During this time of downturn when waning car sales is hurting the car industry, India’s largest car manufacturer, Maruti Suzuki, reports a saving of Rs 175 Crore through value engineering.
The chairman of Maruti Suzuki Ltd., Mr. R. C. Bhargava said, “With the help of value engineering, we had saved around Rs 42.5 Crore in 2005-06 fiscal, Rs 58 Crore in 2006-07, and Rs 75 Crore in 2007-08.”
He also stated that the company had taken various measures to save on costs through various engineering initiatives. In the first year when the company made a saving of Rs 42.5 Crore, the company encouraged its vendors to reduce cost and share the profit margins in the ratio of 70:30. Later in the following year, the same initiative was taken but with a higher ratio of 50:50. In the third year the ratio is reversed to 30:70.
Now it is said that the company has decided to absorb the whole profit margin. In return, the company rewards the vendors cost-wise.
According to Bhargava, Maruti is taking cost-cutting measures for years. This is why today in the time of slow moving car market, Maruti managed to make such a huge saving.