BUSINESS STARTEGY OF MARUTI SUZUKI

MARUTI UDYOG LIMITED – Managing competition successfully

SUBMITTED BY GAGANJOT SINGH AULAKH ROLL NO. 5453 KAMALJEET SINGH ROLL NO. 5478 SURJEET SINGH (5470)

SUBMITTED TODR. P.S GILL HEAD & PROFESSOR SCHOOL OF MANAGEMENT STUDIES PUNJABI UNIVERSITY, PATIALA

INTRODUCTION
Maruti Suzuki India Limited (NSE: MARUTI, BSE: 532500) is a partial subsidiary of Suzuki Motor Corporation of Japan. It has been the leader of the Indian car market in the passenger car segment for over two decades accounting for over 45% of the market share. The company offers a wide range of cars across different segments. It offers 15 brands and over 150 variants - Maruti 800, people movers, Omni and Eeco, international brands Alto, Alto-K10, A-star, WagonR, Swift, Ritz and Estilo, off-roader Gypsy, SUV Grand Vitara, sedans SX4, Swift DZire and Kizashi. In an environment friendly initiative, in August 2010 Maruti Suzuki introduced factory fitted CNG option on 5 models across vehicle segments. These include Eeco, Alto, Estilo, Wagon R and Sx4. It was the first company in India to mass-produce and sell more than a million cars. It is largely credited for having brought in an automobile revolution to India. It is the market leader in India and on 17 September 2007, Maruti Udyog Limited was renamed Maruti Suzuki India Limited. The company's headquarters are located in New Delhi.

A BRIEF HISTORY
In February 1981 Maruti Udyog Limited (MUL) was incorporated under the provisions of the Indian Companies Act, 1956. A license and Joint Venture Agreement was signed between Government of India and Suzuki Motor Company (now Suzuki Motor Corporation of Japan) in October 1982. It manufactured India's first affordable cars though the actual production commenced in 1983. On 14th December, 1983, first Maruti 800, India's iconic car rolled-off the assembly line at company's Gurgaon plant. Late Mrs. Indira Gandhi, the then Prime Minister of India, handed over keys for this car to the first Maruti customer. By 1992 SMC had acquired a majority stake in MUL (increases to 54.2%). In 1990's when the economy was liberalized and foreign investment allowed into India, the auto component companies, set up and nurtured by Maruti Suzuki, became the foundation for global car companies as well. These new players on the Indian automobile scene found an accomplished and experienced auto component industry, which encouraged further foreign direct investment into India. With the entry of foreign players into the automobile sector MUL was forced to become more competitive and aggressive in its marketing strategy in order to maintain its market share. What followed was a series of successful product launches and by 2003 it got listed on the BSE and NSE. In 2007 the Board of Directors of the company gave approval to change the name MUL to Maruti Suzuki India Limited. In 2008 M800 crossed the 25 lakh mark and MSIL celebrated its Silver Jubilee. By 2009 MSIL‘s Capacity to manufacture expanded from 800,000 to a million units (Gurgaon plus Manesar plants) annually.

• Laying emphasis on R&D activities carried out by companies in India by giving a weighted tax deduction of up to 150 per cent for in-house research and R&D activities. with no minimum investment criteria. Swift.a.1 IN CUSTOMER SATISFACTION: For 11 consecutive years in JD Power CSI Survey (at the service level)  NO.005 with a growth of 24. • Plan to have a terminal life policy for CV along with incentives for replacement for such vehicles.MARUTI SUZUKI: Year 2010 The highlights of the year 2010 are as follows:  MILE STONE YEAR: Roll-out of 10 millionth vehicle  4 OUT OF TOP-5 SELLING CARS IN INDIA (4/5): Alto.224 million with a growth of 24. 375.4%  NETWORK: Sales Outlets: 933. • Promoting multi-modal transportation and the implementation of mass rapid transport systems. declined by 8. at Manesar by 2012-13 MACRO ENVIRONMENT ANALYSIS POLITICAL ENVIRONMENT • Indian government auto policy aimed at promoting an integrated. • Allowing automatic approval for foreign equity investment up to 100 per cent. • Establish an international hub for manufacturing small.271.6%  NET PROFIT: Rs. phased and conducive growth of the Indian automotive industry. WagonR. • Assist development of vehicles propelled by alternate energy sources. Cities: 1.886 million.395  CAPACITY EXPANSION: Additional capacity of 500.8%  INCOME: Highest ever total income: Rs.1 IN SALES SATISFACTION: In JD Power SSI Survey (at the dealer sales level)  TOTAL SALES: HIGHEST EVER SALES: 1.000 units p. Cities: 668 and Service Outlets: 2. • Ensure a balanced transition to open trade at minimal risk to the Indian economy and local industry. affordable passenger cars as well as tractors and two wheelers. . Dzire  NO.946. 22.

