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Maruti Suzuki India LTD
Maruti Suzuki India LTD
Maruti Suzuki India LTD
A HHI index below 0.01 indicates a highly competitive index. A HHI index below 0
.15 indicates an un-concentrated index. A HHI index of 0.15 to 0.25 indicates mo
derate concentration. A HHI index above 0.25 indicates high concentration.
It can be clearly inferred form the HHI Index which is 0.2682 , the Passenger se
gment of automobile sector is highly concentrated with four domestic giants main
ly Maruti , Hyundai, Tata Motors, and Mahindra and Mahindra. Apart from that the
re are many foreign players who are fighting for the same pie in India.
Domestic Car Sales Model Wise from 2004 to 2010
The diagram below shows the sale figures of the various models launched in India
by different brands.
31
Maruti Suzuki India Ltd.
Domestic Car Sales Model wise 2004-10 Model Audi A4 2004/05 2006 2007 102 2008 1
,050 (All Audi models) 2009 1,658 (All Audi models) 2010 3,003 ( models) all 201
1 5,117 (JanNov, all models)
Audi A6
105 (all Audi models 05) -
300 (all Audi models)
349 (all Audi models)
111 (JanApr)
396
Audi A8
-
172
1,050 (all Audi models)
Audi Q5 Audi Q7 Audi R8 Audi TT Bentley BMW 3 Series 5 (2005) 20 na 28 946 1,075
(FY09) 1,155 2,220 Nov) (Jan8,042 (JanNov) 350 15
BMW 5 Series
-
-
822
1,352 (FY09)
1,590
2,030 Nov) series,
(Jan-
BMW 6 series, X3 and X5 BMW 7 Series
ca (X5) -
40
257 (all models) -
83
4 (6 Mar) 279 (FY09)
251
BMW X1 BMW X3, X5 and X6 16 (Jan)
32
Maruti Suzuki India Ltd.
BMW Z4 Roadster Chevrolet Aveo 5,624 1,174 (Jan)
25 746 (Feb) 364 (Jan)
Chevrolet Aveo UVA Chevrolet Beat Chevrolet Captiva
-
-
11,523
434 (Jan)
2,825 (Jan) 607 2,134 (FY09) 201 (Feb) 72 (Jan)
Chevrolet Cruze Chevrolet Forester (discontd.) 260 (20032005) 9 191 -
812 (Oct) -
686 (Jan) -
Chevrolet Magnum
Optra
na
6,058 (inc. SRV model) 22,060
1287 (JanMar)
89 (Feb)
51 (Jan)
Chevrolet Spark
-
-
7,265 (JanMar)
2,940 (Feb)
3,477 (Jan)
Chevrolet SRV Chevrolet Tavera 18 622 (2005) na 20,671 4,892 (JanMar) 945 (Feb)
1,512 (Jan)
Ferrari Fiat Grande Punto ~9,000 Nov) (Jun8,401 models Apr-Jul) (all in
Fiat Linea
-
-
-
4,512 (FY09)
~ 12,000 (JanNov)
Fiat Palio Stile
791 (0506)
1,614 (0607)
3,303
33
Maruti Suzuki India Ltd.
Fiat Petra/Adventure (discontd.) Fiat 500
454 (0506)
584 07)
(06-
-
-
-
ca 30 till Sept 2,780 (FY09) 184 (Oct)
ca 65 till Jun 10
Force Trax Ford Endeavour
1 818 (05-06)
na
7,053 2,916
51,420 (all models JanMay)
Ford Fiesta Ford Figo
ca 3 500 -
na -
22,855 58,000 Nov) (till
Ford (discontd.) Ford (discontd.)
