The truth about Mercedes India-2: Absence of regulation  

August 16, 2012

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

Yogesh Sapkale

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.