Joining the race of car recall is Maruti Suzuki (Suzuki Motor Corp has 54.2 percent stake). The biggest carmaker in India is heading to call back 100,000 cars of hatchback model A-Star from the Indian market. The reason cited is to replace a faulty fuel pump gasket, which could potentially lead to fuel leaks. The company in a statement said,
The car recall belongs to Aug 2009 lots. In November 2009, we came across an anomaly reported in the fuel tank in some of the vehicles and by December 2009, we started contacting the customers through letters
The company further says the recall actually began in November, but did not disclose the move until late February. This latest development comes at a time when quality related concerns is already gripping the auto industry with recall from Toyota and Honda already in the bandwagon.
A-Star being a popular model in Europe, Maruti had made it a point to apprise the European regulatory authorities about the recall, but the question remains! Why Maruti did not make this disclosure in India. Maruti says the recall will have very little effect on the company, but the impact was felt elsewhere. The investors packed Maruti’s stock to an all time low at 3 percent after the recall announcement.
Maruti being a leader in car market in India have never bullied on their stand, but from the Reputation management point of view had they disclosed the recall earlier, the investor would not have panicked as it reflected on the share market. Secondly there will be doubts about the way company handle information and disclose them to investors. Finally will this affect Maruti’s reputation or are they going to put up a better show than Honda and Toyota, have to wait and see how it takes shape.