.ECONOMIC ENVIRONMENT • The Indian economy has grown at 8. • Finance availability to CV buyers has grown in scope during the last few years. OEMs. both in product and production processes have developed. • Government initiatives regarding tax rebates have led to global players setting up their R&D centres in India. led to the increase in market share of compact cars.5 per cent per annum. compact cars. even amongst the well-off. • Several Indian firms have partnered with global players. Hyundai etc. • Upward migration of household income levels. and for auto components. • Few global companies have setup their R&D centres in India. have setup their manufacturing units in India. hybrid cars have made entry into the market. • 85% of Cars are financed in India (15% in China). TECHNOLOGICAL ENVIRONMENT • With the entry of global companies into the Indian market. others have entered into technology tie-ups. The Tata Indica has the lowest running cost at US 8. They are socially acceptable. • Increase in PPP. SOCIAL ENVIRONMENT • Growth in urbanization. • With the development or evolution of alternate fuels. • The increased enforcement of overloading restrictions has also contributed to an increase in the number of CVs plying on Indian roads. • More than 90 per cent of the CV purchase is on credit. for mini. advanced technologies. • Preference for fuel efficient cars with low running costs. • Preference for small and compact cars. BMW. • Indian customers are highly discerning. • Vehicles priced between USD 7000 –12000 form the largest segment in the passenger car market. While some have formed joint ventures with equity participation.5 cents per mile. • Establishment of India as a Manufacturing hub. 4th largest economy by PPP index. • The manufacturing sector has grown at 8–10 per cent per annum in the last few years. educated and well informed. They are price sensitive and put a lot of emphasis on value for money. • Cars priced below USD 12000 accounts for nearly 80% of the market. • Major global players like Audi.

hybrid cars have made entry into the market. Indian government auto policy aimed at promoting an integrated. Legal provisions relating to safety measures.• Govt. Few global companies have setup R&D center in India. etc. LEGAL ENVIRONMENT      Legal provision relating to environmental population by automobiles. hence reduce losses and increase profitability. . Have setup their manufacturing units in India. Physical conditions like environmental situation affect the use of automobiles. initiatives in establishing NATRIP network across the country will further lead to enhancing R&D and technological advancements. If there is good availability of roads or the roads are smooth then it will affect the use of automobiles. With the entry of global companies into the Indian market. both in product and production process have developed. ECOLOGICAL ENVIRONMENT Automotive regulations in India Status of Indian regulation Fully / Partially aligned In process of being aligned Items /Regulations to be covered Total        no. Establish an international hub of manufacturing small. If the environment is pleasant then it will lead to more use of vehicles. of regulations 43 32 39 114 Physical infra structure such as roads and bridges affect the use of automobiles. Technological solutions helps in integrating the supply chain. phased and conductive growth of the Indian automobile industry. With the development or evolution of alternate fuels. Major global players like Audi. BMW. advanced technologies. affordable passenger cars. Confirms the government‘s intention on harmonising the regulatory standards with the rest of the world.

few more are expected to enter due to the welcoming government policies and expected retaliation. We would analyze Porter‘s five forces in context of the Maruti Suzuki. .MICRO ENVIRONMENT ANALYSIS PORTER’S FIVE FORCES MODEL Michael Porter identified 5 forces that determined the long run attractiveness of a business. Threat of New Entrants: Increasing Although most of the major global players are present in the Indian market.

In the recent past Volkswagon. small and mid car segment.. There is an increasing awareness among them and they are given a humongous number of choices. Ford have also given competition to the premium car segment. Bargaining power of buyers: Increasing Today. Chevrolet. .g.Threat of Substitutes: Low to Medium Maruti Suzuki faces serious threat from consumer shifting to hybrid or electric cars. This further increases the bargaining power of the buyers. There are a large number of automobile component suppliers whose switching costs are very high. Bargaining power of Supplier: Low Automakers are the key to the supply chain of the automotive industry. Chevrolet and Nissan are also planning to launch their electric car this year. Currently. Brands like Hyundai. Tata and Skoda have given huge competition to Maruti Suzuki. Maruti Suzuki has manufacturing units where engines are manufactured and parts supplied by first tier tier suppliers and second tier suppliers are assembled. However brands like Tata Motors . Competitive Rivalry: High Competition in certain segments is very high e. the electric car market in India is dominated by sole player Reva Electric Car Company. Honda. Thus reducing the bargaining power of the suppliers. consumers are considered kings in the automobile market. Buyers get incentives in the form of cost discounts and better after sales services.

