Maruti Suzuki wants suppliers to sell parts through its network
NEWDELHI: In its quest to improve dealer profitability, Maruti Suzuki India Ltd has created a royalty vertical in its spare parts department wherein the company will offer the option to its vendors such as tyre makers, engine oil suppliers and battery makers to sell their wares directly through authorised dealerships and service centres, said two people familiar with the matter.
In return, the country’s largest car maker would charge a certain amount as royalty from the suppliers, the people cited above said on condition of anonymity.
The initiative is expected to be a win-win for both parties as it would boost profitability at dealerships while offering an additional source of revenue to Maruti, the people said.
The Suzuki Motor Corp. unit expects dealer revenue from repairs and servicing to decline in the future, as the build quality of its cars improve. The latest initiative is therefore aimed at ensuring dealers receive additional revenue and stay profitable.
Dealers currently earn almost 70% of their profit from servicing vehicles.
“The quality of Maruti products have improved substantially over the last few years especially when the company ventured into the premium segment,” said the first person cited above. “With the introduction of new emission and safety norms from next year, the quality of products will further improve. So, the need to service vehicles would also further decline.”
The new vertical is led by Gaurav Sharma from Maruti’s accessories sourcing department, both the people said.
A spokesperson for Maruti Suzuki India Ltd declined to comment.
The latest step is considered as the second round of key initiatives at Maruti to boost dealer financials as it will add to the retailing muscle of its suppliers. The suppliers currently sell their products in the aftermarket through their exclusive or multi-brand dealerships.