99599950 3774198-marketing-automobile-case-study-2

Automobile Four Wheeler Industry

AUTOMOBILE FOUR WHEELER INDUSTRY

MARUTI UDYOG LTD.

MARKET APPLICATIONS & PRACTICES

Market Applications & Practices – Prof Varahan 1


GROUP MEMBERS

ASHISH BHAT (462)

RAHUL DABHADE (468)

RACHIT J. GANATRA (475)

HEMANT MISHRA (489)

VINAY SAHASRABUDDHE (504)



SUBJECT INDEX

Sr. No.

PARTIULARS PAGE NO.

1. INDIAN FOUR WHEELER INDUSTRY 04

2. VISION 20:20:1 09

3. MARUTI UDYOG LTD. 12

4. ROAD SAFETY 13

5. MARUTI SUZUKI’s EXPORTS 15

6. CORPORATE SOCIAL RESPONSIBILITY 16

7. REACHING OUT TO CUSTOMERS 19

8. TARGET COST APPROACH 20

9. WORKING WITH SUPPLIERS 22



10.MARUTI’S CURRENT SCENARIO 23

11.CAR PRICES REVISED 25

12.MARUTI’S NANO 26

13.SWOT ANALYSIS 27



INDIAN FOUR WHEELER INDUSTRY

The 4W industry in India has not quite matched up to the performance of its counterparts in other parts of the world. The primary reason for this has been the all-pervasive regulatory atmosphere prevailing till the opening up of the industry in the mid-1990s. The various layers of legislative Acts sheltered the industry from external competition for a long time. Moreover, the industry was considered low-priority as cars were thought of as "unaffordable luxury".

Initially in the post-liberalisation period, the automotive sector, especially the passenger car segment, saw a boom. The buoyancy in the sector was derived primarily from economic vibrancy, changes in Government policies, increase in purchasing power (especially of the upper middle class), improvement in life styles, and availability of car finance. The passenger car industry was finally deregulated in 1993, and many companies, both Indian and foreign (like Daewoo, Ford, General Motors, and DaimlerChrysler), entered the market. However, the smooth sailing was suddenly disrupted in the last quarter of FY1996. The automobile industry, which contributed substantially to industrial growth in FY1996, failed to maintain the same momentum between FY1997 and FY1999. The overall slowdown in the economy and the resultant slowdown in industrial production, political uncertainty and inadequate infrastructure development were some of the factors responsible for the slowdown experienced by the automobile industry. In FY2000, the sector experienced a turnaround, posted positive growth rates and witnessed the launch of many new models. But the spectacular growth in FY2000 was followed by a decline in FY2001 and only a marginal growth of 0.5% in FY2002.



PASSENGER VEHICLE PRODUCTION GRAPH



MUVs

The MUV segment consists of vehicles that are suited to both rural and urban areas. In rural areas where the roads are usually bad, these vehicles are used as goods carriers and also for public transportation. Northern and Western India account for nearly two-thirds of the demand for MUV. Specifically, in States like Rajasthan, Madhya Pradesh, Uttar Pradesh and Maharashtra, the demand for MUVs is the largest. There are three segments of buyers for MUVs: the private market, Government, and the Defence. Until the 1990s, the Government and Defence segments accounted for the largest share of the market. The reduction in Government and defence spending since the 1990s has substantially reduced sales to these two segments. This has pushed private sector purchases into greater prominence.

There are three sub-segments of the UV / MUV segment: the hard-top, soft-top and pick-up. The hard-top version consists of the higher-end Sports Utility Vehicles (SUVs) that have been present in the Indian markets since FY1999. Following the success of the higher-end SUVs, the share of the hard top segment in total MUV sales has registered an increase. Soft-top MUVs, which are largely dependent on sales in the rural and semi-urban markets where the vehicles serve as modes of mass transportation (maxi taxi), have witnessed a contraction in volumes in recent years. The declining share of the soft-top sub-segment is attributable largely to the increasing acceptance of SUVs as an alternative to soft-tops (and even higher end-cars). Those apart, soft-top sales have also been affected by a decline in rural income, increase in sales tax in some states, increase in diesel prices, enforcement of strict emission control norms, and restraints on the issue of licenses to use soft-top vehicles as rural taxis.





Demand Characteristics

Passenger Cars

In developed markets, engine capacity and wheel-base are the bases of segmentation of passenger cars: price does playa role but only up to a point. Since affordability is the most important demand driver in India, the domestic car market has until now been segmented on the basis of vehicle price. Price-based competition takes place in a continuum rather than in segments since nearly all the models are launched in multiple versions at different price points. As a result, a higher-end variant may compete with a lower-end variant of a car in a segment above it.