Products for many segments of market Weakness • • • • Lack of experience with foreign market Comparatively new to diesel cars Heavy import tariffs on fully built imported models Not diversified . Established brand in Indian market. Great service and nationwide penetration.SWOT ANALYSIS Strengths • • • • • • Brand Image Brand loyalty Reliable and cheap.

politics.Opportunities • • • • Increased purchasing power of the Indian middle class Government subsidies Tax Benefits Prospective buyers from two wheeler segment Threats • • • • • • Cheaper technology from Chinese Manufacturers External changes (government. taxes. etc) Lower cost competitors or imports Price wars Increase in fuel prices Competition from second hand cars .

It is best to try and increase market share or get it to deliver cash. . this method requires an increased investment due to the continuous growth. this is one of the worst situations. Omni and Versa belong to this segment. This scenario requires a low investment. Wagon R and Alto are in this scenario. BCG matrix is often used to prioritize which products within company product mix get more funding and attention. The Dogs method is the situation where the growth is low and the market share is low.BCG MATRIX The BCG model is a well-known portfolio management tool used in product life cycle theory. The last part of the cycle is the Question mark which is high market growth but low shares. The Cash Cow cycle deals with low growth and high share. In this situation there is a high demand but low returns. but the growth is very slow. Maruti Zen and Swift are in this scenario. In this situation if the products are not delivering the cash then it is best to liquidate. The Stars is the scenario where there is the optimum situation of high growth and high share. SX4 and A star belong to this scenario.

Wagon R and Swift competition is intense and any significant move is likely to be copied by competitors. Decline Stage • Market for Baleno and Esteem is shrinking. Zen Estillo and SX4 are characterized by rapid growth in sales and profit. Maturity Stage • In case of Alto. thus reducing the overall profit. Growth Stage • Swift Dezire.PRODUCT LIFE CYCLE Introduction Stage • For cars like Alto K10 and Kizashi market share is slight but marketing costs are high. .

ANALYSIS OF COMPETITION: The diagram below shows the six different types of defence strategies that can be used by the defending market leader against its attackers. has been the market leader of the passenger car segment in the India for the past two and a half decades (as can be seen in the pie chart below) it is very important for it to defend its position against the attacks from various other players. Since Maruti Suzuki India Ltd. .

 The best defensive strategy is the courage to attack yourself with new innovation   To deal with fuel price hike.  Flanking Attack : First to occupy a segment • Nissan launched Micra with push button start option in India. powered by 800 cc engine and to be positioned alongside the company‘s bestseller ‗Alto‘. Maruti Suzuki launched a new LPG variant of its flagship model M800. . Hyundai Motors India introduced Next Gen i10. and attractive interiors. priced between Rs 2.3 km per litre. MSI plans to roll out a global car.05 lakh and Rs 2. to protect its market share Maruti has used the following defence strategies:  Only market leader should consider playing defensive  To defend itself from TATA Nano. by 2017  Strong competitive moves should always be blocked  Maruti had specifically developed 14 vehicles to be used during CWG including 10 Maruti SX4 and 4 electric Eeco variants. the competitors of Maruti have used the following strategies to attack MSIL‘s position:  Find a weakness in the leaders strength and attack at that point • • TATA Motors the 2nd largest car manufacturing company in India. seeing Maruti not in the 1 lakh price zone launched the world‘s cheapest car TATA Nano.26 lakh With its new R&D centre at Rohtak getting ready . On the other hand.So.all new version of its i10 giving Indian consumers a choice of two petrol engines and a mileage of 20. Maruti launched Maruti Cervo having the standard features including power steering and AC. good quality.

000. 1 2 BRAND GRAND VITARA MARUTI BALENO VARIANTS XL7 LXi PRICE IN DELHI (Rs.000.000. Their sole motive of having so many product offering is to be in the consideration set of every passenger car customer in India.00 VX 4 MARUTI VERSA DX DX2 5 MARUTI SWIFT LXi 5.000.000.05. Their pricing strategy is to provide an option to every customer looking for up gradation in his car.000.87.63.000.000.97.66.000.00 which is the lowest offer on road.58.00 LXi AX VXi VXi ABS 3.00 3.000. It has a car priced at Rs.19.000.00 VXi ZXi 6 MARUTI WAGON-R LX 4. Here is how every price point is covered.42.20.CATERING TO ALL SEGMENTS Maruti caters to all segment and has a product offering at all price points.1.000.00 3.) 16.00 4.00 4.000.00 5.000.000.00 4.00 4.000.PRICING STRATEGY .00 .00 VXi 3 MARUTI ESTEEM LX 6. Maruti gets 70% business from repeat buyers who earlier had owned a Maruti car. Sl.87.CURRENT STRATEGIES FOLLOWED BY MUL I.00 4.35.95.85.00 4.39.72.62.No.00 3.

