By on March 1, 2010

Last November, Suzuki received a fuel leakage complaint on three cars in Europe and one in India. Suzuki did what Suzuki was required to do: Send owners of the “A-Star” (A.K.A, Suzuki Alto, Nissan Pixo) an invitation to go to their dealer and have the fuel pump fixed. As usual, this story received next to no media attention. In the years BT (before Toyota,) who cared about a yet another recall?

That was then, this is AT. Today, someone said “Suzuki has a recall” on the floor of the New Delhi stock exchange. Holy cow!

The Maruti Suzuki stock dropped like a rock. Traders that found themselves on the wrong side of the deal complained immediately that the stock exchange should have been notified much earlier about such a significant development. Sound familiar? Miffed Maruti Suzki issued a statement clarifying that it had “no intention” of trying to hush up the affair. They claim that the reason they didn’t go public was that India doesn’t have a framework for recalls. Now that’s an interesting piece of information if you drive in India.

The Times of India reports that Maruti Suzuki didn’t inform the stock market regulator, Sebi, because they believed that the amount required to spend on the recall process would not have much impact on the company’s financials and wouldn’t impact on profitability.

Maruti Suzuki chairman R C Bhargava said “We are supposed to inform only if there is any significant amount involved.”

And because Bertel was slammed yesterday for making a calculation mistake behind the decimal point, I won’t fall into that trap and leave the conversion of Rupees and Indian numbering systems as an exercise to the dear reader (with a little help from Wikipedia.) Said R C Bhargava : “The upper limit for Maruti is around Rs 12 crore which is not large when we read it in relation to the company’s annual PBT amount of Rs 3000 crore. The amount is less than 0.4 percent of our PBT and would not make no difference to our price-to-earnings ratio.” All still with us?

After the money part was (hopefully) settled, Bhargava blasted his critics. Three cars in Europe and one in India, “and this out of the 70,000 units we sold in Europe and about 30,000 units in India. As a responsible company we decided to recall all the cars. We took special care to ensure the problem does not come across on any other car anywhere.”

Car companies can get really touchy about recalls these days. I wonder why?

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5 Comments on “Maruti Suzuki Gets Touchy...”

  • avatar

    I think the Toyota debacle has created an opportunity for an enterprising car company to create a new way of dealing with consumer concerns. Mark Reuss, at the Chicago auto show, said that after he had helped out some customers who’d contacted him via Facebook or Twitter (some social networking site – where companies are groping in the dark to reach customers) that GM set up an internal web site with tools for all GM employees to help customers. Is it bullshit? Maybe, but as I said, if a car company started a new initiative with a functioning system for listening to and responding to consumer issues that would be the best way they can take advantage of Toyota’s problems.

    Reuss used a term in his speech, “customer for life” describing the reaction of consumers that he’d reached out to and solved their problems. I bought, new, an early ’90s Chrysler minivan, with the POS 604 transmission, which Chrysler replaced for free twice and then a third time, when we had to pay the for the labor, but not the rebuilt tranny. On one hand they made a crappy transmission. On the other hand they did take extraordinary measures to keep us happy and fix the car.

    I’ve always contended that when a customer has a problem with a product, if they handle the complaint well they have a great opportunity to foster tremendous loyalty.

    Years ago I bought a conrad-johnson preamp for my stereo, used. When the warm-up muting relay (it has vacuum tubes) failed, I sent it to the company for repairs. They charged me a reasonable fee. What they didn’t charge me for, though, was for a full upgrade to the most recent circuitry, as well as replacing the chrome plated RCA connectors with better gold plated ones. It was a $180 freebie. Not only did it make me very loyal to conrad-johnson, that freebie resulted in you reading about the company in this comment.

    It’s a truism in business that an unhappy customer will tell more people bad stuff about your business than a satisfied customer will tell of their praise. Unhappy customers can be very damaging to a business. Flipping them, though, can often make them brand advocates. If you address their concerns, you can go a long way towards flipping an unhappy customer into a customer for life.

  • avatar

    Clearly a government plot designed to favor Tata over the foreign competition, no?

    Regarding the regulatory filings, the amount of money involved in executing a recall (USD $2.6 million) did not meet the threshold as a percentage of pre-tax profit to be reported to the exchange or shareholders.

  • avatar

    Clearly a government plot designed to favor Tata over the foreign competition, no?
    This argument would hold water if Indian govt. hadn’t owned 49% of Maruthi.
    Would NHTSA favor Ford over GM?


  • avatar

    Anyone want to take bets that the person who yelled on the floor of the exchange was an employee of someone who held a very large short position?

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