MUVs

the MUV segment consists of vehicles that are suited to both rural and urban areas. In rural areas where the roads are usually bad, these vehicles are used as goods carriers and also for public transportation. Northern and Western India account for nearly two-thirds of the demand for MUV. Specifically, in States like Rajasthan, Madhya Pradesh, Uttar Pradesh and Maharashtra, the demand for MUVs is the largest. There are three segments of buyers for MUVs: the private market, Government, and the Defence. Until the 1990s, the Government and Defence segments accounted for the largest share of the market. The reduction in Government and defence spending since the 1990s has substantially reduced sales to these two segments. This has pushed private sector purchases into greater prominence.



Vision for the Future: The opportunity landscape for the Indian auto industrywould encompass manufacture of vehicles and components for domestic sales,manufacture for exports (both vehicles and components), and export of services inareas such as design, engineering, and back office operations. It is estimated that thetotal turnover of the automotive industry in India would be in the order of USD 122-159 billion in 2016 (a substantial increase from the size of USD 34 billion in 2006).

Implementing AMP 2006-2016 would need an incremental investment in theorder of USD 35-40 billion to come into Indian auto industry over the next ten years(2006-2016). It is anticipated that the bulk of this investment will come from expansionof capacities by existing manufacturers operating in India and remaining from globalmultinational corporations (MNCs) seeking to make India their manufacturing base.Competition for attracting investments in India would come from countries such asChina and Thailand.

Vision Statement: Based on the above scenario, the Vision Statement forIndia’s automotive sector will be as follows:“To emerge as the destination of choice in Asia for the design and manufactureof automobiles and automotive components. The output of India’s automotivesector will be USD 145 billion, contributing to more than 10% of India’s GrossDomestic Product and providing employment to 25 million persons additionallyby 2016”.



MARUTI UDYOG LTD

Company Snapshot:

Incorporated

February 1981 Joint Venture Agreement October 1982

Equity Structure

54.2% Suzuki, Japan, balance with Other Financial Institution and Public

Employee Strength 4993 of Financial year 2006-07

Facilities Gurgaon: 3 vehicle assembly plants

Manesar: 1 vehicle assembly plant Head Office in New Delhi, India Regional offices: 16

Diesel Powertrain Plant

Suzuki Powertrain India Limited (SPIL), Joint Venture between Suzuki Motor Corporation 70% Equity the rest is with Maruti Suzuki India Limited. Global hub for Diesel engines and transmissions for Suzuki worldwide.

Joint Venture 15 Joint Venture companies, including Suzuki Powertrain India Limited

for component supply. Subsidiary Companies

True Value: for sale and purchase of pre owned cars Maruti Insurance: for insurance of Maruti vehicles (Maruti’s companies) Maruti Finance: for financing Maruti vehicles

Proposed Investments till 2010

INR 9000 Crores i.e. INR 90 Billion, Yen 257 Billion ( 1Yen = 0.35 Rs), $ 2.25 Billion (1 $ = Rs 40) *

Network ReachFinancial year 2006-07

Sales 398 Outlets covering 228 citiesService 2421 workshops covering 1193 citiesPre-owned Car Sales 242 dealers covering 148 cities



MARUTI SUZUKI TODAY

More than half the number of cars sold in India were a Maruti Suzuki badge. It is a subsidiary of Suzuki Motor Corporation Japan.

As India's largest passenger car company, it accounts for over 50 per cent of the domestic car market.

It has a sales network of 562 outlets in 372 towns and cities, and provide maintenance support to customers at 2538 workshops in over 1200 towns and cities (as on December 31,2007).

Since inception, it has produced and sold over 6.75 million vehicles, including almost 500,000 units in Europe and other export markets.

Maruti has been rated first in customer satisfaction for eight years in a row in J D Power's Surveys, and is India's Most Respected Automobile Company (As per survey conducted by Business World, a reputed Indian Magazine)

Also, in an independent survey conducted by Forbes.Com where they rated top 200 reputed companies on various parameters such as reputation within the customer and employee fraternity, They stood 91st. In the automobile section they finished 7th.

THE MARUTI DNA

Maruti was born as a government company, with Suzuki as a minor partner, to make a people's car for middle class India. Over the years, Maruti’s product range has widened, ownership has changed hands and the customer has evolved. What remains unchanged, then and now, is Maruti’s mission to motorise India.

