on Tuesday said it has launched ‘Qvir’, a four-drug kit priced at Rs158 per kit to be used for treating HIV/AIDS. The kit consists of two tablets packaged together in one strip which represents a single day’s treatment, Cipla said in a statement. The stock settled at Rs349.40 on the NSE, down 0.14%.


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