000.00 2.58.00 HT 8 MARUTI ZEN D 5.00 3.000.00 11 MARUTI 800 STD.00 2.21.37.000.38.68.94.14.000.000.00 2.000.05.41.00 2.93.000. MPFI A/C MPFI .00 3.00 3.06.00 2.29.00 CARGO LPG 5 SEATER 8 SEATER XL 5 SEATER XL 8 SEATER 10 MARUTI ALTO STANDARD 1.83.00 2.7 MARUTI GYPSY ST 5.00 LX LXi VXi 9 MARUTI OMNI CARGO 3.00 2.000.000.000.000.000.27.19.000.000.00 2.000.31.000.00 MARUTI ALTO LX LXi 2.74.00 2.000.

Maruti Countrywide. Maruti Insurance and Maruti Finance. Maruti has strategically entered into this and has successfully created a revenue stream for Maruti. takes care of the A-Z of automobile problems. Kotak Mahindra. give them a fresh warranty. New India Assurance and Royal Sundaram to bring this service for its customers.This helps them retain the customer. N2N: Car maintenance is a time-consuming process. Bajaj Allianz. From identifying the most suitable car coverage to virtually hassle-free claim assistance it's your dealer who takes care of everything. Finance is one of the major decision drivers in car purchase. Maruti has brought all car insurance needs under one roof. Maruti knows its strength in Indian market and has filled this gap of providing trust in Indian used car market. recondition them. The used car market has a huge potential in India. Maruti has build up a strong network of 172 showrooms across the nation. OFFERING ONE STOP SHOP TO CUSTOMERS OR CREATING DIFFERENT REVENUE STREAMS Maruti has successfully developed different revenue streams without making huge investments in the form of MDS. Maintenance. . With Maruti True Value customer has a trusted name to entrust in a highly unorganized market and where cheating is rampant and the biggest concern in biggest driver of sale is trust. Maruti has tied up with 8 finance companies to form a consortium. They are offered loyalty discounts in return. The used car market in developed markets was 2-3 times as large as the new car market. This consortium comprises Citicorp Maruti. Convenience services and Remarketing. Maruti Finance: In a market where more than 80% of cars are financed. allowing customers to bring their vehicle to a 'Maruti True Value' outlet and exchange it for a new car. HDFC Bank. All investments for True Value are made by dealers. ICICI Bank. by paying the difference. Maruti‘s N2N Fleet Management Solutions for companies. Services include endto-end backups/solutions across the vehicle‘s life: Leasing. Maruti has tied up with National Insurance Company. Bank of Punjab and IndusInd Bank Ltd. especially if you own a fleet. N2N. Maruti Insurance : Insurance being a major concern of car owners. Maruti has created a system where dealers pick up used cars. These help them in making the customer experience hassle free and helps building customer satisfaction.II. True Value – Initiative to capture used car market Another significant development is MUL's entry into the used car market in 2001. Sundaram Finance. This has been found to be a major driver in converting a Maruti car sale in certain cases.( erstwhile-Ashok Leyland Finance). Maruti Insurance is a hassle-free way for customers to have their cars repaired and claims processed at any Maruti dealer workshop in India. and sell them again.

4 lacs. head light. This was a result of intensive survey done all across the nation regarding the consumer perception of Versa. Zen has been modified four times till date. They decreased the engine power from 1600cc to 1300cc and modified it again considering consumers perception. This brings that customer to Maruti showroom and Maruti ends up creating a customer. . Other changes have been made from time to time based on market responses or consumer feedbacks or the competitor moves. Then further modifications in engine to increase performance and a facelift in the form of sporty looking grills on the roof. Now it‘s of the most successful models in Maruti stable. Maruti 800 has so far been facelifted two times. Here are the certain changes observed in different models of Maruti. Wagon-R was perceived as dull boxy car when it was launched.3 lacs. Esteem has gone through three facelifts.Maruti Driving School (MDS): Maruti has established this with the goal to capture the market where there is inhibition in buying cars due to inability to drive the car. This was to reduce the price and attract customers. Baleno was launched in 1999 at 7. Versa prices have been slashed and right now the lowest variant starts at 3.46 lacs. REPOSITIONING OF MARUTI PRODUCTS Whenever a brand has grown old or its sales start dipping Maruti makes some facelifts in the models. It has received a very good response from market. which has been positioned as a vehicle for transporting cargo and meant for small traders. A new variant called Omni Cargo. They had come up with a limited period variant called Zen Classic. rear lights and with round curves all around. In 2003 they launched a lower variant as Baleno LXi at 5. A variant with LPG is receiving a very good response from customers who look for low cost of running. Once it came with MPFi technology and other time it came up with changes in front grill. III. In 2002 they slashed prices to 6. This made it a big failure on launch. Omni has been given a major facelift in terms of interiors and exteriors two months back. That was limited period offer to boost short term sales.2 lacs. A new look last year has helped boost up the waning sales of Esteem.