Maruti’s parent company, Suzuki Motor Corporation, has been a global leader in mini and compact cars for three decades. Suzuki's technical superiority lies in its ability to pack power and performance into a compact, lightweight engine that is clean and fuel efficient. The same characteristics make Maruti’s cars extremely relevant to Indian customers and Indian conditions. Product quality, safety and cost consciousness are embedded into Maruti’s manufacturing process, which are inherited from Maruti’s parent company.

Right from inception, Maruti brought to India, a very simple yet powerful Japanese philosophy “smaller, fewer lighter, shorter and neater.”

From the Japanese work culture they imbibed simple practices like an open office, a



common uniform and common canteen for everyone from the Managing Director to the workman, daily morning exercise, and quality circle teams.

From the Japanese work culture Maruti imbibed simple practices like an open office, a common uniform and common canteen for everyone from the CEO to the workman, daily morning exercise, and quality circle teams.

MARUTI’S ACCOLADES

Maruti’s customers have rated them first in 'Customer Satisfaction Index' among all car makers in India for eight years in a row, in the annual J D Power Asia Pacific survey on Customers Satisfaction Index.

Other categories

In SSI (Sales Satisfaction Index) which evaluates customer satisfaction at the point of purchase- They posted a hat-trick with three consecutive wins in 2004-06.

In APEAL (Automotive Performance Execution Layout Award)- Maruti’s cars Wagon R and Alto scored the highest, for second Consecutive year, for the year 2006.

In IQS (Initial Quality Study) - Zen (the old model) scored the highest followed by Wagon R and Alto in their respective categories, for the year 2006



ROAD SAFETY

More than 100,000 Indians are dying every year in road accidents. More than a million are injured or maimed. Many years ago, a study found that road accidents cost the country some Rs 55,000 crore every year.

While the boom in the domestic automobile industry, and the government's focus on roads and highways are both heartening developments, they will have to move hand in hand with a cohesive effort to improve road safety.

INTEGRATED ROAD SAFETY

Maruti believes that we can learn from the experience of countries like the US, UK, Netherlands and Austria, which has demonstrated that it is possible to bring down road fatalities through the right public policy and its effective enforcement.

By adopting an integrated, collaborative approach to road safety they have managed to reduce road fatalities. Experts from road construction and design, vehicle manufacturing, driver training, law enforcement, healthcare have all been brought together by a national road safety initiative to work out a combined strategy to bring down road accidents.

In India, we have a huge apparatus for road safety: national and state level councils, driver license authorities, enforcement agencies like the traffic police, university researchers, voluntary groups, all of whom are engaged in improving road safety. But we are yet to approach road safety in an integrated manner.

India has its own peculiar traffic conditions, including diversity of vehicles, quality of roads and below par monitoring and enforcement. A national road safety initiative will have to design solutions specially tailored for these conditions.

A BEGINNING BY - MARUTI SUZUKI

While the challenge of road safety is gigantic, Maruti Suzuki believes that as a market leader it should undertake initiatives that could act as catalysts for other organizations.

In line with that, it is managing two IDTRs (Institute of Driving Training and Research) and another 30 Maruti Driving Schools in collaboration with Maruti’s dealers to inculcate safe driving habits in people.

Maruti’s first major effort in promoting road safety was in the year 2000 when it offered to take management control of Delhi Government's Institute of Driving Training and Research (IDTR).

They introduced training facilities and infrastructure including world-class driving test tracks, advanced computer simulators and training modules based on the ones followed in the UK and adapted to Indian conditions.



The IDTR has trained and evaluated more than 380,000 people, predominantly commercial drivers. Encouraged by the response, it has set up a second IDTR, this time in South Delhi, again in collaboration with Delhi Government.

Several other state governments, such as Haryana, Punjab, Bihar, Uttarakhand, Chattisgarh and West Bengal have also approached Maruti to set up driving training institutes in their states. The company has already signed an MoU with the Government of Haryana for setting up two driving training institutes at Rohtak and Bahadurgarh.

Maruti Driving Schools

Recently, Maruti has also signed an MoU with Gujarat Government to set up country's first Driving and Technical Training Institute for Tribal Youth. They have offered to set up, manage and run The Gujarat Regional Automobile Training Institute (to be referred as GUJRATI) at Gajadara village of Waghodia taluka in Vadodara district. This institute will not only provide driving training to tribal youth, it will also offer automobile technical training to them.

Maruti has also involved its dealers across country in a big way in promoting road safety and safe driving. In collaboration with them, the company has set up 30 Maruti Driving Schools in 27 different locations across the country. These schools are equipped with the world class, state of the art driving simulators. Over 21,000 people have been trained so far.

