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MUMBAI UNIVERSITY, PUNE M.COM (Part-I) (SEM-I) STRATEGIC MANAGEMENT (PROJECT) YEAR: 2012 – 2013 PROJECT TOPIC: “A PROJECT REPORT ON MARUTI 800 ” NAME OF THE STUDENT: KURESHI FATIMA HABIBULLA NAME OF THE COLLEGE: RAJASTHANI SAMMELAN‟S GHANSHYAMDAS SARAF COLLEGE, AFFILIATED TO UNIVERSITY OF MUMBAI ACCREDITED BY NAAC WITH „A‟ GRADE & DURGADEVI SARAF JUNIOR COLLEGE (ARTS AND COMMERCE) S.V.ROAD, MALAD (W) MUMBAI _ 400064.

PROJECT GUIDE: PROF. MISS. RASHMI BHATTACHARYA
M.COM (PART I) SEM - I

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DECLARATION
I miss KURESHI FATIMA HABIBULLA of GHANSHYAMDAS SARAF COLLEGE of Arts & Commerce of class M.COM (PART-I) (SEM-I) herby declare that I have completed STRATEGIC MANAGEMENT project titled “A PROJECT REPORT ON MARUTI 800” in the academic year 2012 -2013. The information submitted is true and original to the best of my knowledge.

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CERTIFICATE
I Prof. Miss. RASHMI BHATTACHARYA hereby certify that miss KURESHI FATIMA HABIBULLA of GHANSHYAMDAS SARAF COLLEGE class M.COM (PART-I) (SEM I) has completed STRATEGIC MANAGEMENT project titled “A PROJECT REPORT ON MARUTI 800” in the academic year 2012 – 2013. The information submitted is true and original to the best of my knowledge.

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M.COM (PART I) SEM - I

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ACKNOWLEDGEMENT
I miss KURESHI FATIMA HABIBULLA of GHANSHYAMDAS SARAF COLLEGE of Arts & Commerce of class M.COM(part-I) (SEM I) would like to thank UNIVERSITY OF MUMBAI and my college for giving me this opportunity for taking such a challenging project, which has enhanced my knowledge about the topic “A PROJECT REPORT ON MARUTI 800” in the academic year 2012 – 2013. It is with a deep sense of gratitude, I would like to thank to Prof. Miss. RASHMI BHATTACHARYA under whose guidance I was able to complete my project successfully.

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M.COM (PART I) SEM - I

12.I . 6 7 8 9 11 13 17 17 19 21 23 32 33 36 38 Sr. 3. 15. Positioning of the Maruti 800 Reasons For The Success of the Maruti800 The 800's Effect on India Maruti 800 In The BCG Matrix As Of 2004 Maruti 800‟s Competition And Strategy: 2000 Onwards Timeline The 800: Future Imperfect? Fate Of Maruti-800: Bibliography M. 8. 13. Targeting. 10. 11. 2. 4 5. TABLE OF CONTENTS 1. 14. 6.COM (PART I) SEM . 7. Justification and relevance Introduction Product (Maruti 800) Background The past: limited choices left better alone SWOT Analysis PEST Analysis for Maruti 800 to enter India Segmentation.5 INDEX:      Project Title Declaration Certificate Acknowledgement Index I II III IV V Page No. 9. No.

• It was the first small car to be launched in India.COM (PART I) SEM .6 TOPIC FOR THE STUDY: Maruti 800 Model Car Of The MUL Company. All these points make for a good case-study. • It was the leader in market sales for nearly 20 years. M. 1.I . JUSTIFICATION AND RELEVANCE: • Maruti 800 was a revolution of sorts in the 4-wheeler area in India. • The strategies used by MUL from time to time to maintain/increase the sales of Maruti 800 were exemplary.

never-seen-before-in-India. economical cars for the masses. in the cold winter of North India. To get the project off the ground MUL took over the assets of the erstwhile Maruti Ltd. the late Indira Gandhi. which was set up in 1971 and closed in1978. The intention from the beginning was to produce a „people‟s car‟. INTRODUCTION: COMPANY (MUL) INTRODUCTION: MUL was a joint venture created in February 1981 between Japan‟s Suzuki Motor Company and the Indian Government when the latter decided to produce small.COM (PART I) SEM . What in any other circumstances would have been just an ordinary car launch turned out to be the start of the automobile revolution in India.I ..It was the fagend of 1983. hatchback by the then Prime Minister. when one Harpal Singh of New Delhi was handed the keys to a small. M.7 2.

