While auto recalls are making headlines, the fact remains that it is only voluntary. Not only European, Japanese or American markets, even China has a vehicle recall policy in place along with a penalty provision and criminal proceedings, if required

Following the “voluntary code on vehicle recall” initiated by the Society of Indian Automobile Manufacturers (SIAM) last year in July, about 1.5 lakh cars and over 11,500 two-wheelers have been recalled by manufacturers. This is a welcome step, although domestic vehicle makers still have to catch up with the idea. The important question, however, is why not make this code as mandatory with a penalty provision on automakers that is adopted across the world?

"The voluntary code on vehicle recall will address potential issues that exist in a motor vehicle which do not meet the safety requirement due to manufacturing defect and the remedial actions taken in this regard. The vehicle shall be covered under safety recall for seven years," SIAM had said while announcing the code.

While the industry body has prepared the code for recall, in case a manufacturer fails to follow it despite clear evidence, SIAM expects the government, especially the ministry of road transport and highways to issue “appropriate directions” to the automaker for violation. Moreover, the Code is silent on the penalty provisions.

In September 2009, a committee set up to review the Motor Vehicles Act, 1988, recommended a fine of Rs1 lakh on an automaker for producing defective vehicles. The National Road Safety and Traffic Management Board Bill proposed a penalty of Rs10 lakh. But there is no progress on this front.

European, Japanese or American markets have vehicle recall policies in place along with a penalty provision and criminal proceedings, if required. Even China, the world’s largest auto market, has penalty provisions in case its 150 automakers fail to adhere to the vehicle recall policy.

Earlier this week, Renault, the French carmaker recalled 7,016 units of its Pulse and Scala vehicles for defect. Japanese automaker Nissan too decided to recall 22,188 units of its Micra and Sunny variants, produced between June 2012 and March 2013, owing to faulty braking system.

Interestingly, according to a report in The Economic Times, since the implementation of the recall code, it was the multi-national automakers, who have been complying with the code. Apart from Renault and Nissan, Honda has recalled 11,500 units of its CBR 250R bike due to defective brake system and Ford has recalled whopping 1.28-lakh units of its Figo and Classic variants due to steering and rear suspension issues. Toyota, on the other hand had recalled 10,800 units of its Corolla Altis, Corolla, Camry and Altis models due to faulty driveshaft, airbag malfunctioning and power windows switches, the report said.

It would be noteworthy to mention that last month four major Japanese automakers, Toyota, Honda, Nissan and Mazda had announced that they would recall 3.4 million vehicles sold across the globe due to airbag issue. All these airbags, made by Japan's Takata Corp were at the risk of catching fire or injuring passengers. All the four automakers would do the repairing free of cost. There is no mention of any penalty either on Takata or the four automakers, though.

Back home, last year while speaking with reporters, S Sandilya, president of SIAM had ruled out imposing penalty on carmakers for not following the code. He said, “The recall code has been framed with consensus of all members. Companies would adhere to it voluntarily to rectify defects in vehicles and secure their own brand image. The expenses they incur to replace faulty parts as a part of the recall exercise do not require any additional penalties to be put in place”.

The absence of a regulatory mechanism is what is hurting customers the most in India. For example, in the US, the National Highway Traffic Safety Administration (NHTSA) investigates complaints and issues mandatory notifications to automakers for recalling and fixing technical glitches in vehicles. The NHTSA can also impose penalty on automakers for failing to comply with its directions.

China too, levies a fine of Rmb10,000 to Rmb30,000 on automakers for selling defective vehicles besides obligatory product recall.