Recall virus dims Maruti A-Star lustre

February 23, 2010

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.

Maruti A-StarThe 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.

[Full Coverage: Global recall]

3 comments

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When did Maruti make 100,000 A-Stars ?

Posted by Samprem | Report as abusive

I bougth A-star in Dec’09.There alway been pickup problem.it stop running at even at 2nd gear in a slope road where other cars run in 3rd gear. Does it relates to faulty gasket? if so please advise remedy,

Posted by nyai | Report as abusive

@Samprem,
I too own A-star bought in Jan’09. My dealer at Nagpur replaced the gasket in question about a month back saying they have received an internal circular for replacing the same. I have been given understanding by the dealer that cars running with faulty gasket would have fuel leak, if it’s loaded upto brim, and the car would obviously give poor mileage. They went on to add that they’ve detected this problem only in 1-2 cars and this work out is being done only as a precautionary measure. The faulty gasket replacement exercise takes some time as the fuel tank is removed. Prior to the gasket replacement I was getting FE of 17.65 in city (AC off) and highways 23.85 (AC off). So i guess I had no leak issue. I think A-star gives good mileage post 5000 km run on the odo and 2nd servicing.

Probably your pickup problem is related with something else. Have it checked at MASS.

Thanks. Please do drive safely.

Posted by raj2805 | Report as abusive