a 796cc hatchback car priced at Rs. in 2004. Even though competition predicts that the „A‟ segment is dying. The M800. But changes to the regulatory environment in India could finally mean the end of the road for the 800. 1983. has sold over 2. In fact. in spite of price hikes.I . MUL will mark its 21st year of leadership in the Indian car market. The Maruti800 may be based on 1980s technology.000 units per month. The first model was the SS80. In the 1980s. Maruti Suzuki has never looked back since. Available in vibrant colours when India‟s passenger car population comprised mainly Ambassadors and Fiats in black and white.500. PRODUCT (MARUTI 800) BACKGROUND: On December 14. the M800 continues to sell an average 12.COM (PART I) SEM . MUL launched the first Maruti vehicle – the Maruti800. M800 gave Indians the first taste of global quality and reliability.8 3. but the 800 has defied predictions of its demise. 47.Subsequently. M.1 million units. It caught the fancy of the middle class. Its obituary has been written before. the Maruti 800 (M800) was India‟s first „people‟s car‟. first manufactured in 1983. but it remains very popular as an entry-level model in India. the car remained within the reach of the Indian middle class and became a runaway success.

Named after Hanuman. 6-valve. quality construction more of an afterthought and attributes like power. safety and comfort being last on a manufacturer's to-do-list. three-cylinder. The car was powered by a 796cc. theFiat1100 derived Premier Padmini and the Standard Herald derived Gazel.5cm. carbureted engine and had front-wheel drive. son of the then Prime Minister Indira Gandhi. Maruti was the brainchild of the late Sanjay Gandhi. THE PAST: LIMITED CHOICES BETTER LEFT ALONE India's protected market meant that until the early eighties Indians had essentially three model choices in terms of automobiles: the Morris Oxford derived Hindustan Ambassador. still made for a respectable power-to-weight ratio because the car weighed M. After toying with the idea of a joint venture with Volkswagen.COM (PART I) SEM . two-box saloon (the tailgate opened only from the externally hinged rear window that was the access to the boot area) with a total length of 329.9 4. Power was 39 bhp. The company Maruti Udyog was conceived by the Indian government in 1981as a means of providing affordable personal transportation to Indians. Suzuki was short-listed because of the Japanese major's expertise in small cars.TheMaruti800 based on the European Alto IV (SS80 in export markets) was launched in December 1983 in a four-door. the Indian automobile industry was going through what might be termed its anthracite period in history. SOHC.I . Daihatsu and some other majors. With all three products obsolete. the name of the God of Wind in Hindu mythology. which though not much. Renault.

the Maruti 800 proved everyone wrong by a long margin.500 making it the cheapest car at that time in India. citing three cylinders to be insufficient for taking on a five-passenger load.COM (PART I) SEM . The 800 soon notched up a huge waiting list as sales boomed.TheMaruti800. The rivals tried to play it down on the power front. People were awed by Japanese reliability. in 1983. However. M.attributes that the small Indian passenger car industry. It was a time of licenses in India and manufacturers needed to get a license from the government on what to make and what numbers to make. Often waiting lists for cars would take up to three years to clear. refinement and fuel efficiency . The launch price was INR 47. marked the introduction of the modern automobile into the Indian passenger car market. was unable to provide. ease of operation. A Maruti800 booked in 1984-85 would be cleared only by 1987-88. This used to create a huge gap between demand and supply resulting in long waiting lists.10 slightly above 600kgs. in 1983.I .

SWOT ANALYSIS: M.COM (PART I) SEM .11 5.I .

M. WEAKNESS: At the time could only have been its relative inexperience with the Indian audience. Maruti were entering muddy waters and they read the minds of the consumer so well that the company became India‟s largest car manufacturing company with the largest number of models and iterations on the road and today with a commanding market share of close to 50%. ii).I .SUZUKI‟S STRENGTH: At the time of its entry in the Indian auto sector was its technological know-how and ability to produce quality products. They had expertise in engine building courtesy Suzuki .12 i). iii). MARUTI. They wanted and deserved better products which Maruti had and was ready to sell to them.They knew what the Indian car buying populace desired and they delivered it in spades. The growing purchasing power and disposable income of the Indian middle class was at an all time high which was perfectly tapped by Maruti with the all conquering 800.COM (PART I) SEM . OPPORTUNITY: That was quickly realized by Maruti was the existing demand for enhanced mobility among the Indian car buying audience.