The Curriculum

The driving training modules are as per international standards and include both theory and practical. Difficult driving situations such as fog, uphill terrain, rain and night driving is simulated on the simulators to give learners a first hand account of the demanding weather conditions. They are then taken for actual driving on road.

This rich mix of theory and practical gives learners a critical insight into the required driving skills. In addition, the learners are also given technical training like changing flat tyre and handling minor snags and repairs in the vehicle. Special sessions are organized for learners on traffic rules, regulations and signage's.

Most importantly, the training lays great emphasis on developing right attitude for safe driving and road safety among learners.

For the convenience of women learners, there are lady instructors at MDS.

The Profile of the trainees

It is interesting to note that as many as 53% of those coming to learn driving in these schools are women learners.

Road Safety as a subject is too vast and diverse and requires an integrated approach of Government, Corporates and Civil Society.



MARUTI SUZUKI EXPORTS

As a forward looking organisation, it has always stressed on exports to remain competitive in global markets. An exposure of global markets always comes handy in improving product quality and cost.

This is why, in 1986 despite a 3-year waiting period in the domestic market, it started exporting cars, only to ensure that they remain competitive in terms of cost and quality. Since then they have sold more than 450,000 cars to more than 100 countries of the world.

Some of Maruti’s cars became bestsellers. Like Maruti’s old Zen- was projected as the World Car and was very well received in Europe.

Similarly, Alto received rave reviews in Netherlands, Greece, Germany and Switzerland. Alto's superb fuel economy entitled its customers to a 1000 Euro refund from the Government of Netherlands.

However, due to adoption of new emission norms they had to temporarily suspend Maruti’s exports to European countries and They began developing a new model for European markets.

At present, they export entry level models to many Latin American and African nations. With a heavy focus on Non-European countries Maruti’s has managed to bring incremental sales and Maruti’s exports to these countries have grown by 47%, 65% and 40% in the past three years.



CORPORATE RESPONSIBILITY

As a responsible corporate citizen, they feel they must plough back in the society that we live in. They have set up guidelines for CSR activities, which include elements of partnership, sustainability, employee involvement, and scaling up of activities from the local to the national level. There is strict adherence to government labour legislations, and there are defined policies for occupational health and safety, environment protection and product quality. There is a dedicated department which overlooks the Corporate Social Responsibility initiatives of the company.

Practicing the Art of Giving Back

Adopting State Run ITI's

There is no better way to give back to the society than investing in education. They offered to adopt four government ITI's in Gurgaon and develop them as Centers of Excellence. The idea was to groom young unemployed youth of the state for the automobile industry and give them requisite exposure on Maruti’s infrastructure and increase their prospects of employability in the industry.

GUJARATI - Employment opportunities with driver training

Recently, it also signed an MoU with Gujarat Government to set up country's first Driving and Technical Training Institute for Tribal Youth. Maruti has also offered to set up, manage and run The Gujarat Regional Automobile Training Institute (to be referred as GUJRATI) at Gajadara village of Waghodia taluka in Vadodara district. The institute will not only provide driving training to tribal youth, it will also offer automobile technical training to them.

Focus on Children Education

In addition, to the youth it has also entered in an agreement with the Delhi Public School and opened two schools in Gurgaon.

The first, DPS Maruti Shiksha Kendra was initiated as a dream project to provide education to children below poverty line from nearby villages of Gurgaon District. Around 200 students in the age group of 4-12 years are given education here. In addition to providing elementary education They have tried to provide complimentary books, stationary items, uniform, healthy refreshments and transport facility to them.



The second school, Maruti International School, was developed to impart good quality education to employee children. The school runs in two shifts and also imparts education to underprivileged children.

Maruti’s next step

Soon after inaugurating Maruti’s World plant at Manesar, They decided to adopt villages surrounding Manesar. They have adopted three villages in Manesar namely Kasan, Alihar, Dhana (all located around the Manesar facilities)

The key areas of intervention where they feel they would be able to add value are as follows:

Basic Infrastructure

Education

Vocational Training

Health Care

Maruti’s Appreciation

The TNS Automotive Global Corporate Social Responsibility (CSR) study covered corporations from passenger car, commercial vehicle, motorcycles, tyre & oil sectors. The study is conducted across 18 countries and besides global rankings, country specific rankings too are announced.

In India, Maruti Suzuki was ranked as the "Most Trusted" Company under Passenger

Globally, over 18,000 consumers participated in the study worldwide. The general public perception of the automotive industry is taken with regard:

Corporate ethics

Social responsibility

Environmental policies and

Philanthropic activities

The study found that Safety and Environment amongst the most important issues and corporations that rated highly on these are perceived to be most trustworthy.