000 for fuel (would be the cost of using the car). CUSTOMER CENTRIC APPROACH Maruti‘s customer centricity is very much exemplified by the five times consecutive wins at J D Power CSI Awards. maintenance need not be. Maruti is right now working towards making things simple for Indian consumers to upgrade from two-wheelers to the car. COMMITTED TO MOTORIZING INDIA Maruti is committed to motorizing India. another Rs 1. Control over the fuel bill is in the consumer's hands. As far as the maintenance cost is concerned. Maruti dealers and employees are answerable to even a single customer complain. if you want it that way.sector laid back attitude image and has inculcated the customer-friendly approach in its organization culture. Rs." .000. They have even changed their showroom layout so that customer has to walk minimum in the showroom and there are norms for service times and delivery of vehicles.that the EMI (equated monthly instalments) would range between Rs 4. Maruti has proper customer complain handling cell under the CRM department. The Dealer Sales Executive. 2599 scheme was one of the outcomes of this effort. V. There are instances of cancellation of dealerships based on customer feedback. favorable regulatory framework.Maruti enjoys seventy percent repeat buyers which further bolsters their claim of being customer friendly. That. who is the first interaction medium with the Maruti customer when the customer walks in Maruti showroom. which currently constitute around 80% of the market. To counter that apprehension. Robust economic growth. Towards this end. we will charge a little extra in the EMI and offer free maintenance. While researching they found that rural people had strange notions about a car . to be the engine of growth in the future. Maruti expects the compact cars. Maruti has taken a number of initiatives to serve customer well. Maruti is busy fine-tuning another innovation. is trained on greeting etiquettes.000 for monthly maintenance. Maruti is investing a lot of money and effort in building customer loyalty programmes. Maruti partnerships with State Bank of India and its Associate Banks took organized finance to small towns to enable people to buy Maruti cars. The low penetration levels at 7 per thousand and rising income levels will augur well for the auto industry.000 and Rs 5. But. Says Khattar: "What the company is doing now is saying how much you spend on fuel is in your hands anyway. Their Market Research department remains on its toes to study the changing consumer behaviour and market needs.500-2. affordable finance and improvements in infrastructure favor growth of the passenger vehicles segment. The customer centric attitude is imbibed in its employees. Focus on customer satisfaction is what Maruti lives with.IV. the company is working on a novel idea. The Maruti call center is another effort which brings Maruti closer to its customer. plus another Rs 1. Maruti has successfully shed off the public.

The response to changing market conditions and technological needs will be faster. MUL. ―Decisions will now become quicker. Quoting from the report that appeared in The Economic Times. The Indian car giant Maruti Udyog Limited has finalized its two mega investment plans — a new car plant and an engine and transmission manufacturing plant. VII. the company's operations could be boiled down to a simple three-box flowchart. Suzuki's proposed two-wheeler facility in India. of course. REALISATION OF IMPORTANCE OF VEHICLE MAINTENANCE SERVICES MARKET In the old days. you know where the company's revenues come from. The two-wheeler unit will have a capacity of 250. In this scheme.VI. The above signifies when GOI was a major stakeholder in the MUL strategies which lead to investment have had a bureaucracy factor in it but after the disinvestment strategy followed is a TOP DOWN approach with a fast implementation. At its meeting the company's board approved a total investment of Rs3.off deal is proof of its success. when Maruti Udyog Limited (MUL) was formally set up. would start making motorcycles and scooters by the end of 2005 through a joint venture. The size of Maruti‘s sell. The new scheme is more complicated. The disinvestment followed by IPO gives the insight in the fact that now all the strategic decisions are taken by Maruti Suzuki Corporation. which will be located in Haryana. Maruti is its most profitable and the largest car company outside Japan. After the disinvestment Suzuki became the decision maker at MUL. in which Maruti has 51 per cent stake. 4th April 2005. Now looking at the strategy point of it – for Suzuki. Both the projects will be implemented by two different companies. Components came from the 'vendors' to the 'factory' where they were assembled and then sent out to the 'dealers'. making it the biggest privatization in India till date.000 crore control premium the Government has been able to extract from Suzuki Motor Corporation for relinquishing its hold over India‘s largest car company. On the investment of Rs 66 crore it made in 1982. the sale represents a staggering return of 35 times The best part of the deal is the Rs 1. It revolves around the total lifetime value of a car. complete control of MUL means a lot. Disinvestment had helped by removing the red tape and bureaucracy factor from its strategic decision making process.9 crore for these two ventures. They flowed fund in India for the major revamp in MUL.‖ says Jagdish Khattar. managing director.000 units a year. Suzuki will now be in the driver‘s seat and will not have to mind the whims and fancies of ministers and bureaucrats. A reward worth Rs 2.424 crore. but a rewarding one at the end. DISINVESTMENT AND IPO OF MARUTI UDYOG LIMITED It was a long and tough journey.271. .