Fusion
329
na
2,678
Ikon
24 536
na
4,797
Ford Mondeo (discontd.) Hindustan Ambassador Honda Accord
25 (0506) 12 740
0
na
8,487
3 324 (05-06)
2,728 (0607)
2,133
4,108 (FY09)
948 (Jan-Apr)
288 (Jan)
Honda Brio Honda City 37 545 (200506) 40,464 (06-07) 40,536 (incl. Marina STW) 1
6,723 18,482 Apr) (Jan4,485 (Jan)
Honda Civic
na
16,262 (06-07) 858 1,873 (06-
2,386 Apr)
(Jan-
644 (Jan)
Honda CR-V
1
3,425
501 (Jan-Mar)
76 (Jan)
34
Maruti Suzuki India Ltd.
(05-06)
07)
Honda Jazz Hyundai Accent Hyundai (discontd.) Hyundai Eon Hyundai Getz Prime 5 4
83 na 16,787 9,442 (FY09) 106,110 (FY09) 4,991 (FY09) Elantra 24 383 2 331 (2005
) na 1,683 (0607) 8,274 10 (Mar)
3,069 (Jun-Jul)
490 (Jan)
Hyundai i10
-
-
14,451 (2007) -
24,990 Mar 12) 4,940 (Oct)
(till
Hyundai i20
-
-
Hyundai Santa Fe Hyundai Santro Xing 103 301 163,838 (06-07) 506 121,163 91,466 (
FY09) 486 (FY09) 232 (Jan-Apr) 29 (Jan)
Hyundai Sonata
806 (2005) 318
577
Hyundai Terracan (discontd.) Hyundai Tucson
-
884 (MarchNov 05) na
533 (incl. Terracan)
188
50 (FY09)
13 (Jan-Apr)
Hyundai Verna
na
24,370
2,132 (Feb)
5,502 (Jan)
ICML Rhino Jaguar
-
242 (incl. Land Rover) 891 (Apr-Mar 11) incl. Land Rovers
Lamborghini
35
Maruti Suzuki India Ltd.
Land Rover
ca 30
na
~90 (2008) 51,009 55,924 (FY09) 3,000 (Apr08Feb09) 27,000 (Apr08Feb09)
242 Jaguar)
(incl.
35 (Jan)
Mahindra Bolero
-
-
Mahindra Max
-
-
-
Mahindra Scorpio
31,661 (05-06)
38,015 (06-07)
41,443
3,200 (Mar)
ca 44,000 ( 10- 11)
Mahindra Thar Mahindra XUV500 Mahindra Xylo 7,201 (FY09) 49,383 (FY09) 15,736 (F
Y09) 218,127 (FY09) ~10,500 (JanApr) 9,915 (Apr-Jul)
Maruti 800
116 262
79,245 (06-07) -
69,553
Maruti A-Star
-
-
2,784 (Jun)
2,494 (Jan)
Maruti Alto
126 223
200,000+ (Apr06Feb07) na
227,173
240,000
Maruti (discontd.) Maruti DZire
Baleno
6 521
-
-
5,658
61,952 (FY09)
8,995 incl. SX4 (Jan)
Maruti Esteem (discontd.) Maruti Grand Vitara
18 379
na
12,485
na
na
795
270 (FY09) 7,219 (FY09)
Maruti Gypsy
na
na
3,132
36
Maruti Suzuki India Ltd.
Maruti Kizashi Maruti Omni Maruti Ritz Maruti Swift 34 463 (MayNov 05) na 88,745
110,071 (FY09) 60 377 na 88,273 6,214 (Jun)
103 (Mar 11)
Maruti SX4
-
31,192
1,953 (Feb) 1,440 (FY09) 134,768 (FY09) 32,694 (FY09) 140,000 163,000 (AprMar 1
1)
Maruti Versa
4 291
na
1,456
Maruti Wagon R
79 712
na
132,727
Maruti Estilo
65 345
na
50,635 (Zen and Estilo) 1,127
Mercedes C-Class
785
883
1,765
1,607
5,109 (All models, JanNov)
6,698 (all models JanNov)
Mercedes E-Class Mercedes S-Class
825 (05) 144 (2005)
922 248
1,048 518
1,167 561
1,048 467
245 (Jan) 22 (Jan)
Mercedes CLS/SLK/SL/CLK/M
na
118
141 (incl. 80 M-class)
125 (models other than C,E and S class)
6 CBU imports(Jan)
Maybach
3 ( 04 and 05) 2 509
na
na
Mitsubishi Lancer/Cedia Mitsubishi Outlander
na
2,582
1,570 (FY09) 278 (FY09)
-
-
-
37
Maruti Suzuki India Ltd.