Environment

While lending colours to Maruti’s cars they have been extremely conscious that Maruti’s facilities and Maruti’s cars retain their Greenness to be environment friendly. Commitment and responsibility towards environment comes from Maruti’s Green Philosophy- which:

promotes 3R's- Reduce, Reuse and Recycle,

promotes energy conservation,

encourages green procurement and

provides education on environment to employees and their families.

Green Philosophy

Adopting the powerful mantra of Smaller / Lesser / Lighter / Shorter / Neater has inspired us to design & develop cars that are fuel efficient and environment friendly. They have successfully launched alternate fuel cars and are steadily progressing towards new engine series, which will help us bring EURO-V compliant cars on Indian roads.

Over the years, the approach has only refined and the results are both pleasing and promising.

Despite increased production volumes there has been a consistent decline in energy consumption. Thanks to numerous Kaizens and a concerted environment friendly approach, Maruti’s total energy consumption per vehicle (during manufacturing) has come down drastically by 26 per cent over the last six years.

In addition, power consumption has come down by 31 per cent while water consumption per vehicle has dropped by 63 per cent over the last six years. Landfill waste has also come down by 67 per cent over this period.



REACHING OUT TO CUSTOMERS

Maruti’s customers have rated us first in J D Power's Customer Satisfaction Survey for eight consecutive years.

When they achieved it first time in 2000, people were skeptical. They could not fathom how could a market leader like us manage to keep happy such a vast and diverse group of customers.

The answer perhaps lies in Maruti’s approach towards customer satisfaction. Being first in a Customer Satisfaction rating was not just simply about winning an award. Rather, it became Maruti’s weapon to fight and win in this competitive market place.

How they evolved Maruti’s approach?

There was a time( in late 1990's) when they faced some real competition with the entry of global players into India.

They aren’t back to the basics: What was it that the Indian customer desired? Maruti had the right products for India, ones with reliable quality, low cost, top performance and so on. What else could they offer Maruti’s customers?

It was then that they decided to focus on Customer Satisfaction. Caring for the customer, thinking from his and her point of view, building transparency in Maruti’s interactions, orienting ourselves to face the customer's needs and concerns rather than the other way round. If they could do all that, Maruti’s satisfied customers would recommend Maruti’s products to their friends and relatives and themselves buy their next car from us. There was nothing new about this strategy; all companies swear by customer satisfaction.

The challenge for us was to go beyond words and make it all work, convert intention into action, translate an intangible mission to tangible benefits, evolve from random and one-off customer benefit gestures to a consistent and systematic effort to satisfy the customer.

They had to strive to internalize Customer Satisfaction and make it a way of life for ourselves.

Cars For A New India

Maruti has tried to keep pace with the changing lifestyle of Maruti’s customers by bringing models high on 'style and design quotient'. Some of Maruti’s recent offerings like the Swift, Zen Estilo (Spanish for Style) and SX4 have become popular choices because customers find them relevant.

While designing contemporary cars and lacing them with latest safety features They have



remained vigilant and cautious of pricing them aggressively for Maruti’s customers by adopting a target cost approach.

TARGET COST APPROACH

Through continuous study and research Maruti has adopted a new approach towards product planning and product pricing- Target Cost Approach.

They now begin designing products by keeping an aggressive market price in mind. They work it backwards to arrive at target costs for different components, equipment and for manufacturing operations. Growing design capability in the area of cars, components and dies, both within the company and among suppliers, have helped us foster this 'target cost' approach. That possibly explains why they are able to bring out fresh models with high levels of localisation and aggressive pricing.

MARUTI’S FACILITIESMaruti has two manufacturing facilities in India, one in Gurgaon and the other in Manesar, North India.

GURGAON FACILITY

Maruti’s facility in Guragaon houses three fully integrated plants. While the three plants have a total installed capacity of 350,000 cars per year, several productivity improvements or shop floor Kaizens over the years have enabled the company to manufacture nearly 650,000 cars per year at the Gurgaon facilities.

The entire facility is equipped with more than 150 robots, out of which 71 have been developed in-house. More than 50 per cent of Maruti’s shop floor employees have been trained in Japan.

MANESAR FACILTY

Maruti’s Manesar facility has been made to suit Suzuki Motor Corporation (SMC) and Maruti Suzuki India Limited's (MSIL) global ambitions. Rated high among Suzuki's best plants worldwide the plant was inaugurated in February 2007.