volumes will go up. Maruti 800. traveled across the world. product competitiveness in the market will further increase. The company has set itself (and its vendors) the target of a 50% improvement in productivity and a 30% reduction in costs in three years. Maruti was getting only the first one-third of the overall stream. Maruti achieves this through continuous improvements in operational efficiency and productivity. It‘s the low cost provider of car. The impressive sales and profits were the result of major efforts within the company.S. Maruti is now encouraging its vendors to develop R&D capability for specialized components. A new Vehicle Tracking System improved efficiency on the shop floor and enhanced quality control. general manager (new business). Maintenance market has a huge market potential. VIII. The ability to keep lowering the prices sets Maruti apart from other players in the league. smoothened Maruti‘s Just In Time operations. Maruti spread the overheads over a larger base.Work on this began in 1999. Maruti consolidated its vendor base. assuring them that for every drop in price. Maruti also increased focus on vendor management. when a MUL team. The e Nagare system. Even after having fifty lakh vehicles on road Maruti is only catering to approximately 20000 vehicles through its service stations everyday. if a car is going to see three users in. This has provided its vendors with higher volumes and higher efficiencies. adopted from Suzuki Motor Corporation. PLAYING ON COST LEADERSHIP Maruti is the price dictator in Indian automobile industry." If a buyer spends Rs 100 on a car during its entire life. Says Kalsi: "So the question was. Kalsi. Based upon such activities. . trying to capture more of the total lifetime value of a car. how can I make sure that it comes back to me each time it changes hands ? So Maruti has changed gears to take a big share of this final one-third spent on maintenance.e. Maruti has increased its authorized service stations to 1567 across 1036 cities. Every regional office is having a separate services and maintenance department which look after the growth of this revenue stream. a life span of 10 years. And the final third went into maintenance. one-third of that is spent on its purchase. Earlier. Maruti does that by working with vendors. The lowest car on road is from Maruti stable i. Says R. Another third went into fuel. customers began to change cars faster. wondering about new revenue streams. Maruti also made strides in applying IT to manufacturing. As the Indian market matured. MUL was just making and selling cars. For this they are conducting free service workshops to encourage consumers to come to their service stations. MUL: "While car companies were moving from products to services. say.

Last 30 months have been quite happening. Following a decentralised sales network in the company has enabled them to give tailor made solution to take care of various regional challenges.SOME MORE STRATIGIES The confidence of their network partners in their capabilities is evident from the fact that majority of their new showrooms & workshops are coming from existing dealers. The company launched 6 new models (including Swift Diesel & WagonR Duo) in this span of time. Maruti¿s presence in A3 segment is getting stabilised fast by recently launched SX4. Their overall portfolio consists of 11 basic models & over 150 variants spanning across all segments of the industry. The whole country has been divided in to 4 zones and further into 16 ROs and 15 AOs. . While maintaining the focus on Compact cars. They have sold maximum number of cars in domestic A3 segment this year till Oct'07. Their foray into Alternate fuel segment (with LPG powered WagonR and Swift Diesel) has seen a very encouraging response from customers.