Mitsubishi Pajero/Montero Nissan 370Z Nissan Micra
na
na
1,676
1,814 (FY09) 4 (Jan-Aug) ~6,000 Nov) (Jul10,247 (H1) 58 (H1)
Nissan Teana
-
-
347
58 (FY09) 100 (FY09) -
207 (FY10)
179 Nov) 50 (Jul)
(Apr-
Nissan X-Trail
253 (2005) Corsa 8 369
250
173
157 (H1)
Opel (discontd) Porsche models) Premier Rio
na
-
-
-
-
(various
ca 100 (2005)
160
168
168
Mahindra Verito (Renault Logan) Mahindra Reva Renault Fluence
-
-
25,884
13,419 (FY09)
2,520 Apr)
(Feb-
555 (Jan)
290 (Jun)
Renault Koleos Rolls-Royce 5 (2005) 7 (2006) 12 (2007) 14 (2008) <10 (2009) 80 (
2010)
San Storm koda Fabia
na -
na 1,906 6,634 5,510 (JanMar) all koda models 9,257 (H1)
koda Octavia/Laura koda Rapid
9 559 (05-06)
11,433
10,944
7,459 (FY09)
3,519 (H1)
38
Maruti Suzuki India Ltd.
koda Superb
na
769
586
694 (FY09)
541 (Apr-Jun)
2,078 (H1) 1,310 (H1)
koda Yeti
Tata Aria Tata Indica 111 574 (05-06) 39 377 (05-06) 2 050 144,690 (06-07) 34,31
0 (06-07) na 21,535 (Jul-Jan 10) 4 692 (05-06) 15,816 (06-07) 19,078 25,630 (Su
mo+Safari: Apr-Jan 10) 77,000 (till12/10) 3,538 (Safari/Sumo Jan) 135,642 111,2
57 (FY09) 49,190 (FY09) 91,295 (AprJan 10) 41,724 (AprJan 10) 11,448 (Jan)
Tata Indigo/Indigo XL/Indigo CS Tata Marina Tata Nano
31,416
7,258 (Jan)
Tata Safari
Tata Sumo / Sumo Victa Tata Sumo Grande/MKII Tata Vista Tata Xenon XT
33 213 (05-06)
32,077 (06-07)
28,622
-
-
-
161 (FY09) 182 (AprJun) 44 (Apr-Jun) 120 (H1)
Toyota Camry
794 (2005)
1,001 (0607)
988
Toyota Corolla Altis
8 974 (2005)
na
6,204
9,172
4,901 (H1) 20,765 (H1)
Toyota Etios
Toyota Etios Liva
3,154
737 (Jun)
39
Maruti Suzuki India Ltd.
Toyota Fortuner
~3,100 Dec) 32 000 (2005) na 48,069 42,740
(Aug-
5,475 (H1) 25,307 (H1)
Toyota Innova
Toyota Land Cruiser 200 Toyota Land Cruiser Prado Toyota Prius Toyota (discontd.
) VW Beetle Qualis 31 759 na 162 (2005) na 141 109 (FY09)
ca 240 till Jun 10 1,566 (all VW models) 1,957 (JanAug: all VW models) 27,946 (
Vento Polo)
88 (H1)
VW Jetta
975 (H1)
VW Passat
-
-
383 (H1) and
VW Phaeton
58 (till Jun 11) 20,127 (H1) 17,555 (H1)
VW Polo
VW Touareg VW Vento
Volvo S80
-
-
ca 100 (all Volvo)
ca 90 ( all Volvo models)
Volco XC60 Volvo XC90 -
40
Maruti Suzuki India Ltd.