which helped the company keep prices down for the 800. There were other sops too specifically for Maruti. So all in all. In1983. the only FDI player – to enter the market in a joint venture with Maruti .I .13 iv). Ten years later. The 800.COM (PART I) SEM . India de-licensed passenger car manufacturing and opened it up further to foreign participation. PEST ANALYSIS for Maruti Suzuki to enter India: i). things were favorable for Maruti on virtually all fronts. as part of a broader move to liberalize its economy. There was no major threat to its operations either from its existing competitors or perspective new players. POLITICAL FACTOR: The political environment favored Maruti to enter the Indian market with tie up with Suzuki at the time in 1983.for some time. The government waslifting sanctions and making it easier for foreign players to enter the market.a state operated enterprise at the time. 6. the government permitted Suzuki . The Indian government is alleged to have curbed competition in order to promote state-owned Maruti. several new car projects like M. being a Maruti model. Consequently. enjoyed a number of benefits from the government. THREAT: At the time could only have come by way of sanctions that the Indian government could have applied on Maruti or from a similar new entrant that could have also entered the Indian market like Suzuki.

14 Premier Automobiles planned tie-up with Nissan to manufacture the Sunny in the mid-80s did not receive government approval. ii). The common man wanted to buy a family car that gave him mobility and didn‟t cost a bomb and was easier to own and maintain. The Indian economy was doing better and after the last decade‟s emergency rule under Indira Gandhi the eighties was a time of development and stabilization for the economy and people. ECONOMICAL FACTOR: The economic conditions in India where favoring Maruti Suzuki because the people were willing to spend more on automobile sector. The disposable income of the middleclass was rising and they could now think of investing in things like better homes and cars so Maruti‟s entry at the time was perfect.I .COM (PART I) SEM . The population was rising and there was a serious shortage of options as far as car models in the nation was concerned we were not exactly spoilt for choice as far as cars was concerned. SOCIAL FACTOR: Socially the Indian middle class was gaining in repute and spending power. M. iii).

were dated and old. c)Floor mounted gear box. it is safe to say that technologically the cars being sold in the era. So with a favorable PEST analysis Maruti Suzuki zoomed into the country and the hearts of millions of people. TECHNOLOGICAL FACTOR: With the presence of only two players in the industry The Hindustan Motors “AMBASSADOR” and the Premier Padmini (PAL) “FIAT”.COM (PART I) SEM .I . d)Better servicing options. Maruti entered India with Suzuki (Japan) and brought with itself latest technology that included a)A modern compact efficient engine. b)Bucket seats. M. e)Cheaper spares.15 iv).

COM (PART I) SEM .I .16 PORTER‟S 5 FORCE MODEL: M.

a title it has held for every month since then. when its stable-mate Alto led it by a few hundred units . it is difficult to point out one single factor that has been responsible for the car's success.Like all success stories. POSITIONING OF THE MARUTI 800: The Maruti 800 was mass marketed since day one and with India being a largely price-driven market.000-100. People who wanted to upgrade from a two wheeler to a 4 wheeler. So it was positioned as an entry level car for those who wanted to step up to the world of four wheeling. REASONS FOR THE SUCCESS OF THE MARUTI800: Within a few months of its launch. including: M. till the month of May2004. TARGETING. It was good value for money and yet came with basic amenities like air conditioning.000.I .COM (PART I) SEM .17 7. 8. SEGMENTATION. coilsprung rear suspension and bucket seats in the front. but several factors stand out. theMaruti800 became the largest selling car in India. the 800 became an entry point for first time car buyers. The Maruti 800 was targeted at small families and the middle class. the 800 had great aspirational value to millions of its first time buyers. Price difference between Maruti 800 and its nearest rival used to be about INR 50. which was 25-50% of the 800's price. The Maruti 800 made an excellent entry-level car. Indian legislation has also ensured that there were three-point seat belts all around.

000. • Maruti has the largest network of dealers in India. several new car projects like Premier Automobiles planned tie-up with Nissan to manufacture the M. • Over the last twenty years the 800 has established a reputation for being trustworthy and reliable.000-100. coil-sprung rear suspension and bucket seats in the front. which is 25-50% of the 800's price. which helped the company keep prices down for the800. There were other sops (Standard Operating Procedure)too specifically for Maruti. • The Maruti800 is simple and basic and yet sophisticated enough to meet the requirements of safety and comfort. Consequently. being a Maruti model.COM (PART I) SEM . the 800 has become an entry point for first time car buyers. Price difference between Maruti800 and its nearest rival used to be about INR 50. With India being a largely price-driven market. It is good value for money and yet comes with basic amenities like air conditioning. Apart from these. • TheMaruti800 makes an excellent entry-level car. the 800.I .18 • TheMaruti800 is the cheapest car in the Indian market. The Indian government is alleged to have curbed competition in order to promote state-owned Maruti. enjoyed a number of benefits from the government. which means that the800 has the widest reach. Indian legislation has also ensured that there are threepoint seat belts all around.