1. This will further reduce the imported component in Maruti vehicles. PHASING OUT ZEN IN 2007 The launch of Swift and phasing out Zen is a strategic move.MAJOR FUTURE STRATEGIES I. Investment in this facility will be Rs. However. 2005 in the price band starting from 4 lacs.5 lakh units per annum. will be a joint venture between Maruti Udyog and Suzuki Motor Corporation holding a 70 per cent and 30 per cent stake respectively. It will manufacture new generation CRDI (common rail direct injection) engines in collaboration with Fiat-GM Opel and engines will be of 1200 cc.00 more margins to dealer on the sale of Wagon-R as compared to Zen. III. Perhaps being the flagship product phasing out of Maruti 800 faced lots of resistance from dealers all over. Swift was launched in May. the initial production would be 1 lakh diesel engines. it was 19-20 per cent in the first quarter (April-June) of the current fiscal. supplies diesel engines for Maruti's Zen and mid-sized Esteem models.4 lakh transmission assemblies.7 crore. MARUTI PLANS FOR A BIG DIESEL FORAY The new car manufacturing company. Alto was launched keeping in mind that it will take over Maruti 800 market in future. It is a rational decision to kill a product before it starts facing the decline stage in product cycle. . The new car manufacturing plant will begin commercial production by the end of 2006. Another reason behind not phasing out Maruti 800 was the fear of brand shift of customers to other competitor‘s product. The commercial production will start by the end of 2006. The ultimate total plant capacity would be three lakh diesel engines.2 crore plant will have a capacity to roll out 1 lakh cars per year with a capacity to scale up to 2. At present.747. Maruti has currently an insignificant presence in diesel vehicle. This is to let dealer push Wagon R instead of Zen. Peugeot of France. called Maruti Suzuki Automobiles India Limited. Before launch of Swift Maruti management had decided that they will phase out Zen since it had already came up with two modifications. 20. II. The plant with a capacity to produce one lakh diesel engines would be operational in 2006.000 petrol engines and 1. Maruti would set up a diesel engine plant at Gurgaon in line with its plan to become a major player in diesel vehicles in a couple of years.524. This has been done in the wake of major competition from Tata Indica and meets the growing demand of diesel cars in India. The major reason behind this decision was cannibalization of Wagon R and Swift due to overlapping of price band. making them more competitive in the Indian market. Maruti is offering Rs. The Rs1. 3000. MARUTI PLANS FOR A NEW ENGINE AND TRANSMISSION PLANT The engine and the transmission plant will be owned by Suzuki Powertrain India Limited in which Suzuki Motor Corporation would hold 51 per cent stake and Maruti Udyog holding the balance. While the annual growth in the diesel segment was 13 per cent in the last three years.

are Saudi Arabia. Uganda. U. has been very popular in Europe where a landmark 200. In August. which meets the Euro-3 norms.an automobile BPO. INDIA AS EXPORT HUB FOR MARUTI Three years back as an experiment. Ethiopia. Some markets in this region where Maruti is. since it just costs $ 500 and just three weeks (and both figures are falling) to ship out a car to anywhere in the world.00 mark was crossed by the shipment of 571 units to the same country. Chile. lower levels of automation. so there's a lot of money to be made by shifting the production overseas.000 vehicles since its first export in 1986. Though the main market for the Maruti vehicles is Europe. and the combination of which means a 25 per cent increase in existing revenue levels. Costa Rica and El Salvador. are being regularly exported out of India. Santros from Hyundai. Maruti has entered some unconventional markets like Angola. The top ten destination of the cumulative exports have been Netherlands.K. Qatar and UAE.000 vehicle were exported till March 2003. Yet. Germany. over 90 per cent of automobiles today are sold in the countries they are made in. Germany. Indicas from Tata Motors. based on the increasing design capabilities of suppliers in countries like India. it is exporting in over 70 countries. The Alto. as McKinsey points out. Chile. . UK. The result was staggering: the industry stands to gain $ 150 billion annually in cost savings. where it is selling over 70% of its exported quantity. among others. According to the study. The Middle-East region has also opened up and is showing good potential for growth. France and Italy Maruti vehicles have made a mark. so to speak. Bahrain. the study says. just 100. Hungary. why produce cars in high-wage islands? If a car was produced in India instead of in Japan. 2003 Maruti crossed a milestone of exporting 300. and Ikons from Ford. after factoring in higher import duties for components/steel.presumably this figure is going up now that Altos from Maruti. France and Poland in that order. and transport costs. McKinsey did an exercise to figure out just how much money could be saved if automobiles were to be made in overseas locations like India.IV. Djibouti. Italy. Morocco.000 cars produced in low-cost countries were exported to high-cost ones -. and an additional $ 170 billion annually in new revenues once demand shoots up following the drop in prices. Mexico and South Africa -. it will cost 22-23 per cent less.. Even in the highly developed and competitive markets of Netherlands. Greece. Benin. Till recently. the 300. Kuwait. Nepal. Europe is the largest destination of Maruti‘s exports and coincidentally after the first commercial shipment of 480 units to Hungary in 1987.