The plant has several in-built systems and mechanisms to ensure that cars being manufactured here are of good quality. There is a high degree of automation and robotic control in the press shop, weld shop and paint shop to carry on manufacturing work with acute precision and high quality. In particular, areas where manual operations are hazardous or unsafe have been equipped with robots.

The plant is designed to be flexible: diverse car models can be made here conveniently owing to automatic tool changers, centralized weld control system and numerical control



machines that ensure high quality. The open lay-out and ergonomic design make work convenient and improve productivity.

The plant at Manesar is the company's fourth car assembly plant and has started with an initial capacity of 100,000 cars per year. This will be scaled up to 300,000 cars per year. A total investment of Rs 2,500 crore will be made in this car plant by 2010.

In addition, the Manesar campus would also have, for the first time in the Indian automobile industry, a Suppliers' Park.

DIESEL ENGINE PLANT

Suzuki Powertrain India Limited the diesel engine plant at Manesar is Suzuki & Maruti's first and perhaps the only plant designed to produce world class diesel engine and transmissions for cars.

The plant is under a joint venture company, called Suzuki Powertrain India Limited (SPIL) in which SMC holds 70 per cent equity with the rest held by MSIL.

This facility has an initial capacity to manufacture 100,000 diesel engines a year. This will be scaled up to 300,000 engines per year by 2010.

The diesel engines manufactured at this plant will also be exported to SMC companies across the world.

This facility, too, has a high level of automation. Final inspection of components is done through automatic measuring and marking machines, which leads to a uniform and error free production.



WORKING WITH SUPPLIERS

Maruti’s Suppliers Maruti’s Partners Maruti’s Strength

Maruti’s suppliers have been Maruti’s partners in growth. The joint initiatives taken by Maruti and its team of suppliers have generated over 29% cost reduction over three years for Maruti.

Participation has been the key to Maruti’s success. Through a participative and collaborative approach called Value Analysis & Value Engineering, they have been successful in bringing cost reduction across all Maruti’s models. The localization levels are as high as 85 per cent.

Maruti’s supplier partners have been major contributors to Maruti’s turnaround. Less than 20 per cent of a car is manufactured in-house. The rest is accounted for by Maruti’s 215 suppliers and hundreds of second and third tier of vendors who, in turn, supply to them. The underlying basis of Maruti’s relationship has been that rather than focus on "price reduction" of the component, they have to work together to bring down the "cost" of the component.

One of the ways to reduce their cost has been to replicate the Maruti Production System on the shop floor of supplier companies. These techniques have been transplanted through the Maruti Centre for Excellence. The suppliers, too, have been able to reduce wastage and make their operations lean and efficient.

Rather than appropriate the entire gains, they have a system whereby suppliers keep a part of the productivity and cost gains and pass on the rest in the form of a price reduction.

The other route to cost reduction has been Value Analysis & Value Engineering, another collaborative effort between Maruti’s suppliers and us

Involving Vendors At Development Stage

Another interesting initiative is the early involvement of suppliers. It triggers innovations at the designing stage itself. Suppliers are being trained to evolve as innovation drivers by engaging them at new product designing stage.

Perhaps that is reason why Maruti’s models now are launched with as high as 90 per cent levels of localization.



MARUTI’S CURRENT SCENARIO

SALES FIGURES

Car market leader Maruti Suzuki India Limited sold a total of 63,822 vehicles in February 2008. This includes 4,511 export units.

The company had sold 62,999 units in February 2007. Domestic sales in February 2007 were 59,095 units.

Maruti’s volume in the domestic A2 segment went up by 2.7 per cent, while in A3 segment the domestic volume grew by 8.9 per cent, compared to sales in February 2007.

During February 2008 the company became India's first car manufacturer to export 5 lakh cars cumulatively.

Segment ModelsFebruary Till February

April'06 - March'072008 2007 %

Change2007-08

2006-07 %change

A1 M800 5745 5955 -3.5% 63200 73104 -13.5% 79245C Omni, Versa 7268 8069 -9.9% 81688 74430 9.8% 83091

A2Alto, Wagon-R, Zen, Swift

44059429132.7% 45741139330716.3% 440375

A3 SX4,Esteem, Baleno * 1958 1798 8.9% 41799 27283 53.2% 29697

Total Passenger Cars 59030587350.5% 64409856812413.4% 632408

MUV Grand Vitara *, Gypsy 281 360 -21.9% 3299 2949 11.9% 3221

Domestic 59311590950.4% 64739757107313.4% 635629Export 4511 3904 15.5% 47149 32079 47.0% 39295Total Sales 63822629991.3% 69454660315215.2% 674924

SX4 launched in May 2007, Grand Vitara launched in July 2007, Baleno figures are for 2006-07



FIRST INDIAN COMPANY TO EXPORT HALF MILLION CARS

Car market leader Maruti Suzuki India Limited has achieved another significant milestone today. The cumulative exports of India’s leading carmaker today crossed half a million mark i.e. 500,000 units.