Competitive Landscape
BCG Matrix
Passenger Vehicle Growth Rate Number of Years Vehicles Growth (Sales Current/Sal
es Previous) 1.12311999 1.001820139 1.256732936 1.291640637 Cumulative growth in
4yrs 1.826419822 CAGR(%) 16.25% -
2006-07 1,379,979 2007-08 1,549,882 2008-09 1,552,703 2009-10 1,951,333 2010-11
2,520,421
Relative Market Share Market (%) 45.00% 16.00% Share Relative 0.356
Company Maruti Hyundai TATA Motors
14.00%
0.311
41
Maruti Suzuki India Ltd.
Compan y
Year
Sales
Incremental Growth (Sales Current/Sales Previous)
Cumulative growth in 4yrs
CAGR
200607 200708 Maruti 200809 200910 201011
635629
1.119863946
-
-
711818
1.782075708
15.54 %
722144
1.014506517
870790
1.205839832
-
-
1132739
1.300817648
-
-
200607 200708 Hyundai 200809 200910 201011
186174
1.076476844
-
-
200412
1.916040908
23.53 %
245297
1.223963635
289863
1.181681798
-
-
356717
1.230639992
-
-
42
Maruti Suzuki India Ltd.
200607 200708 Tata Motors 200809 200910 201011
228220
0.955459644
-
-
218055
1.400893874
8.79%
207512
0.951649813
260020
1.253035969
-
-
319712
1.229566956
-
-
The Tata Motors are at Dogs position and Hyundai is at Question mark position wi
th respect to the market leader (Maruti Suzuki). Dogs have low market share and
a low growth rate and thus neither generate nor consume a large amount of cash.
This can be due to the Tata Nano failure and Indica loosing market. Question mar
ks are growing rapidly and thus consume large amounts of cash, but because they
have low market shares they do not generate much cash. Hyundai has to bring new
innovation into its product and brand lines in order to keep regular cash flows.
43
Maruti Suzuki India Ltd.
Porter Five Forces
1. Bargaining power of Buyers: India is an emerging country with growing GDP of
7.74%. The countrys household income is increasing which has lead to growth in it
s markets. The rise in the population has even increased the demand needs of the
country. The divide between the rich the poor is also increasing which has attr
ibuted the foreign companies to fight for consumers in the country. With the adv
ent of many foreign companies entering into the country has lead to the variety
of options for the consumers which has lead to the decrease in the market share
of the market leader i.e. Maruti Suzuki India Ltd. which was having a market sha
re of 55.5% in 2000 which reduced to 44.1% in 2010. This also shows that the Ind
ian middle class is rising with purchasing power and changing tastes and prefere
nces. Since the market leader still has a lead of more than 25% which clearly st
ates that buying power of company is still a bit leveraged. Even the switching c
osts are very high for consumer. Hence, we can clearly infer that the Bargaining
Power of Buyers is Moderate. 2. Bargaining Power of Suppliers The industry majo
r costs are incurred in the designing and manufacturing of the metal forge and f
ittings. Almost 70% of the cost incurred in it. Since the industry is growing at
a much faster rate than the steel industry where there is derived demand. Due t
o the cheap imports of Steel from China the Indian steel industry is at bay. The
se factors determine to conclude that the industry has a lot of options to minim
ize their costs. Hence, we can clearly infer the threat bargaining power of supp
liers is LOW. 3. Threat of Substitutes The substitutes comprises of Indian Rail,
Metro and Local trains that comprise of a major mode of commuting for the masse
s in big cities. The Government as part of 10th Plan has initiated several Metro
s in Kolkata, Delhi, Bangalore and Hyderabad. The State Board buses and private
transport buses are also huge threat to the industry. The other modes of transpo
rt are the Commercial vehicles, Two Wheelers and three Wheelers which are a majo
r threat to the passenger car industry. Hence, we can clearly infer the threat o
f substitutes is HIGH.
