Home / Companies / News /  Osamu Suzuki asks Maruti suppliers to built inventory fearing 2nd covid wave

NEW DELHI : Osamu Suzuki, chairman of Maruti Suzuki India Ltd’s Japanese parent, has urged parts suppliers to its Indian unit to boost output and build a sizeable inventory to meet demand from the carmaker even if a second wave of coronavirus infections sweeps through the country and disrupts production.

This is the first time in more than a decade that the 90-year-old patriarch of Suzuki Motor Corp. has personally reached out to Maruti’s vendors. A copy of the 17 June letter written by Suzuki was reviewed by Mint.

With India’s largest carmaker contributing more than 60% of Suzuki Motor’s profits, ensuring that Maruti Suzuki is prepared even if the pandemic conditions worsen is critical.

“The lockdown has been re-imposed in few cities (in India) and we are most concerned about the chaos/confusion again. Therefore, we request you to take necessary measures to be able to respond to production recovery plan after July and request you to build up enough inventories toward the preparation for the second wave of covid virus," Suzuki said, expressing concern about the developing coronavirus situation in India.

He was referring to the Tamil Nadu government’s decision earlier this week to re-impose a lockdown for 12 days, starting 19 June. The state houses factories of automakers, including Hyundai Motor India Ltd, Eicher Motors Ltd and Renault India Pvt. Ltd. Some of Maruti’s vendors are also based out of the state and the firm may face some impact on production.

“We at Maruti Suzuki also plan to build up the inventory of in-house manufactured parts and gear up ourselves to avoid the same furrow. I am very sorry for making the above request in a situation wherein everyone is passing through a tough time on account of corona impact but I would like to request you (to) carefully consider the situation, and seek your special cooperation," Suzuki said in the letter.

Mint reported on Thursday that Maruti Suzuki expects to produce more than 100,000 vehicles each month, starting July, sharply higher than the 3,714 vehicles it produced in May, on hopes that sales of affordable, entry-level hatchbacks will rebound on a faster revival in demand in semi-urban and rural markets.

Maruti is likely to produce 30,000-40,000 cars in June.

“In India, the spread of covid continues and it seems impossible to predict the end. In view of this, we are extremely worried about the serious impact of this on the Indian economy. Although such circumstances prevail, we would like to inform you that we plan to produce monthly production of 100,000 or more vehicles after July same as that of previous year," said the octogenarian.

A spokesperson for Maruti Suzuki declined to comment on a query sent by email.

“This letter from the chairman points towards the stress in the supplier ecosystem due to the pandemic. Maruti needed someone of Suzuki’s stature to assure suppliers to invest in ramping up output at a time the demand outlook for the industry is negative," said Avik Chattopadhyay, founder, Expereal, a brand consultancy firm.

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