In a market-driven economy, the actions of all stakeholders in the supply chain viz. manufacturers, importers, distributors, retailers etc [including in the e-commerce segment] are driven by age-old dictum ‘consumer is the king’. They are all expected to ensure that the consumers get access to goods at competitive/low price besides providing quality services.
On their part, successive governments have introduced reform measures during the last over three decades overarching focus being on removal of controls and liberalization. Additionally, 99% of the sectors have been opened to foreign investment to increase competition and bring more benefits to the consumers.
Yet, it is ironical that in their zeal to increase profits, manufacturers including multinational companies [MNCs] have resorted to ‘disingenuous’ ways to the detriment of millions of consumers. A real life experience of this writer with a leading [albeit MNC] brand in consumer durable will help illustrate.
In June 2014, I had purchased a HITACHI ‘Split AC’ [2 ton] with added feature ‘inverter’ [that promised lower electricity consumption when compared to other ACs without it] spending about Rs 60,000/-. After the first year which is normally covered by guarantee, I have been taking annual maintenance contract [AMC] from second year for Rs 5000/- every year involving cumulative spend of Rs 25,000/- over 5 years. This was essentially to insure us against any unexpected problem in functioning of the unit.
In February 2019 [3rd week], we faced ‘less cooling and starting problem’ with the said AC. We lodged a complaint. The technician from the authorized service center examined the unit on 25th Feb 2019 and determined that some parts in both the inner and outer unit needed to be replaced. Pursuant to the AMC, the company agreed to initiate necessary action for replacement.
After a long wait and persistent follow-up, the service centre informed that ‘since the parts are not available, the company can buy-back the unit by paying to us the depreciated value’. Taking into account the period it has been with us, they calculated that ‘the company would pay us a mere 20% of the purchase price or Rs 12,000/-‘. As percentage of our total investment Rs 85,000/- [60,000/- plus 25,000/- on AMC], the recovery is miniscule 14%.
On 10th April 2019, we took up the matter with the area service manager [Delhi] who sent a technician on the following day. He took pictures of the relevant portion in the outer unit. With this, the company appeared to be getting into action mode to replace the parts. But, that was not to be as on our calling [22nd April 2019], the manager too repeated the earlier reply viz. ‘since the parts are not available ……….’.
On April 24, 2019, I took up the matter with the MD of the company who arranged for the visit of an officer from the head office on April 26, 2019. After promising to revert on the same day, he too went into hibernation. When, we checked with the officer on April 28, 2019, shockingly, he too came up with the same reply ‘since the parts are not available ………….’
On the same day, I sent a mail apprising the MD on the above development seeking his intervention to resolve the issue. But, this time, there was no action, not even a reply.
There are many flaws in their actions. How come after initially confirming that the parts were on the way, suddenly the service centre took a U-turn? How come, the area service manager [ASM] after promising and even taking picture of the unit [purportedly to arrange for replacement of the part], finally say ‘NO’? How come, even the officer sent by MD repeated the same curt reply?
There is strong reason to doubt genuineness of the company’s claim or else why would the service center say ‘the part is not available’ without even taking the pictures of the unit, a procedure must for initiating replacement [as confirmed by ASM]. Why should MD go incommunicado if he has no eggs to grind?
Clearly, the company has a crafted game-plan to take the consumer for a ride. First, it declares that something has gone wrong with the original part. Second, when, it will go wrong – 2,3, 4 or 5 years after purchase – this is also determined by the company. Third, it also decides that the spare part is not available which in turn, leads to the inevitable i.e. offer of ‘buy-back at throwaway price. In short, the customer is confronted with a fait accompli!
HITACHI India has a policy of buying back the AC unit starting from the second year [after purchase] onward applying depreciation on a sliding scale. One may not quibble over this but only if the consumer has the freedom of choice. But, what if a decision is forced on him/her as has happened in the instant case?
The implications for tens of thousands of consumers who invest huge sums in buying the AC and thereafter recurring expense on AMC year-after-year are mind-boggling. In a matter of few years, the value embedded in it plunges to near zero even as he/she has to invest heavily in buying a new unit. Needless to say, his/her loss is corresponding gain of the company which rakes in a moolah.
Such brazen actions of leading MNC such as HITACHI not only make a mockery of adage ‘consumer is the king’ but go much beyond. It represents a typical case of ‘the supplier literally enslaving the consumer’.
A foreign company wanting to do business in India in the long-term can’t afford to ignore the dire need for servicing ‘existing’ customers over the life time of the asset. This is all the more for items in the ‘consumer durable’ segment. An entity which ignores this basic requirement will be doing so at its own peril.