44
Maruti Suzuki India Ltd.
4. Entry and Exit Barriers The industry is a capital intensive by nature which c
learly defines the entry and exit barriers. The Government of India has to compl
y with the European ECE regulations to keep a check on global pollution. The exi
t barriers are also capital intensive even today the Hindustan Motors whose fron
tline Brand Ambassador is a dead state of product life cycle still they are not ab
le diversify or move out of the business. Though the foreign companies have trie
d to enter India through completely knocked down units where in the components m
anufactured outside are assembled back in India, however, the business is vulner
able to the exchange rate volatility and the infrastructure lag within the count
ry. Hence, entry and exit barriers are HIGH. Competitive Rivalry
Manufacturer Maruti Suzuki India Hyundai Motor India Tata Motors Mahindra and Ma
hindra GM India Ford India Toyota Motor Volkswagen India BMW India Mercedes-Benz
India Audi India Total
Domestic Sales 2010-11 1,132,739 356,717 319,712 377,000 110,804 83,887 74,759 3
2,627 6,246 5,819 3,003 2,503,313
S= % Market Share 45.25% 14.25% 12.77% 15.06% 4.43% 3.35% 2.99% 1.30% 0.25% 0.23
% 0.12% 100.00%
HHI = S^2 0.2047526 0.0203057 0.0163113 0.0226805 0.0019592 0.0011229 0.0008919 0
.0001699 0.0000062 0.0000054 0.0000014 0.2682
45
Maruti Suzuki India Ltd.
A HHI index below 0.01 indicates a highly competitive index. A HHI index below 0
.15 indicates an unconcentrated index. A HHI index of 0.15 to 0.25 indicates mod
erate concentration. It can be clearly inferred form the HHI Index which is 0.26
82 , the Passenger segment of automobile sector is highly concentrate with four
domestic giants like (Maruti , Hyundai, Tata Motors and Mahindra and Mahindra )
and many foreign players who are fighting for the same pie in India. The overall
CAGR of the Passenger Car industry is 16.24%. The number of brands of companies
which have there presence in India is 15-20 which clearly states that there is
a oligopolistic market where in all the companies are fighting for market share.
Hence, we can clearly infer that the competitive rivalry is HIGH in this indust
ry. The final verdict is that the industry is lucrative for several big companie
s to fight for market share as the country population with its market evolving c
onstantly and as well as the GDP is growing.
Macro Environment Analysis
Political Environment Indian government auto policy aimed at promoting an integr
ated, phased and conducive growth of the Indian automotive industry. Allowing au
tomatic approval for foreign equity investment up to 100 per cent, with no minim
um investment criteria. Establish an international hub for manufacturing small,
affordable passenger cars as well as tractors and two wheelers. Ensure a balance
d transition to open trade at minimal risk to the Indian economy and local indus
try. Assist development of vehicles propelled by alternate energy sources. Layin
g emphasis on R&D activities carried out by companies in India by giving a weigh
ted tax deduction of up to 150 per cent for in-house research and R&D activities
. Plan to have a terminal life policy for CV along with incentives for replaceme
nt for such vehicles. Promoting multi-modal transportation and the implementatio
n of mass rapid transport systems.
46
Maruti Suzuki India Ltd.
Economic Environment The Indian economy has grown at 8.5 per cent per annum. The
manufacturing sector has grown at 810 per cent per annum in the last few years.
