The Indian auto industry voluntarily recalled 376,536 vehicles in 2021 till the month of August. This number is more than double of 2019.
Leading vehicle manufacturers in India like Maruti Suzuki India and Hyundai Motor India, among many others, are voluntarily recalling their vehicles. The recalls in 2022 essentially have been due to airbags, incorrect fitment parts, malfunctioning fuel bags, and quality checks and airbags that vendors might have missed.
While the figures and such news seem alarming, the auto experts view this as comforting and reassuring. Reason? Today, consumers are more aware and educated. Thus, original equipment manufacturers, aka OEMs, have become proactive while showcasing huge caution to keep safety in mind.
Traceability is emerging as a robust solution to this problem.
Tracking and tracing each unit comprising a sub-system in a car is known as traceability in the automotive industry.
The concept of traceability in the automotive industry is not new and has been around on the scene in one form or the other. However, now the automotive industry experts are talking about it in loud voices. Read on to know why it is creating waves now and how auto companies can ensure component-level traceability.
Understanding Traceability in Automotive Industry
To understand traceability in the automotive industry, let’s look at what it refers to. Traceability has been defined as a process where the genealogy of parts and subassemblies associated with a specific type of vehicle or even a range of vehicles is documented.
Earlier, the automotive industry tracked and traced various units of vehicles with direct marking on either mechanical or electronic components. The marking was done using 1D or 2D radio-frequency identification (RFID) or barcodes. Traceability was introduced as a defensive method to reduce vehicle recalls because recalls are not only expensive but also cost brand reputation.
Now things are different. Now traceability is more of a compliance mandate and there have been significant fines and penalties associated with non-compliance. Additionally, the Central Motor Vehicles Rules – the fifth amendment and the Union Road Transport and Ministry of Highway, announced a new policy. According to this policy, automakers must follow the quality standards stringently. Non-compliance with the policy can result in a penalty. The maximum penalty an automaker would have to pay in case of a mandatory recall of 100,000 four-wheelers, 600,000 two-wheelers, and 300,000 three-wheelers are Rs 1 crore.
Manufacturers are now strongly relying on traceability to bridge the gaps in the value chain and meet the end users’ safety requirements. Consumers have become more aware and educated. As a result, auto manufacturers have become stricter in abiding by the safety concerns in their vehicles and have welcomed the new recall policy from the government with open arms.
Benefits of Traceability in the Automotive Industry
As for the importance of traceability in the automotive industry, here are a few of the benefits.
Traceability helps auto manufacturers
- Reduce the impact of product recalls and returns
- Review their existing products, materials, and even processes
- Cut down on further chances of recalls in the future
Benefits of Auto Parts Tracking
Auto parts tracking involves monitoring and managing automotive components throughout their entire lifecycle — from procurement and storage to distribution and delivery. This system plays a vital role in ensuring operational efficiency, cost savings, and customer satisfaction across the automotive supply chain.
1. Better Inventory Management
Auto parts tracking provides real-time visibility into inventory levels, helping businesses maintain the right balance between supply and demand. It minimizes the risk of overstocking or stockouts, ensuring parts are available when needed without locking up unnecessary capital.
2. Enhanced Accuracy in Operations
Tracking systems significantly reduce human errors in order processing, picking, and stock counts. Automated barcode or RFID tracking ensures precise information on part availability and location, improving data reliability and operational control.
3. Improved Operational Efficiency
With accurate tracking, employees spend less time searching for parts and more time on productive tasks. This streamlined process enhances workflow efficiency, reduces downtime, and supports faster service or production turnaround.
4. Cost Reduction and Higher Profitability
Accurate tracking reduces waste, avoids duplicate orders, and prevents unnecessary inventory buildup. These factors lower overall operating costs and improve profitability by aligning purchases and storage with real-time demand.
5. Stronger Traceability and Compliance
Auto parts tracking maintains detailed records of each component used in manufacturing or service. This ensures better traceability for quality assurance and regulatory compliance. In cases of recalls or warranty claims, quick access to part history helps avoid costly disruptions.
6. Smarter Supplier Management
Tracking systems make it easier to monitor parts from different suppliers. Businesses can compare supplier performance, delivery timelines, and pricing, leading to improved contract management and stronger supplier relationships.
7. Higher Customer Satisfaction
Accurate, real-time tracking improves communication with customers regarding order status, availability, and delivery schedules. Faster and more reliable service enhances customer trust and satisfaction, leading to long-term loyalty.
How can the Automotive Industry Mitigate Third-party Risks?
Managing and monitoring entire third-party suppliers and vendors can be both time-consuming and costly. Any lapse in quality by any vendor or provider can be risky. The risk involves excessive recalls and component inconsistencies that could be dangerous for the customers and users. To ensure component traceability and mitigate third-party risks, manufacturers must implement end-to-end traceability for vendors and suppliers. And with new laws in place, Indian auto companies have made it their business priority.