Thus theMaruti800 (actually up to the late 90s) did not have any real competition in the Indian market. at the top-end. 9. It has helped the market to mature to a level in which there is a place for many product segments and. M. Thanks to the model being launched in1983. From an object of purely aspirational value. the Indian automotive benchmark was raised a few notches in terms of performance and quality. till a few months back.19 Sunny in the mid-80s did not receive government approval.I . The car has been for the Indian market what the2CV and the Beetle have been for their respective markets. This has ensured that the Maruti800 has managed to retain its low pricing in a market where the nearest competitor. The 800 has encouraged low pricing in the Indian marketplace. THE 800'S EFFECT ON INDIA: It would be wrong to credit the 800 with merely the physical growth of the Indian market in its early days. enough to amortize costs of the plants and dies used for manufacturing. In doing so the 800 has provided a platform for all the models higher than it in the market. the 800has transformed the passenger car in India to a perception more along the lines of a basic necessity. The 800 has been the car that has put India on wheels. Along period of more than 15 years without any real competition ensured that the800's volumes stayed high.COM (PART I) SEM . was priced about 50% higher. models like the Porsche Cayenne or the latest S-Class.

000 and a subcompact like the Tata Indigo and the Ford Ikon (three-box Fiesta saloon based on last generation European model) at little above INR 400.I . Thanks to the large volumes produced of the 800.000. competitors are inclined to price their products lower to come close to the 800. The infrastructure development kicked-off by Maruti(and its mainstay. This has resulted in a market where the B-segment hatchbacks start retailing at little above INR 250.COM (PART I) SEM . Subros and Jai Bharat Maruti are amongst the most successful suppliers in India. M. the ancillary industry that started with Maruti in the Delhi-National Capital Region has benefited the most.20 Thanks to the low price benchmark set by the 800. This has made a number of cars more accessible to the Indian customer. On the other hand the contribution of the 800 in the socio-economic development of the satellite townships of Delhi cannot be denied. The employment generated (both primary and secondary) was huge as Maruti resulted in the growth of a number of ancillary units. Companies like Sona Steering (now Sona Koyo). the 800) in the early 80s laid the foundation for Gurgaon to develop into the modern IT-BPO hub that it is today. The initial phases of the growth of Gurgaon (a significant satellite township of Delhi) was fuelled by the local Maruti manufacturing unit.

If we take a look back at Maruti‟s flagship models performance a decade and half ago it was the shining star of Maruti. But there are still hard core fans that swear by the 800 name and would just not put their trust in any other car. The campaigns have always shown a sensitive. Since they M. That‟s the precise reason why MUL would not discontinue the 800 just yet. When the car was launched in 1983within two years the car lapped up numbers like no other and emerged as a star for the company.COM (PART I) SEM . MARUTI 800 IN THE BCG MATRIX AS OF 2004: Even according to the latest (year 2004) BCG matrix the famed Maruti 800 is a cash cow business for Maruti. family centric theme that always found favor with the sentimental Indian audience. For more than a decade since 1987 till 1998 it was the star of the Maruti stable and thereafter it assumed the role of a cash cow which it holds to this day. the phase out would follow a similar path into tier1 and tier 2 cities. Yes because of the latest Bharat Stage 4 emission norms it has been proposed that the 800 be phased out but that phase out would not be immediate it would be carried out slowly and timely as its been started with Maruti not selling/producing the 800 in 13 of India‟s top cities.I . It‟s safe to say that India‟s answer to VW Beetle and the Citroen 2cvwill not die just yet. On the advertising and promotional front the 800 has always been projected as a compact entry level family car.21 10. yes the sales have slumped to around 2500 monthly.

