Thakur Institute of Management Studies and Research
INDIAN AUTO CO’S GREAT CAR CALL BACK – REASONS & IMPACT ON INDIAN ECONOMY
Production Management Assignment by Bharat M Patil – MFM 15-18-33

Reasons for Car CALL BACKS….
Every manufacturer need to produce a products that are, safe to use and must achieve all the specifications as specified to customer. This aspects is not only essential to build long-term brand value and corporate success, but it is also required by laws.
Every manufacturer develops and implements various robust systems & processes to achieve goal of perfection. However due to some errors which occurs during manufacturing processes, defects occurs. This is very much possible in advanced products such as automobiles. In the event of defects noticed, by taking a responsibility & showing a maturity if action is initiated by manufacturer to fix the issue in favour of the customers, such events are called as CALL BACK.
The main reasons for CALL BACKS are,
1. If auto manufacturer discovers safety-related defects, he must initiate some form of CALL
BACK to address the problem.
e. g. Honda Cars India Ltd (HCIL), CALL BACK 64K units of diesel variants of Honda City manufactured from Dec. 2013 to Jul. 2015 to voluntarily replace the fuel return pipe.
2. The product reliability issues aren’t always related with CALL BACK but customer expect the need for CALL BACK for reliability problems also.
e. g. navigation system malfunctions would be reliability issue
3. If the deviation of specification from the norms specified as per government regulations like emissions even then the need is felt by manufacturer to execute CALL BACK.
e. g. Recent CALL BACK announced by German auto major Volkswagen Group of 3.23 L units for - Audi, Skoda and Volkswagen. This CALL BACK is in relation to the emission test.
It was the largest recall of vehicles in India.
The manufacturers work with their dealer partners to take care CALL BACK issues in a transparent and timely fashion, usually during scheduled maintenance visits.

Impact of Car CALL BACKS on Indian Economy….
The CALL BACK results in negative impact on tangible as well in-tangible areas,
1. The reputation of manufacturer for quality is damaged to the large extent. The damage of reputation largely dependent on number of vehicles, reports of severe injury or death.
2. The damage to brand is also the result of CALL BACK. The brand damage effect & the extent is largely determined by two factors: media coverage and brand reputation prior to the recall.
The brand damage is also co-related with numerous injuries or deaths.
3. The brand reputation’s effect on consumer reaction to a recall is reflected in used vehicle prices.
4. The car CALL BACK have been a standard operating procedure in the West, but are a relatively recent phenomena in India. Hence currently no data available for Indian car market which will provide impact on tangible parameters like impact on market share, market growth.
However from data available from West we can draw a conclusion the larger impact of car CALL BACK on market share of company.
e. g. In USA, researchers estimated, Toyota’s market share was reduced by 0.007% each time the media covered the CALL BACK. In the research in West found, recalls decreases the market share of a low reputation automaker by 1.6%, while a high-reputation automaker’s by 2.9%.
5. The economic losses to the manufactures is enormous because of fine when CALL BACK is associated with violation of regulations/laws.
e. g. The costs associated with GM’s record-shattering recalls are expected to be approx. $35 million fine.
The car CALL BACK will impact negatively on DEMAND, which will result in reduction in current employment generation, no new employment getting generated as well overall reduction in contribution to economic growth.