More than 90 per cent of the CV purchase is on credit. Finance availability to C
V buyers has grown in scope during the last few years. The increased enforcement
of overloading restrictions has also contributed to an increase in the number o
f CVs plying on Indian roads. Several Indian firms have partnered with global pl
ayers. While some have formed joint ventures with equity participation, others h
ave entered into technology tie-ups. Establishment of India as a Manufacturing h
ub, for mini, compact cars, OEMs, and for auto components. Social Environment Gr
owth in urbanization, 4th largest economy by PPP index. Upward migration of hous
ehold income levels. Increase in PPP, led to the increase in market share of com
pact cars. 85% of Cars are financed in India (15% in China). Cars priced below U
SD 12000 accounts for nearly 80% of the market. Vehicles priced between USD 7000
12000 form the largest segment in the passenger car market. Indian customers are
highly discerning, educated and well informed. They are price sensitive and put
a lot of emphasis on value for money. Preference for small and compact cars. Th
ey are socially acceptable, even amongst the welloff. Preference for fuel effici
ent cars with low running costs. The Tata Indica has the lowest running cost at
US 8.5 cents per mile. Technological Environment With the entry of global compan
ies into the Indian market, advanced technologies, both in product and productio
n processes have developed. With the development or evolution of alternate fuels
, hybrid cars have made entry into the market. Few global companies have setup t
heir R&D centers in India. Major global players like Audi, BMW, and Hyundai etc.
have setup their manufacturing units in India. Government initiatives regarding
tax rebates have led to global players setting up their R&D centers in India.
47
Maruti Suzuki India Ltd.
Govt. initiatives in establishing NATRIP network across the country will further
lead to enhancing R&D and technological advancements. Ecological Environment Au
tomotive regulations in India Status of Indian regulation Fully / Partially alig
ned In process of being aligned Items /Regulations to be covered Total no. of re
gulations 43 32 39 114 Physical infra structure such as roads and bridges affect
the use of automobiles. If there is good availability of roads or the roads are
smooth then it will affect the use of automobiles. Physical conditions like env
ironmental situation affect the use of automobiles. If the environment is pleasa
nt then it will lead to more use of vehicles. Technological solutions helps in i
ntegrating the supply chain, hence reduce losses and increase profitability. Wit
h the entry of global companies into the Indian market, advanced technologies, b
oth in product and production process have developed. With the development or ev
olution of alternate fuels, hybrid cars have made entry into the market. Few glo
bal companies have setup R&D center in India. Major global players like Audi, BM
W, etc. Have setup their manufacturing units in India. Legal Environment Legal p
rovision relating to environmental population by automobiles. Legal provisions r
elating to safety measures. Confirms the governments intention on harmonizing the
regulatory standards with the rest of the world. Indian government auto policy
aimed at promoting an integrated, phased and conductive growth of the Indian aut
omobile industry.
48
Maruti Suzuki India Ltd.
Establish an international hub of manufacturing small, affordable passenger cars
. Ensure a balanced transition to open trade at minimal risk to the Indian econo
my and local industry. In India the Rules and Regulations related to driving lic
ense, registration of motor vehicles, control of traffic, construction & mainten
ance of motor vehicles etc are governed by the Motor Vehicles Act 1988 (MVA) and
the Central Motor Vehicles rules 1989 (CMVR). The Ministry of Shipping, Road Tr
ansport & Highways (MoSRT&H) acts as a nodal agency for formulation and implemen
tation of various provisions of the Motor Vehicle Act and CMVR.
In order to involve all stake holders in regulation formulation, MoSRT&H has con
stituted two Committees to deliberate and advise Ministry on issues relating to
Safety and Emission Regulations, namely CMVR- Technical Standing Committee (CMVR
-TSC) Standing Committee on Implementation of Emission Legislation (SCOE) CMVR-
Technical Standing Committee (CMVR-TSC) This Committee advises MoSRT&H on variou
s technical aspects related to CMVR. This Committee has representatives from var
ious organisations namely; Ministry of Heavy Industries & Public Enterprises (Mo
HI&PE)), MoSRT&H, Bureau Indian Standards (BIS), Testing Agencies such as Automo
tive Research of India (ARAI), Vehicle Research Development & Establishment (VRD
E), Central Institute of Road Transport (CIRT), industry representatives from So
ciety of Indian Automobile Manufacturers (SIAM), Automotive Component Manufactur
ers Association (ACMA) and Tractor Manufacturers Association (TMA) and represent
atives from State Transport Departments. Major functions the Committee is:
49
Maruti Suzuki India Ltd.