The campaign “Petrol Khatam Hi Nahi hunda” highlighted the super mileage of the car and incorporated the warmth of the family as well. time and effort Maruti always scored big by making their ads high on the emotion quotient as well.I . Their creative‟s also targeted the youth quite effectively as it was presented as young peppy car when actually it was aging.COM (PART I) SEM . Maruti‟s plans of taking it out in 2-3 years would mean the end of the road for a motoring true icon. M. There portrayal of the 800 as a member of the family only goes to reinforce their family and values orientation. On the PLC front though sadly it is coming to an end it‟s in the decline phase of its life with it having already created a market share and that too is being eaten away. their target audience was always most certainly the young family man or a young man who is about to start one.22 were high involvement purchases involving a great degree of thought. Fuel efficiency was another trump card on their side that Maruti always played to perfection. Maruti always touched the emotional cord with their adds weather it was the “India comes home in a Maruti” campaign or “ joy of life “ campaign their adds were always that much closer to the hearts of the audience.

MARUTI 800‟S COMPETITION AND STRATEGY: 2000 ONWARDS: Maruti 800. that of Omni by 48 per cent and that of the Zen by 22 per cent. the name most common for a middle class Indians and the only car in the A-Segment category. Placing all facts and moves of MUL since 2000 will give a broader picture of the game plan and strategic sequence. It can still milk better and MUL is trying its level best to capture the market. It served as cash cow of MUL for nearly 17 years.COM (PART I) SEM .35000 between the two entry level and small car segment. According to Ansoff matrix it will be called as new market / old product move. MUL market share had fallen to 51 percent from 80 percent that it had enjoyed for nearly seventeen years. Tracing back to start of year 2000. The basic strategic focus of MUL is to offer Zen. The obvious idea is to keep Maruti 800 out of the competition and make it nearest alternative for two wheeler segment.23 11. Though the market share had fallen altogether. Though there was hardly any difference of more than Rs. the sales of Maruti 800 had grown by 22 per cent. It is quite clear from the strategic point of view that Alto never influence Maruti 800 or its variants for cannibalization.I . The MUL‟ slogic for increase in unit sale with the decrease in over-all market share is that when there are more players in the market there will be competition. When M. Alto LX and its variants to all the existing customers and on the other hand position Maruti 800 to those who want to switch from two wheeler to four-wheelers segment.

Never position two brand extensions with high price difference and to wrong customers! January 2003.510 units of Zen and4. MUL came out of the mess with sales of 44. 365000. Omni and Esteem.348 units in the 'B' segment and 7. The market equation balanced the loss on Hyundai‟s Santro and Daewoo‟s Matiz part. Competitors were emotionless on this move of MUL. These sales included 12.24 there is competition. Later on the VX version was backed out from the market as customers were hardly able to differentiate between two models. Hyundai‟s Santro and Accent was produced on the same assembly line and Hyundai was trapped in catch-22to maintain a restriction on trade off between the production of Santro and Accent.I . So what is the lesson from this mistake .COM (PART I) SEM .167 units.000 (mind the psychological pricing) while Alto LX was placed between Wagon R and Esteem at price Rs. Alto LX was placed between Maruti 800 and Zen at price Rs.000 more then another. MUL hiked the price of its all800 cc variants. Some market share was eaten up by Telco‟s Indica as well. The sales included 3.980 units for export. the market expands and the consumer base increases which means there will be more number of unit sales.838 units of Wagon R. The Hyundai‟s loss of market share was not because of lack in marketing strategy but the production problem. Just six months after that Tata Engineering M. At the same time Alto was strategically placed with two variants LX and VX. MUL‟s strategy to offer credit sale to its dealers also fueled the fire. The difference was of LX and VX but one cost 66. March 2000. 299.

COM (PART I) SEM . 4000 for Omni and Esteem. Omni and Esteem covered 55 percent sales of MUL portfolio and MUL covered 60 percent market share of the total four wheeler segments. The main M. OOPS!! How it is possible when the cost of raw material is increasing and out of 12 Manufacturer one (MUL) has slashed the price and for what did they hike the price for just six months. the increase in price in Jan-2002 was nearly Rs. 8000 for 800 cc variants and Rs. The only question arises is that how did it happen? The answer comes from psychological effect on customer with the increase in the steel cost. This key insight was in the long term profit at the expense of short term decrease in sales. But some still think that the price reduction was due to decrease in sales and on the other hand MUL told its due to cost rationalization and improvement in production efficiency. Maruti 800. Now after six month the price reduction was only for Maruti 800 and in the range of Rs. If you remember. The only thing they did was that they took money Rs. The three Brands.25 gestured for price hike due to higher input cost. 8000 from one consumer (price hike) in the month of January and gave it to a customer who bought in the month of July (as a decreased price) and the increase in sales with this game plan bought all the profit. The whole game plan was to cash this opportunity of increase in raw material cost.I . Logically. there was no loss but profit by this price decrease. MUL was thinking hard to curb the market in the A and B segment.15000 for 800 cc variants. MUL going against the situation slashed the price of its entry level car-Maruti 800.

