Counterfeit and substandard automobile parts impede the growth of the industry and risks passengers safety. Around 30-40% of auto components sold are fake. The automobile industry loses an estimated 30% of its revenue due to Intellectual Property related crime. With the recent slump in the automobile sector, the grey market of automobile parts has been further detrimental to revenue and growth. It has discouraged Original Equipment Manufacturers (OEMs) and Aftermarket Suppliers, which are the generic equivalents at a cheaper cost. Studies have estimated this loss to be around one lakh crores INR for authentic spare parts manufacturers and suppliers. The spare parts from authorized suppliers often come with an extended warranty, unlike the counterfeit spare parts. The counterfeit automotive spare parts reduce the performance standards and do not adhere to safety checks.
Counterfeit in the auto components includes one or more of the following practices:
- Fraudulent means of copying and manufacturing a patented, copyrighted, or trademarked product
- Altering an original product, to sell it for a lower price, without authorization
- Deceiving customers by misrepresenting a product’s properties
Why counterfeit thrives in the Automobile sector?
- Intellectual Property laws: The Copyright Act, 1957, The Patents Act 1970, The Designs Act 2000, The Geographical Indications of Goods (Registration and Protection) Act 1999, The Customs Act, 1962 provide safeguards against infringement of intellectual properties. India has made significant changes to its IP laws in the recent past, yet we have a long way to go. We need more randomized raids to arrest counterfeiting and fraudulent practices that threaten IP rights.
- Access to technology: The widespread availability of technology has enabled counterfeiters to operate in sophisticated ways. Thus, they avoid detection through ingenious means. They operate under the radar.
- Increased Globalization: Open borders encourage the free-flowing of counterfeit parts across countries, thereby increasing the market coverage.
- Organized crime: Automobile parts are in high demand, and hence the parallel grey market runs successfully. Because of the high yields, sales on counterfeit automobile parts, it has become a source of income for organized crime.
- Lack of awareness: Counterfeit manufacturers operate under the guise of the original brand. It is impossible for customers to spot a fake, especially in the case of items that can be easily duplicated. These include break-pads, suspensions, filters, and more.
Why we need to act NOW?
- Cost to the exchequer: The absence of legitimate paperwork, the sale proceeds of counterfeit products go unchecked. Loss of direct and indirect taxes through such gains compromises the functioning of the economy.
- Cost of substandard quality: Fake automotive parts reduce the overall performance standards of a vehicle. The lifetime cost of maintenance and ownership of vehicles also rises due to the usage of counterfeit automobile parts.
- Safety: Studies have shown that fitting counterfeit brake pads result in an increase of 36% to 66% in braking distance. Counterfeit products often follow the ‘one fit for all’ rule.
Thus, they do not consider the model specifications. Counterfeit manufacturers of automobile parts flout safety regulations.
- Unique identification markers: At Acviss, we assist and integrate into products, unique overt, and covert markers, including holograms and barcodes. Our services will further help the government’s policy draft on making microdots compulsory for automotive parts. With our markers, we can assist you in staying ahead of the game.
- Blockchain and serialization: The complex supply chain of automotive parts makes it difficult for companies to track their products. Our multi-ledger blockchain and serialization provide real-time data to companies. Any gaps in the supply chain can be identified and rectified.
- Authenticity Verification: Acviss’s anti-counterfeiting technology, while complex for counterfeiters to replicate, is incredibly simple for a consumer to use. Our proprietary computer vision algorithm helps consumers verify all complex, unique random markers for authenticity verification of a product in just a few seconds.
- Awareness campaigns: We offer customized solutions for brands to build awareness amongst their customers on possible sources of counterfeit products. We assist in lobbying and educational programs for law enforcement authorities to tackle the menace of counterfeit products effectively.
- Warranty Management: Our warranty management solutions provide automobile manufacturers and OEMs a complete view of a product’s manufacturing and warranty details. We provide multiple vendor access and real-time customer insights and alerts to ease warranty-related pain points.