With a comprehensive traceability solution including a vendor management solution and a warehouse management solution,
companies can –
- Leverage automation to improve operational efficiency and enable automatic GRN processes
- Use printing and sensing technology to achieve accuracy in material picking
- Reduce the occurrence of manual errors
- Accurately track material from vendors and enable back traceability
- Get data-driven insights into product tracking – without any human intervention
With end-to-end traceability, companies can mitigate third-party risks by focusing on the demands of their customers, the care and safety of their employees, and the risks involved in cash flow.
Case Study: How Maruti Suzuki Reduced Recalls with Traceability
Overview
This case study highlights the strategies used by Maruti Suzuki, one of India’s leading automobile manufacturers, to enhance product quality and safety through a comprehensive traceability system.
Implementation of Traceability System
Maruti Suzuki introduced an advanced traceability system that enables real-time tracking of every component throughout the vehicle production process. This system ensures visibility across the entire supply chain — from suppliers to assembly lines.
Using Data Analysis to Prevent Defects
By leveraging data analytics and automation technologies, the company was able to identify potential issues as they occurred. This real-time monitoring minimized the likelihood of manufacturing defects, allowing preventive action before vehicles reached customers.
Overcoming Implementation Challenges
During the transition, Maruti Suzuki faced challenges such as integrating new traceability tools with existing systems and training employees to use them effectively. The company addressed these issues through continuous training, technical support, and strong leadership alignment.
Cross-Department Collaboration
The success of this initiative relied heavily on collaboration between departments — including engineering, production, and quality assurance. This cross-functional teamwork ensured seamless system integration and consistent quality control across all stages of manufacturing.
Results and Impact
As a result of these efforts, Maruti Suzuki achieved a significant reduction in product recalls, improved production accuracy, and enhanced operational transparency. The initiative also increased customer trust and reinforced Maruti Suzuki’s reputation for reliability and safety in the competitive automotive market.
Wrapping Up
QodeNext, with its end-to-end traceability solutions, is well-positioned to help Indian auto manufacturers mitigate their third-party risks and help in reducing vehicle recalls.
QodeNext has a customized approach that includes an exhaustive deep dive into the current scenario. And based on that, they design a solution tailored to their customer’s demands and needs. The solutions are not only implemented but also maintained by their technical team of experts in-house.
Connect with us to know more.
FAQ: Traceability in the Indian Automotive Industry
1. What is component traceability in the automotive industry?
Answer: Component traceability in the automotive industry involves tracking and documenting the origin, movement, and quality of parts and subassemblies in a vehicle. Using technologies like RFID and barcodes, it ensures safety, reduces recalls, and complies with Indian regulations like the Central Motor Vehicles Rules.
2. How does traceability reduce vehicle recalls in India?
Answer: Traceability identifies defective parts early, enabling targeted recalls instead of mass ones. For example, it helped Indian manufacturers like Maruti Suzuki address airbag issues, cutting recall costs and improving safety per 2025 SIAM data.
3. Why is third-party risk management important for auto manufacturers?
Answer: Third-party risk management ensures vendors meet quality and safety standards, reducing risks like faulty components or non-compliance with India’s recall policies. It protects brand reputation and avoids penalties up to ₹1 crore.
4. What are the benefits of traceability solutions for Indian auto companies?
Answer: Traceability solutions reduce recalls, improve quality control, and enhance operational efficiency. They enable accurate vendor tracking, minimize manual errors, and ensure compliance with Indian safety regulations, saving costs and boosting customer trust.
5. How can auto companies implement end-to-end traceability?
Answer: Auto companies can implement traceability using automation, RFID, and warehouse management systems. QodeNext’s solutions offer real-time tracking, data-driven insights, and vendor integration to ensure compliance and safety in India’s automotive sector.
6. What are the penalties for non-compliance with India’s vehicle recall policies?
Answer: Under the Central Motor Vehicles Rules (2022 amendment), non-compliance with recall policies can lead to fines up to ₹1 crore for recalls involving 100,000 four-wheelers, 600,000 two-wheelers, or 300,000 three-wheelers.
7. What technologies are used for component traceability in India?
Answer: Indian auto manufacturers use RFID, 2D barcodes, and IoT sensors for component traceability. These technologies enable real-time tracking of parts, ensuring quality and compliance with regulations like the Central Motor Vehicles Rules.
8. How much does implementing traceability solutions cost for auto companies?
Answer: Costs vary based on scale, but solutions like QodeNext’s start with affordable automation tools for SMEs, ranging from ₹5-20 lakh annually. They reduce recall expenses, offering long-term savings for Indian manufacturers.
9. How does traceability improve vendor management in the automotive sector?
Answer: Traceability streamlines vendor management by tracking supplier parts, ensuring quality, and flagging inconsistencies. It helps Indian auto companies maintain reliable supply chains and meet safety standards efficiently.
10. Can traceability solutions help comply with India’s BIS standards?
Answer: Yes, traceability solutions ensure parts meet Bureau of Indian Standards (BIS) quality requirements by tracking their origin and testing data, helping manufacturers avoid penalties and maintain compliance.