All the vehicles done lesser then 60. while on the other side Hyundai with Santro. The MUL shaped it as organized sector with the brand name True Value.I . The Zen was in the top list of true value brands. Gypsy. All the damaged parts were replaced with the new Maruti branded parts. This market being unorganized and large was on the radar of MUL.26 competition for these segments was coming from second hand cars market as substitute. MUL re-launched Zen with new look and without a price change. The highly sold brands were Maruti 800. To make some visible differentiation between a newly bought Zen and the one bought under True Value brand. Esteem and Zen Suzuki. Tata Engineering with Indica and Fiat Auto with Palio were competing with only M. 50000 on Alto. Competitively. for the period April 2003 to March 2005. Zen and Santro. The motive of Maruti behind this ball game was to maintain market share of its brands and to regulate the market from either end. How Smart!!!The luck charmed on the royal part too which was exempted by Suzuki for Alto. Omni. Only vehicles which are less than seven years old were procured under the True Value scheme in accordance with the norms of MUL.COM (PART I) SEM .000km were on one–year warrantee. Maruti 800. All dealers in this market were selling the second hand car with 85 percent price of the new car. A 10 per cent discount on knocked down components imported by Maruti came as additional relax to MUL. The portfolio of MUL had at least five models in the A and B segments. To make it an opportunity MUL reduced Rs. MUL was on a strong position.

India's largest carmaker. To make strategic fit of Maruti 800.27 one product in B segment. MUL stepped out in year 2003 to tie-up with the State Bank of India for financing. MUL launched a new market offer called `2-se-4' in Ahmedabad and Hyderabad under which a consumer can exchange his two-wheeler for a Maruti 800. Apart from easy loans from banks. without change in price. unveiled a new-look Zen.To cope up with the M. In the same year. Sales of Maruti 800 were eroding continuously since 2000. The competitors were not ready to reduce the prices and were shrinking their market with more expensive variants like Hyundai Getz. The indication is that MUL is only company to penetrate in the market with low priced vehicles. In July 2004. In mid of 2004. the main objective was to use wider rural market network of SBI for tapping the prospects. This makes the MUL also busy in price adjustments. The objective was to match EMI of the two-wheeler with Maruti 800.I .COM (PART I) SEM . Alto sales were 14 percent higher then Maruti 800. The bank promised to offer 85 percent finance for on road Maruti 800 (with registration and insurance) for tenure of seven years. The upcoming problem was of Maruti 800 and its variants. Maruti Udyog Ltd. Alto performance made it to overtake the company‟s bread-and-butter car Maruti 800 to become the largest selling car. To take the competition by Hyundai's Santro and Tata Motors' Indica seriously for B-segment cars. more national and international bank started integrating in the win-win strategy of MUL.HDFC Bank has launched a new product for financing Maruti 800.

Tata threaten with a car priced on Rs. The idea was to reduce the maintenance and fueling cost.000 which is still on papers. Zen and Wagon R shares the highest share of sales in the product portfolio of MUL and maintained the over all sales increase by 20 percent. MUL also relaxed the norms of schemes for True Value cars to increase the market share. Maruti the major player of the small car segment market has only 15 percent share in the A3 segment. This was to get competitive advantage of low cost steel as compared to imported steel. WOW!! Handle threat with a counter threat. The true indication of Head-on can be M. Honda and new entrants like Mahindra-Renault combine is making existing and competition intense. 100. With eye on entry car market. Ford. It was a different kind of proliferation where a customer can choose a second hand Maruti 800 or Zen or a new variant of Zen and Wagon R as per the value fathomed by customers.I . Baleno and Esteem sales by 7 percent Alto. GM. The over-all sales MUL grown by 20 percent in the financial year 2007 Despite decrease in sales of Maruti 800 by 11 percent. The price of Maruti 800 was kept constant to suit it for the targeted customers who were two-wheelers owners.28 increasing cost. with the presence and focus of car-makers such as Hyundai.COM (PART I) SEM . The threat was caught by MUL and proactively advertised launch of its LPG variants of Maruti 800 and Alto. MUL increased the price of all models indirectly by launching new variants of Zen. The next thing MUL did was to increase the procurement of steel from domestic market by 15%. InA3 segment.

