“ Our Policy is to be present in most of the

segments, but our focus will be small car.

This country for a good number of years will be a

small car market because five million two-
wheelers are sold and only six lakh cars.

You have got 35-40 million two-wheelers on the

road”
• Maruti Udyog a joint venture between Suzuki of
Japan (26% stake) and the Indian government in
1981

• 10 basic model and more than 50 variants

• 3 out of top five selling car model in India are

Maruti Product (M 800, Zen, Alto)

• Annual production capacity 5,00,000 with 54%

market share
 Road to Maruti 800
• Indian govt. preferred
* Japan for technology & capabilities in small car
* Suzuki over top three player in japan Toyota,Nissan,Honda

• Govt. Offered various concession for the production for

M 800 so was priced attractively

• First M800 in 1983 with INR 40,000 tagged as ` people car`

from Gurgaon

• Dominated the market with 85% small car share

upto 1990
 Disputes and price paid
• In 1992 Suzuki increased its equity to 50%

• 1993 conflict occured when Suzuki proposed an expansion plan of

Rs. 22 billion which government denied accusing of inflating the
Project cost

• Transfer of gear box technolgy was held and finaly govt agreed

• 1990 dispute over management control and Bhargava`s sucessor

* Suzuki decided to go to International court of arbitration
* As a mutal concern Bhaskarudu steeped down two years before and
Mr. Khattar appointed in 2000
  Realized the profile of Indian car market have changed
B  B segment was growing faster than small car segment
R (M 800)
I
 Leaving the basic 800 model unchanged for over 15
N
G years was a blunder
I
N Decided to make up for the loss time with :-
G * Launching new models every 6-12 month
G * Operational efficiency & marketing effectiveness )
L (i) Product Development
O (ii) Vendor Management
R (iii) Manufacturing
Y * Brand Building
* Diversification
B
A
C
K
 Cont…..
• Dispute delayed the introduction of new models
• Lossed the commanding market share from 85% to 65%

• Global players started to enter India with deeper pockets

* 1998 compétions from Hundai (Santro)
* 1998 – Matiz fom Daewoo motors
* 1999 – Indica from Tata motors

• All these models began to offer stiff competition to Maruti

 The Launch Story
• 1999 – two new models launched
* Boleno for premium segment
* Wagon R as multi utility vechile

• 2000 – Alto (Premium small car) especially for export market

* two versions Alto LX and Alto VX
* two versions in seven colours
* exported to more than 12 countries
* Highest selling small car in Netherland

2001- Launched Versa, the first multipurpose vechile

 The Launch Story
Model Price Range ( in Rs.) No. of Variants

Maruti 800 Rs. (.2mn - .23mn) 3

Maruti Omni Rs. (.22mn - .26mn) 5

Maruti Alto Rs. (.29mn - .37mn) 6

Zen Rs. (.33mn - .48mn) 12

Gypsy Rs. (.45mn - .47mn) 4

WagonR Rs. (.32mn - .46mn) 9

Versa Rs. (.4mn - .49mn) 6

Maruti esteem Rs (.47mn - .61mn) 14

Baleno Rs (.65mn - .70mn) 4

Maruti Grand Vitara Above Rs. (1mn) -

 Product Development
• Product development is a capital intensive process
• Have to introduce new models to face competition

• Maruti reduced the cost on new models:

* In-house development
* sourcing of dies, welding jigs and other eqipment
* introducing flexible welding lines that could be used for multiple models
* reduced the number of platforms – shared the same engine & critical
components (M 800 & Alto Lx) (Alto VX & Wagon R )
* Standardized the engine

• Discontinued Maruti 1000 and Gypsy 1000

 Vendor Management
• Implemented Vendor rating for timely feedback to vendors

• Cross functional team set up to solve quality problems

• Web initiaives helped Maruti to bring down procurement time and

cost

• Reduced the number of suppliers from 370 to 299 in 2003

• Instead of assembling component from many suppliers,started

picking from Tier-1 suppliers, who assemble supplies from another
* Better co-ordination,smaller inventories, lower costs
 Cont…
• Maruti paid its vendor within 7 days of receipt of materials

• Encouarged the vendors to build warehouse near Gurgaon

• System to tell its vendor cmponents requirement within 15

days

• Connected its vendor through Internet information system

• E-buying in consumables cut procurement cost

• Maruti Started 4 four related business
* Corporate lease and fleet management (2001)
* Buying and selling of used cars(2001)
* Auto Finance (2002)
* Car Insurance (2002)

