Maruti Suzuki India Limited (MSIL) is on a roll. The company has registered highest ever monthly sales in July 2016, up 12.7% to 1,37,116 units. At the same time, the company has announced a hike in prices by INR 20,000.
With sales on the rise, Maruti Suzuki India are ordering more from their vendor partners and suppliers than ever before. In such a situation, when demand is on the rise, the company does not want to lose out on quality. In order to keep quality under check, the company demands zero defect policy from its suppliers.
The company’s Gujarat plant will cater to export markets where high-quality standards are demanded and for this, vendors or part suppliers have been told to spruce up quality of spares supplied. Suppliers failing to meet the zero defect policy of the company could find contracts cancelled. This is in keeping with company efforts to do away with costly vehicle recalls and cater to the high demands by buyers in international markets.
For Gujarat plant, MSIL has entered into an agreement with Suzuki Motor Corp. Suzuki Motors will produce vehicles and sell these to MSIL at cost price. Production is slated to commence in February 2017 with initial capacity of 250,000 units per annum to be increased to 1.5 million units by 2030.
MSIL has had to contend with a number of recalls in the past with over 2 million units recalled in the past 4 years. 1.01 million units were recalled in 2015 while in first five months of this year, 700,000 units have been recalled all of which have proved costly and time-consuming for the company.
MSIL has entered into an agreement with its vendors with the final onus of a vehicle recall lying with suppliers. If the component is found to be faulty and if it leads to vehicle recall, the supplier will bear all expenses.