The country‘s leading car manufacturer will make substantial investments to upgrade its research and development centre at Gurgaon in Haryana for executing design and development projects for Suzuki. The company will be hiring more software engineers and technocrats to handle Suzuki‘s R&D projects. the R&D teams will focus on latest technologies using CAD-CAM tools to roll out new models that will meet the needs of MUL‘s diverse customers in the future. MARUTI EMERGING AS R&D HUB FOR SUZUKI MOTOR CORPORATION Japanese auto major Suzuki is all set to convert Maruti Udyog Ltd‘s research and development (R&D) facility as its Asia hub by 2007 for the design and development of new compact cars. Suzuki‘s investment in India. Saudi Arabia.  Secondly. Maruti exported more than 51. Srilanka and Bangladesh. This includes localisation. in the current year. are Algeria. V. . is also important as it has completely divested now as a result MUL will now become a 100% subsidiary of Suzuki in the coming year. Investment would be more in terms of manpower than in infrastructure. modernisation and greater use of composite technologies in upcoming models. which is already in place.  Thirdly. In the financial year 2003-04 Maruti exports contributed to more than 10% of total Maruti sales. Apart from working on innovative features. The reasons as to why it can be good for R&D is that  Firstly the cost involved in R&D and infrastructure is low in India as compared to other countries. Also the technical skills are abundantly available. again at a cheaper cost.000 vehicles in 2003-04 which was 59% higher than last year. India is growing as an export hub along with the Indian market growing aggressively into becoming an attractive one for investors. according to a top official of the firm.The markets outside of Europe that have large quantities.

(4)One Stop Shop At Maruti Suzuki.D. This means every Maruti Suzuki owner gets the ideal combination of power and performance from his car. best service advisor experience. Maruti 800. while 90% owners would probably repurchase the same make of vehicle. (7) Technological Advantage It has introduced the superior 16 * 4 Hypertech engines across the entire Maruti Suzuki range. insurance. best in-service experience. customers will find all car related needs met under one roof.92% of Maruti Suzuki owners feel that work gets done right the first time during service. Alto and Omni. exchange.KEY SUCCESS FACTORS (1)The Quality Advantage Maruti Suzuki owners experience fewer problems with their vehicles than any other car manufacturer in India (J. Power CSI study 2004 also reveals that 97% of Maruti Suzuki owners would probably recommend the same make of vehicle. The J. (2)A Buying Experience Like No Other Maruti Suzuki has a sales network of 307 state-of -the-art showrooms across 189 cities.size car segment across 9 parameters. highest service quality. Esteem. Although a car may be affordable to buy. it may not necessarily be affordable to maintain. Power CSI Study 2004. Whether it is easy finance. The Alto was chosen No. (6)Lowest Cost of Ownership The highest satisfaction ratings with regard to cost of ownership among all models are all Maruti Suzuki vehicles: Zen. with a workforce of over 6000 trained sales personnel to guide MUL customers in finding the right car. . Wagon R. Maruti Suzuki scored the highest across all 7 parameters: least problems experienced with vehicle serviced.D. and it is here where Maruti Suzuki shines. This new technology harnesses the power of a brainy 16-bit computer to a fuel-efficient 4-valve engine to create optimum engine delivery. It is in the economy segment that the affordability of spares is most competitive. Not so in the case of a Maruti Suzuki. (5) The Low Cost Maintenance Advantage The acquisition cost is unfortunately not the only cost customers face when buying a car. as some of its regularly used spare parts may be priced quite steeply.D. fleet management services. Power IQS Study 2004). best service delivery.1 in the premium compact car segment and the Esteem in the entry level mid .Maruti Suzuki is set to provide a single-window solution for all car related needs. most user-friendly service and best service initiation experience. (3)Quality Service Across 1036 Cities In the J.

It will still focus on low cost products with around 70% to 80% models being small cars. the next being Hyundai which sold just 26677. It is planning to launch 15 to 20 products in the next five years. . Suzuki is planning to combine its R&D unit with India which will give India a big role to play in development of products. But it still sold the maximum number of cars 77086 compared to other competitors. high interest rates and steep petrol prices have marred the growth story of the car industry in August 2011 which has reduced the volume sold of all the major carmakers in India. The current economic condition is affecting everyone and hence Maruti‘s decline is not as big a concern for its brand image. It is going to invest approximately 1500 crores on development of products. Maruti Suzuki‘s sales were down by 17% and it is expecting ―small single digit‖ sales growth this fiscal year (2011-2012). But all carmakers will have to find a way out from the existing condition in the economy. Maruti Suzuki still has the maximum market share in the India market. Current Economic Scenario Currently.THE ROAD AHEAD Maruti Suzuki has been the most successful brand in India and it strives to continue to maintain that position.

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