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Maruti Asks Component Suppliers to Decrease Costs

By Motortrend India Staff   |   09 May,2010

Maruti Suzuki has asked its 200-odd vendors to cut their component costs by three per cent across the board in this financial year.

Maruti Suzuki can then save around Rs 700 crore in a year. With net sales of around Rs 29,000 crore, nearly 77 per cent of the components are bought from its vendors. The saving works out to Rs 7,000 for each car at last year's production level of a million cars annually.

Speaking a day after attending the global vendor and dealer conference of Suzuki in Macau and Hong Kong, R C Bhargava, chairman, said: "Fuel efficiency has always been the USP (unique selling proposition) of Suzuki and the R&D (research and development department) in the company will be working on engines which will offer mileage beyond 20 km. With global emission norms getting tougher, you have to make engines with more fuel efficiency, as well as lower CO2," added Bhargava.

He said Suzuki would, in due course, launch its big car, Kizashi, expected to take on the Honda Accord and Toyota Camry, with a 2.4-litre engine. The car was launched in the US and Japan only last year.

Bhargava also ruled out any plan to launch a new 800cc car to take on Hyundai's proposed small car, which is expected to be in the same range or as a replacement to the Maruti 800cc. Says Bhargava "We have decided that we will not come with a Nano segment car or with any new model in 800cc. Our base-level entry model will be the 1,000cc. We believe consumers want a value for money car but also want performance and the combination can only be given from the 1,000cc range. Also, smaller the engine, the more difficult it is to meet growing stricter emission norms."

Bharagava also ruled out speculation on Maruti using Volkswagen's plant in Chakan, near Pune, to manufacture its cars on a contract basis to meet its capacity constraint.

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