As the ship liner, “Goliath Leader” left Mumbai port on 28th February, carrying 1180 Maruti cars to various Latin American countries, Maruti Suzuki became the first carmaker in India to cross the 500,000 units of export.

While Maruti Suzuki cars ply in all five continents, Europe has been a popular destination accounting for 56 per cent of the company’s cumulative exports. Netherlands with 67,700 units followed by Italy (over 41,000) and UK (over 34,000) have been the biggest European buyers. Germany and Hungary too are among the countries that have imported over 20,000 Maruti Suzuki cars.

Amongst the non-European markets, Algeria is the biggest buyer with over 42,000 units, followed by Chile, Sri lanka and Nepal.

Just as in the Indian market, the Maruti 800, with 178,000 units, has been the most popular Maruti car overseas. Alto follows closely with 152,000 units. “Zen”, India first world car that was exported to Europe as early as 1994, was well received selling over 130,000 units cumulatively.

Next Step: Hub for World Strategic Model

In the light of Maruti Suzuki’s growing role in Global Suzuki, the company has set up a state of art assembly plant at Manesar with an initial capacity of 100,000 units. The Manesar plant production capacity is planned to be increased to 300,000 units in the next two years.

Maruti Suzuki will manufacture Suzuki’s fifth World Strategic Model, A-Star, for export. The production model will be based on the Concept A-Star, unveiled at the recent Auto Expo in Delhi. The company plans to export 100,000 units annually of this new model, to Europe and other parts of the world.

Earlier in February Maruti Suzuki tied up with Mundra port for development of dedicated port facilities for export shipments of cars through Pure Car Carriers. The new facility is expected to be operational by December 2008. Maruti Suzuki plans its first export shipment from the new port facilities in January 2009.



CAR PRICES REVISED

Car market leader Maruti Suzuki India Limited has announced a moderate increase in the prices of its range of cars.

The increase ranges between Rs 1,000/- to Rs 11,000- (Ex-Showroom, Delhi) and is effective across all cities and is applicable to most of its models.

In early January 2008, the company had refreshed the Swift model (Petrol and Diesel) and had increased its prices.

Following are the revised prices of some Maruti vehicles:

Model Pre-revision Ex-showroom Price (Rs)

Revised Ex-showroom Price (Rs)

Change (Rs)

M800 Std 197092 198092 1000

M800 A/c 218331 219331 1000

Alto Lx 271522 274022 2500

Alto Lxi 290184 292684 2500

Zen Estilo Lxi 352822 354822 2000

Zen Estilo Vxi 377954 379954 2000

Wagon R Lx 331429 334929 3500

Wagon R Lx LPG Duo

353232 354232 1000

Wagon R Lxi 356256 359756 3500

Wagon R Lxi LPG Duo

381053 382053 1000

Wagon R Vxi 380062 383562 3500

Omni 5 Seater 224703 227203 2500

Omni Cargo LPG 200122 202622 2500

Omni 8 Seater 226664 229164 2500

Versa Std 365465 369465 4000

Versa Dx2 476200 480200 4000

Gypsy King Hard Top

512351 522351 10000

Gypsy King Soft Top 493009 503009 10000



SX4 Vxi 618000 629000 11000

SX4 Zxi 689000 700000 11000

SX4 Zxi (Leather) 724000 735000 11000

MARUTI’S NANO

New Export Model - Concept A-Star

Concept A-Star is the upcoming export model that has been developed by Maruti and Suzuki Motors Corporation jointly. Production of this world car will begin in October 2008, at Maruti's Manesar Plant.

Today is the era of cheaper cars, not of the king-size, luxurious and costly ones. One by one every car maker has announced their small and cheaper car to compete with the much hyped 'Tata Nano', which is expected to over turn the Indian car market. Now it is the turn of Maruti Udyog Limited, India's leading car maker, to add to the row of cheapest cars and unofficial reports state that soon a car priced in 1 lakh bracket will roll out of the company. Earlier, at the launch of Tata Nano, Maruti had denied any plans of manufacturing an ultra low cost car that could compete with Tata"s car and squashed reports of a possible price cut on its flagship Maruti 800. But alarmed by the expected revolution that may hit Indian car market by the launch of Nano, They are reported to have changed the mind and the market expects a small and cheaper car from Maruti.

