Recall virus dims Maruti A-Star lustre
No. 1 Indian carmaker Maruti Suzuki’s recall of its best-selling A-Star vehicles may not cost the company much financially, but sure raises questions about the procedures followed by the company for disclosing such information to investors.
The company says the recall of 100,000 cars began in November, but did not disclose the move until late February.
Maruti told Reuters it had informed European regulatory authorities about the recall — the A-Star is popular in Europe — but was sketchy about why it did not make the disclosure in India.
The recall comes at a time when the auto industry is grappling with quality-control concerns.
Japanese automakers Toyota and Honda are reeling under mammoth recalls, stemming from sticky accelerator pedals and faulty brakes.
The A-Star’s problem is a faulty gasket that could potentially lead to fuel leaks.
Investors sent Maruti’s stock — one of the best performers in India over the past year — down more than 3 percent on Tuesday.
Should the company have disclosed the recall earlier, or are investors overreacting to what may eventually be a minor recall that the company quickly puts behind it without significant costs?
For now, we will have to wait and watch.