Corporate lease and fleet management

In this business there were 4 key partners – Fiancer,dealer,insurer,
car rental agency.
Brand management,business development,maintenance,risk
undertaking and fleet management operations were
responsibility of Maruti
Fiancer- Conducted initial credit assessmant, provided funding,
took residual risk and responsible for collection
Dealer- maintained the car and provided other value added services
such as valets and emergency assistance
Insurer- Value risk undertaking
Car Rental Agency- provided replacement cars if & when necessary
 Buying and Selling Used Car
• Used car addressed the need of two segments
* Two-wheeler vehicle owner aspiring to own a car
* Existing car owners who want to upgrade their cars

• Used car market in India was 1.3 times the size of market of new cars
• Used car market was a unorganised sector, resulting poor realiability &
transperecy
• Maruti entered this business with 12 `True Value` outlets in 11 cities

• Maruti Played an advisory role in conducting technical evaluation,

estimating the refurbishment cost and providing certification and
warranty to the buyer of the pre-ownwed car
• The warranty was covered by an arrangemant with insurance companies
 Auto finance
Auto Finance (2002)
• In past Auto finance was through direct selling agents of independent
finance companies

• Maruti made available fiance through deales & product of eight selected
finance companies

• Maruti earned sourcing fees from the finance companies

• In 2003;agreement lith SBI,

* India`s largest bank
* SBI became preferred fiancier for customers
* Compétitive interest rates
* SBI extensive branch network
 Car Insurance
• Maruti`s two subsidiarités – Maruti Insurance Brokera Ltd and Maruti
Insurance Distribution services Ltd. Entered into alliance with insurance
companies

• Dealers got payements on insurance claims directly from insurance

companies

• Customers benifitted with caseless transation

• Maruti earned sourcing fees from the insurance companies.

 PEST Analysis

Political
 Maruti ltd. Acquired by Indian Govt.

 Govt provide various concessions for Maruti 800

 In may 2002 cabinet committee of disinvestment approve the exit of Gvot

from joint venture

Economical
 Suzuki holding rose to 54.2%

 Early 2003 Maruti made an IPO

 Entry of new players in the Indian market

 Cont…
Social
 6.8 mln population annual income is >12 lakh
 Changing consumer preference
 Changing life style in urban India

Technological
 Transfer of technologies from Suzuki Japan to India

 Development of new models in India rather than import from outside

 Automation of manufacturing assembly

 Rapid change in environmental standard e.g. Bharat I,II,III

 SWOT ANALYSIS OF
MARUTI UDYOG

Strengths
• Established distribution and after-sales networks
• Understanding of the Indian market and ability to liaison with the
government
• Ability to design products with differentiating features
• Brand Image
• Experience and Know-how in technology
Weaknesses
• Lack of experience with the foreign market
• Inexperience with foreign workforce
• Heavy Import tariffs
 SWOT ANALYSIS OF
MARUTI UDYOG

Opportunities
• Increased purchasing power of Indian middleclass category
• Govt. subsidies
• Tax benefits
• Foreign collaboration

Threats
• Emerging competition
• Increasing cost of inputs
• Rapid change in customer prefrence
 Porter five force model

Threat of new Entrance : Increasing

• Most of the global players are attracted toward Indian market

• Welcoming government policies

Power of supplier : low

• Large number of automobile component suppliers

• Bulk buyer can bargain high

 Porter five force model

Power of buyer : Increasing

• Increasing awareness among the consumer

• High expectation

Threat of substitute : Low to medium

• Consumer could shift to hybrid and electric cars

Industry Rivalry : High

• New player are entering in market

• Competition in selected segments are very high e.g. small and mid car segment
 Porter’s Generic Strategy

Differentiation
• Performance
• Mileage
• Best match with Indian rode conditions
• Less Maintenance cost
• Resale price
• After sale services
 Market Position of Maruti Suzuki

Market Leader
• Large market share in small car segment
• Largest distribution channel
• Most Dominant player in Indian car market
As a leader strategy of Maruti Suzuki
• Market Expansion
Targeting two wheeler segment
Targeting new geographical areas like Europe, South
America, Africa
 Market Position of Maruti Suzuki

Protection of existing market share

• Consistent product and process development
• Strong distribution network and service station
• Heavy promotional budget
• Unique poisoning for each segment
 Promotional strategy

• Maruti Driving School

• Adoption of state running it is

• Advertisement through electronic media, Print Media, outdoor ads and

web media

• CSR programs

• Sponsorship of Rode race e.g. Maruti Raid De Himalaya

• Sponsorship of other sports like golf and polo

 Recommendation

• Maruti Suzuki should do proper quality check before launching new

model e.g. recall of A-star

• Maruti Suzuki have to need launch new model in MUV and SUB

segment

• Company have to need tight cost control for competing TATA and

Hyundai in A car segment