As the commencement, Suzuki Motor has recently launched a mini car named Cervo in Japan, which is powered by a 660cc engine offering 54 bhp. Its turbo-charged variant offers 60 bhp, more power than the Alto and the Maruti 800 and nearly the same as Wagon R"s 64 bhp. Cervo meets Japan"s 4-star emission standards and exceeds the 2010 fuel economy standards by about 10%. And the same car is expected for India too, of course with necessary changes.

The new model is part of MUL"s flanking strategy against Tata Motors" Rs 1-lakh car, scheduled to hit the market by 2008-end, if Maruti goes forward with the plan. The other flank will be the new 660cc small car being developed at Suzuki"s headquarters in Hamamatsu, Japan. The new Maruti 800 will be on the existing platform but would sport a more contemporary look, entirely different from the current product. Both cars are likely to be priced aggressively against Ratan Tata's dream car, Nano.

Maruti's car may hit the market in 2008, around the same time that Tata Motors plans to launch its new small car. “They are working on a mini car which would be lower than 800cc in engine capacity," Maruti"s director, sales & marketing Shuji Oishi commented about the car.


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The Suzuki and the Tata cars will be the first sub-800cc cars in the Indian market. The Suzuki car will offer over 50 bhp power with a 660cc petrol engine. In comparison, the Tata small car is expected to offer 30 bhp with a 700cc petrol engine.

Reliable sources say that the Maruti vehicle will be a geared, front-wheel driven car, “Maruti’s car will be far more fuel-efficient than any car in the segment," Oishi said.

SWOT ANALYSIS OF MARUTI UDYOG

STRENGTHS

Established distribution and after-sales networks:-

Maruti Udyog has its distribution centers all over the India and it delivers outstanding after sales service to the customers.Thatswhy Maruti people has faith in the name Maruti

Understanding of the Indian market and ability to liaison with the government:-

Maruti Udyog understands the Indian market in a very good manner. It knows what exactly Indian people need and provide it accordingly. Maruti Udyog has a lot of ability to liaison with the government

Ability to design products with differentiating features:-

Maruti has produced the different models of their cars. Maruti Udyog has been producing cars for middleclass range, higher class range so it is fulfilling needs of all classes of the country. Maruti also gives various and different features in their cars.

Brand Image:-

Brand image is the important thing for any business. Maruti Udyog ahs created its own brand image in the country. Today Maruti Udyog has developed their different image in the mind of people.

Experience and Know-how in technology:-

Maruti Udyog has collaborated with Suzuki, the Japanese company.With this collaboration, Maruti has brought hi-tech technologies in their past models and also using some modern techniques in their upcoming models.


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WEAKNESSES

Lack of experience with the foreign market:-

Though Maruti Udyog has their name in Indian market, they are not having experience with foreign market. When exports of any products starts or increases company gets lot of revenue in foreign currency.

Inexperience with foreign workforce

If any company recruits foreign experts or foreign technicians who know have better technical knowledge then it helps in product development in more efficient way.But Maruti is not that much experienced with foreign workforce..

Heavy Import tariffs:-

Maruti Udyog spends a lot on import tariffs on imported spare parts. It increases the cost of product. Though same thing happens with other companies Maruti incurs more tariffs compare to other companies.

OPPORTUNITY

Increased purchasing power of Indian middleclass category:-

Now a days situation has been changed. Now even Indian middle class people can also afford the luxuries like cars. Their purchasing power is increased so there is lot of scope to Maruti Udyog to increase their volume.

Govt. subsidies:-

Maruti Udyog gets a lot of subsidies from Govt. So its good opportunity for Maruti Udyog to reduce their cost which gets increase due to various tariffs.

Tax benefits

Tax benefit is an important opportunity for any company. Same way Maruti Udyog gets tax benefits from Government which helps them to increase reserves and use it into the research and development and other activities.



Foreign collaboration

Due to collaboration with Suzuki company, Japan, Maruti has got various foreign techniques which helps in product development.

THREATS

Threats from Chinese manufacturers:-

Actually speaking this threat is not only to Maruti Udyog but also to all four wheelers manufacturers in the world. Chinese are well known in producing best quality product in less cost.

Indian as well as foreign competitors:-

Since this is globalized world, there are various Indian as well as foreign competitors to Maruti. Indian companies like Tata, Mahindra and foreign companies like Daewoo, Toyota are doing well in this industry.

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