Thursday, 9 October 2014

Government may take action against Maruti Suzuki for taking orders for Ciaz without giving specifications

MUMBAI: The consumer affairs ministry is considering legal action against Maruti Suzuki for taking orders for its new mid-size sedan Ciaz even before publicly displaying the car or revealing its technical specifications or price. The move follows a complaint filed by former Railways Minister and MP Dinesh Trivedi, who claimed to have received many complaints from the public about the company taking pre-launch booking.

In a letter to Maruti Suzuki, the largest unit of Japanese auto maker Suzuki Motor, the ministry called it an unfair trade practice and asked why it shouldn't initiate action against the company. The government move is likely to have a wide-ranging impact, as other carmakers also adopt similar marketing strategies to rustle up interest in new products.

The Consumer Protection Act "probookvides a consumer the right to be informed about the quality, quantity, potency, purity, standard and price of goods so as to protect the consumer against unfair trade practices", Manoj Parida, joint secretary at the ministry, wrote in the letter addressed to the chairman and managing director of Maruti Suzuki, India's largest carmaker by volume. The letter, dated September 23, which EThas reviewed, stated that in the "modern days of total transparency", the manner in which the sale of this new car is being promoted amounted to "misleading" consumers.

It called the company's response to Trivedi as unacceptable. According to Trivedi, a Maruti executive had responded to his complaint by informing him that the customers had the option of considering newspaper reviews and not booking the car. The ministry has asked the company to provide complete details of the pre-launch booking programme, and explain why action under the Consumer Protection Act, 1986, such as filing a suit by the central government should not be taken.

In an email response to ET's query, a Maruti Suzuki spokesperson defended its marketing strategy, saying its "accepting bookings for the Ciaz is in no way an unfair trade practice and nor does it violate consumer rights". The booking is completely voluntary for customers and entirely at their discretion, the spokesperson said.

"The company accepts a token amount which is adjusted against the price of the car at the time of purchase. Customers are free to cancel their booking at any stage in which case the token booking amount is fully refunded." Mahindra & Mahindra, which recently launched its new-generation Scorpio sport-utility vehicle with a similar strategy, declined to comment.

Government may take action against Maruti Suzuki for taking orders for Ciaz without giving specifications

Carmakers such as Honda with the Amaze and Mobilio, Hyundai with the i10 Grand and Tata Motors with Zest have invited bookings without revealing prices and technical specifications. Legal experts aren't sure whether the ministry and Trivedi have a strong case.

"The customer can file a complaint that the strategy of Maruti Suzuki violates the rights of consumer guaranteed under the Consumer Protection Act 1986, but the (consumer disputes redressal) forum will take up an issue in totality," said Chandubhai Mehta, managing partner of Mumbai-headquartered law firm Dhruve Liladhar & Co. "The complainant will have to prove that this is not a normal practice within the trade and the company is unfairly treating its potential customers."