The momentum in the economy and increase in the disposable income of the consumers increased the market demand by 22 percent. The only restriction will come with production unit at Manesar which produces the Swift and SX4. Swift diesel was initial step for the whole journey. This left little score for the production of SX4. the external factors are turning unfavourable to customers. the company phased out the Zen and replaced it with a brand new car the Estilo and gave Wagon R a facelift.000 units. The launch of LPG models has witnessed the strategy of MUL. So the scope in the market is higher. loans for Maruti's cars are M. The increasing interest rates have begun to affecting the sales. The MUL reshuffled its portfolio launched five new models starting with Swift Petrol in May 2005. MUL launched sedanSX4 and priced just at par with Honda City. new engine design.COM (PART I) SEM . Apart from internal problems. the sales were driven by lower exercise duties. Nearly 7000 units of Swift already produced from this plant per month. On the other hand increasing cost of steel procurement has affected the operation margin which is flat on 13. The strategic focus is on three dimensions.36 percent. To beat the competition. This launch was the replacement of Baleno and to strengthen the A3 segment.I . Till now the diesel engine is the domain of Tata. fuel efficiency and diesel engines. In the FY06. In 2006-07.29 guessed by the launch of new models by major players who also expanding their presence in the segment. It is fact that 75 percent of the customers buy the cars on loans.The installation capacity of this unit is 100.

5 percent. MUL has the capacity of producing 2500 units per month due to restriction on production capacity. The domestic sales were zoomed by 25. Sales in the A1 segment. In June2007. Esteem. Wagon-R.COM (PART I) SEM . Zen and Swift as against 27. makers of the popular model Santro. comprising MUL's flagshipMaruti-800.923 units. MUL has offered discounts ranging from Rs 5. C segment.000 to 35.4 per cent in the month at 3. The discount is on Maruti 800.228 units in the same month last year.000 across various models. up 38.646 units in the A2 segment comprising hatchbacks Alto.3 per cent. MUL sales up by 24 percent. No discounts have been given on Swift diesel and SX4. Sales of sedans Esteem and newly-launched SX4 increased 46.59 per cent per annum. that comprises Omni and Versa. Swift.214 units. Versa and Omni is also going against the company. The company sold37.I .30 being priced at the lowest rates in the industry .8. Omni. Versa and on the petrol models of Wagon R.3 per cent at 6. M. Alto. which is about 40 basis points lower than that offered by arch rival Hyundai Motor. dipped 20. The car maker's inability to replace its fading models Gypsy.

COM (PART I) SEM .31 Maruti800 (Domestic Sales Volume in Units): Fiscal Years 1983-84 1984-85 1987-88 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 Domestic sales (in units) 852 20269 63763 106114 139403 183593 184584 161975 189061 151976 144387 143322 167561 M.I .

The model received a heavy facelift in 1986 with the introduction of the SB 308 body style.444. The present Maruti800 shape was launched in 1997. The car was known just as the Maruti800 and was essentially a four-door saloon with a rear window that opened for access to the boot area. June 2000 in the 796cc engine in early 2000 with an MPFI unit to meet the Euro II emission norms. This new shape made the 800 into a five-door hatchback though the mechanicals remained the same including the 796cc. Platform remained the same though the rear leaf spring suspension was changed to coil springs for the deluxe model. the SS80. three-cylinder engine and the leaf-spring rear suspension. Power went up from 39bhp to 46bhp though there were no other major changes.Maruti replaced the carburetion system 2. four door saloon with a rear window that opened like a hatch. TIME LINE: Maruti launched the first 800 (Alto IV generation). The company also offered a fivespeed gearbox in the deluxe model. • December 1983: Launch.COM (PART I) SEM .32. in the Indian market in December 1983.I .32 12. M. for the next 11 years till 1997. barring a few changes to the grille. The 800 in this form has continued till date though the company has now withdrawn the five-speed gearbox from the range in order to push the new Alto. This body style continued unaltered. SS80.

33 • 1986: Major facelift: SB 308. has more M. Also five-speed gearbox. only slightly higher than the AC version of the 800 (INR 226. dashboard. Even the AC version of the Alto at INR 260. • 2003: Five speed version withdrawn. it is the rise in sales of the Alto that has affected the 800. May sales went down on a year-on-year basis.000 is not very far off the 800. Maruti had reduced the prices of the Alto with the base version now selling at around INR 230.and Csegments being the fastest growing. But more than the stagnation (or decrease) in sales. where theMaruti800 is the only player is not growing and 800 sales have been stagnating in recent months. indicators etc • 2000: Upgraded engine MPFI.000 (non AC). 13. Some time back. In fact.COM (PART I) SEM . coil-spring rear suspension and radial tyres. New headlight. which Maruti attributed to uncharacteristically higher sales in May 2003. The A-segment. taillight. THE 800: FUTURE IMPERFECT? The Indian passenger car market is witnessing a sea change with the B.I .000). The Alto is powered by the same 796ccengine. the tailgate opens completely and the car is now a five-door hatchback • 1997: First major facelift in eleven years. 46bhp.

