Suzuki calls for closer ties with Maruti to save costs

Osamu Suzuki, SMC chairman, has pressed for closer working ties in divisions like finance, production and IT with domestic car market leader Maruti, in which it owns a 54.21% stake. Speaking at Maruti’s board meeting on January 25, Suzuki told top Maruti officials that the two companies need to increase communication, and not keep it restricted to engineering and R&D functions. Leverage on common sourcing and other functions will reduce duplication of effort and save on costs.

“He said (Osamu Suzuki) that both companies need to work much more closely together, given that Maruti’s role is much more important now in the total scheme of things. The idea is to have discussions together on things like sourcing and finance. Currently, prices paid by the two companies are different, but a larger scale may help us get better rates from suppliers,” a source close to the development said.

The source added that common sourcing may not be possible across all components given logistic costs and the different requirement of markets for things like steel, but in some components there may be significant cost benefits for Maruti as well.

Suzuki’s emphasis on closer ties follows Maruti’s increased prominence in Suzuki’s global operations — Maruti now accounts 40% of its global sales and a fourth of its revenues. Additionally, analysts added that

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