ISUZU EAST AFRICA TAKES THE FIGHT AGAINST COUNTERFEIT GOODS HEAD ON

Aware of the dangers that are posed by the sale of fake parts to unsuspecting motorists, leading motor vehicle assembler maps out strategies on how to curb the vice

By Catherine Kuria

Counterfeit and grey market automotive components are a thriving concern and a costly problem in the automotive industry. Besides creating monetary losses for legitimate manufacturers, the use of poorly manufactured counterfeit, fake and knockoff parts increases costs to the consumer due to reduced life, failures and breakdowns. This is because they don’t hold up or perform like genuine parts.

Moreover, these parts are typically not built to the original equipment manufacturer (OEM) specifications to deliver consistent and reliable performance. They can lead to other mechanical problems and system breakdowns. Counterfeit parts not only harm suppliers and rob them of valuable intellectual property rights; they also pose a threat to motorists and repair technicians who unknowingly install inferior and potentially dangerous parts on their vehicles.

It is extremely difficult to quantify the economic and industry-wide costs because of the illicit nature of counterfeiting. In light of this, players in the automotive industry have joined the bandwagon in fighting this vice. Isuzu East Africa has not been left behind.

About Isuzu EA

Isuzu East Africa (formerly General Motors East Africa) is the leading motor vehicle assembler in East Africa, selling a wide range of Isuzu vehicles. The company started out from a solid foundation established by the Isuzu brand’s automotive excellence over the last 40 years. The brand has attained strong leadership in the market, selling over 80,000 units since the first Isuzu vehicle rolled out of its Nairobi assembly plant in 1977.

These vehicles have over the years successfully met the transport needs of Isuzu customers in diverse sectors of the economy: ranging from education, agriculture, construction, public service vehicles (PSVs) and security. Isuzu EA has over 15 models in its commercial and passenger vehicle line-up. These comprise light and heavy-duty trucks, mid-sized to high capacity buses, single and double cab pickups and an SUV, the Isuzu mu-X.

The Isuzu brand has dominated the new vehicle segment over the last seven years since 2012. Mrs. Rita Kavashe, the Managing Director, Isuzu East Africa says: “In 2018, we had a strong finish to the year and were able to grow our market share and maintain industry leadership for the seventh year in a row. We attained a 39.1% market share, thanks to the outstanding support of our customers. This is a testimony to customer confidence in our vehicles and excellent after sales service.”

Isuzu EA is focused on offering innovative solutions to meet the diverse transport needs of its customers. Beyond its robust and outstanding products, it is keen on providing great value as it builds lasting and valuable relationships with all its business stakeholders.

“We have invested in the capacity of our teams to tackle emerging customer requirements through local and international trainings,” Mrs. Kavashe notes. “We’ve also formulated an innovation team that explores new trends and developments in the auto industry for local application and adoption,” she adds.

Through its engineering department and service trainers, it works closely with its local suppliers to develop its technical capacity to meet international standards and support its product quality objectives.

 The brunt of counterfeit products

This illicit trade is quite prevalent in our country. According to a research by the company, only 23% of spare parts and accessories in the market can be said to be genuine. Using the estimate that about 77% of spare parts are counterfeits in the market, this would constitute nearly 80% of potential sales that are lost to these non-genuine products.

Collectively as an industry and based on the company’s own calculations from its parts business, the Kenyan motor industry could be losing as much as Ksh 600 million per month (or Kshs. 7.2billion per year) due to the illicit business. Many manufacturers don’t have the engineering expertise, the understanding of the part’s original design or the quality manufacturing processes to match the exacting performance specifications of an original equipment component. They cannot match the safety, reliability or durability of the original part.

“To keep costs attractively low, unapproved parts use cheaper materials and lower grades of metals that can lead to component failures. If untrained labour is used, error-prone manufacturing can result,” notes Mrs. Kavashe. Quality standards simply do not exist at some low-cost manufacturing facilities.

The greatest cost of counterfeiting and intellectual property rights (IPR) violations go beyond lost sales and manufacturing. It can result to damage of a legitimate company’s good name and honour. In addition to that, it can also lead to product liability claims.

 How customers can distinguish Isuzu EA products from the counterfeits

Often, motorists cannot tell a genuine part from a counterfeit simply by looking or touching it. Criminals involved in this illicit trade have mastered the art of crafting knockoffs to look like the original brand. Some have even gone the extra mile of coming up with a counterfeit trademark. A counterfeit trademark is a mark that is identical or substantially indistinguishable with the registered trademark. Counterfeiters steal these trademarks to mark their fake products because they know buyers want the quality products marked by prestigious and original trademarks.

Mrs. Kavashe says that the only way to be sure is to buy from established auto manufacturers or their authorized dealerships. Isuzu East Africa is working closely with its dealers to enlighten its customers on the need to buy only parts stocked by it to ensure optimum performance of their vehicles.

“We have also conducted customer education and public awareness campaigns targeting motorists which have gone a long way in demonstrating the value of genuine spare parts in vehicles in terms of maintenance costs and safety. The trade-offs expected when one buys a counterfeit can be very costly. Buying cheap is often expensive in the long run,” she emphasizes.

 Curbing this unlawful trade

The multi- sectoral team comprising the Anti Counterfeit Agency, the Kenya Bureau of Standards and the Kenya Revenue Authority in conjunction with the Kenya Association of Manufacturers (KAM) are actively playing a critical role in curbing this illicit trade. KAM and its partners for instance is doing a commendable job highlighting this illegal trade in diverse forums and advocating for progressive policies to address it.

“One legislative measure that could have considerable impact is for the government to provide tax rebates for motor vehicle assemblers such as ourselves in order to bring down the costs of genuine spare parts, making them more competitive against the counterfeits,” observes Mrs. Kavashe .

All in all, the government needs to work closely with genuine spare parts manufacturers in formulating tighter regulatory and supervisory frameworks to stem the tide of counterfeit imports into the country. It may need to come up with regulations akin to the ones that have been set in place on money laundering to tackle this menace.

However, law enforcement agencies can only investigate the offenses they know about. So, it’s up to all the players in the industry to let them know about suspicious products. The real key to fighting counterfeit automotive parts is awareness throughout the supply chain and reporting suspicious products.