They point out that the company's strategy is to bring down the Alto to A-segment prices so that Maruti can offer two models in the same price band. People who used to giftMaruti800s are now gifting the Alto as for only a few thousand more they command more respect. a speculation that Maruti executives are quick to dismiss and they have a point too as a 10.10. Alto sales started creeping up once Maruti launched the non-AC version and the gap between the 800 and Alto narrowed and the bigger car finally overtook the traditional best seller in May 2004. the Indian media has been quick to speculate the eventual demise of theMaruti800.016. It seems likely that the Alto will continue to lead in the Indian market. the worst affected being the 800'swedding gift market. the score read:Maruti800 .COM (PART I) SEM . Thus the pricing of the Alto has made it a substitute for the 800. In reaction to falling sales.I . Maruti executives point out that April-July is not a good period for the 800 sales as the800's main customer . In May. It is also regarded as amore expensive car in the typical Indian social strata.Alto .373 units.000 unit per month model(and currently India's second largest selling car) cannot be retired so easily.34 modern mechanicals and is bigger." Two models will only help grow the A-segment like our three models have grown the BM.are under financial pressure (because of income tax in Feb-March and expenses during the start of the financial year like school/college admission fees) during these months and also because of a tendency to defer purchase decisions till after monsoon.10.the salaried middleclass in India .

With financial institutions ready to offer loans up to eight years.000 and an EMI of INR 2. "The point that Maruti 800 would make way for a lower priced Alto. the bias towards the Alto cannot be missed as the company realises that they have an eventual replacement of the 800 now. For many thousand aspirants. What may eventually bring the end to the 800 story .500. a fact that Maruti is strongly publicising with millions spent on a new ad campaign to highlight the affordability of the 800. A fresh facelift cannot be ruled out.Maruti800 is the only brand they will settle for. like stopping the 800 five-speed version and delaying a long overdue facelift for the 800.I . have pushed customers towards the Alto. New safety legislation and the impending upgrade to Euro III may make Maruti think very hard M. Other steps." pointed out an executive. theMaruti800 base model is now available at a down payment of INR 21.point out some analysts -is future legislation. something that brings it closer to two-wheeler prices. et. The then Managing Director of Maruti Udyog added. That is not true.35 segment. Maruti is also working hard to further reduce component costs of the Alto so that prices can be further rationalised. To support the 800. because it is the one they trust." And trust is something that the 800 has in abundance as a brand that has crossed20 years of existence and sold in excess of two million units to date. The intention is to depreciate the Alto faster so that prices can be further brought down.Marutiis now targeting the 40-million two-wheeler owners in India.COM (PART I) SEM . assumes that price is the only factor for entry-level buyers.

Surat and Agra.COM (PART I) SEM . Kanpur. Bangalore. Kolkata. 14. Hyderabad.But that is still three years away and this is a long time period in India's automotive industry. M. The cities were Delhi. FATE OF MARUTI-800: In early Feb-2009 Maruti-Suzuki Limited announced to scale down the production of the popular brand Maruti-800. They cited inability to upgrade theMaruti-800 engine to comply with engine efficiency and pollution standards as reason for the same. Mumbai. Ahmedabad. Later in the same year the Maruti-800 was phased out from production schedules completely due to ever diminishing contribution to the sales revenue. At that time Euro IV norms were recently adopted in 11major cities of India.I . Pune.36 about whether or not to invest in the 800. Chennai.

37 EXHIBIT-1 MARKET SEGMENT OF INDIA CAR INDUSTRY -2010: M.I .COM (PART I) SEM .

BIBLIOGRAPHY: • Philp Kotler • Prof.com •www.managementfunda.38 Step of the company was spot on considering the country they were in.com •www. • Varying Marketing strategies to maintain/increase the sales of the product.icmrindia.slideshare. • Managing cannibalization from its own product.articlesbase.org •www.net •www. Bharadwaj‟s • Slides WikipediaGoogle • www. • Exiting the market at the right time.internsindia.I .com M. 15.COM (PART I) SEM .

39 M.I .COM (PART I) SEM .

I .40 M.COM (PART I) SEM .

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