Maruti Suzuki may cut partsmakers unable to pay for expansion

Article by Christian Andrei, on August 30, 2010

Amid the drop in auto production in India due to a parts shortage, Maruti Suzuki India Ltd. said that partsmakers that can´t pay for expansion could be cut. In an Aug. 23 interview, Chairman R.C. Bhargava said that in the absence of strong balance sheets and resources, partsmakers won´t be able to expand at the same rate as Maruti.

Bhargava revealed that suppliers have told to strengthen their balance sheets or run the risk of being dropped. Vehicle production has been adversely affected by the shortage of parts such as tires, bumpers, and batteries.

In fact, carmakers (including Suzuki Motor Corp. unit and Hyundai Motor Co.) have introduced waiting lists in India. Expansion has been difficult for makers of local components because of debt levels that are twice as high as Asian suppliers levels.

Vaishali Jajoo, an analyst with Mumbai-based Angel Broking, said that when one or two suppliers can´t deliver parts on time, it affects the entire supply chain.

Jajoo pointed out the urgency for Maruti to resolve this issue with suppliers. Maruti's stock has plunged by 21% in 2010, compared with a 4.6% gain in the benchmark Bombay Stock Exchange's Sensitive Index, or Sensex.

Topics: maruti, suzuki

If you liked the article, share on:


Login or Create new account to add a comment!


Mitsubishi is now officially part of the Renault-Nissan alliance after Nissan took over the Japanese car company recently. We know a lot has been happening in the car industry, but...
by - October 24, 2016
Driving the newest 2017 BMW 5-Series (G30), Clive Owen (Closer, Children of Men) returns to his role as “The Driver”. In this latest installment, what initially starts as a simple...
by - October 24, 2016
Many had wished that a Lamborghini Huracán Superleggera would somehow make a surprise debut at the recently held Paris Motor Show. Sadly, not a single Lamborghini appeared anywhere in sight....
by - October 24, 2016
Aston Martin and Red Bull Racing teamed up for the first time in creating what looks like one of the most ferocious beasts in history. The British car manufacturer has...
by - October 24, 2016
German premium carmaker Audi is reportedly planning to buy back around 25,000 Audi Q7 SUVs powered by its 3.0-liter V6 TDI engine in the United States. The buyback should compensate...
by - October 24, 2016