o
To provide technical clarification and interpretation of the Central Motor Vehic
les Rules having technical bearing, to MoRT&H, as and when so desired. To recomm
end to the Government the International/ foreign standards which can be used in
lieu of standard notified under the CMVR permit use of components/parts/assembli
es complying with such standards. To make recommendations on any other technical
issues which have direct relevance in implementation of the Central Motor Vehic
les Rules. To make recommendations on the new safety standards of various compon
ents for notification and implementation under Central Motor Vehicles Rules. To
make recommendations on lead time for implementation of such safety standards. T
o recommend amendment of Central Motor Vehicles Rules having technical bearing k
eeping in view of Changes in automobile technologies.
o
o
o
o
o
CMVR-TSC is assisted by another Committee called the Automobile Industry Standar
ds Committee (AISC) having members from various stakeholders in drafting the tec
hnical standards related to Safety. The major functions of the committee are as
follows:
o o o o o
Preparation of new standards for automotive items related to safety. To review a
nd recommend amendments to the existing standards. Recommend adoption of such st
andards to CMVR Technical Standing Committee Recommend commissioning of testing
facilities at appropriate stages. Recommend the necessary funding of such facili
ties to the CMVR Technical Standing Committee, and Advise CMVR Technical Standin
g Committee on any other issues referred to it
o
The National Standards for Automotive Industry are prepared by Bureau of Indian
Standards (BIS). The standards formulated by AISC are also converted into Indian
Standards by BIS. The standards formulated by both BIS and AISC are considered
by CMVR-TSC for implementation.
50
Maruti Suzuki India Ltd.
Standing Committee on Implementation of Emission Legislation (SCOE) This Committ
ee deliberates the issues related to implementation of emission regulation. Majo
r functions of this Committee are
o o o
To discuss the future emission norms To recommend norms for in-use vehicles to M
oSRT&H To finalise the test procedures and the implementation strategy for emiss
ion norms Advise MoSRT&H on any issue relating to implementation of emission reg
ulations.
o
Based on the recommendations from CMVR-TSC and SCOE, MoSRT&H issues notification
for necessary amendments / modifications in the in Central Motor Vehicle Rules.
In addition, the other Ministries like Ministry of Environment & Forest (MoEF),
Ministry of Petroleum & Natural Gas (MoPNG) and Ministry of Non-conventional En
ergy Sources are also involved in formulation of regulations relating to Emissio
ns, Noise, Fuels and Alternative Fuel vehicles.
51
Maruti Suzuki India Ltd.
Strategic Pricing Analysis
The prices of the cars of MSIL have generally been set to target the Lower middl
e-class and middle class families in India. Their pricing strategy is based on t
heir continuing vision of Putting India on Four Wheels. Their prices are so design
ed as to enable people to upgrade from 2-wheelers to 4-wheelers and already 4-wh
eeler owners to upgrade to a better 4-wheeler offered by the company. In 2007, t
hough the company changed its Price strategy as it was being labeled as Low-Pric
e small-car manufacturer. They launched plans of a new Car in the Premium Car se
gment (Kizashi) to remove this label attached to the companys reputation. The fol
lowing chart shows the various Products and their Price ranges of the Cars of MS
IL in India.
The company has set its pricing in following manner given below: 1. Setting an O
bjective ( Maximum Market Share )- Maruti believes in maximizing the market shar
e as higher sales volumes will lead to the lower unit cost and higher long run p
rofit. The company is the market leader in India for last two decades.
52
Maruti Suzuki India Ltd.
2.
3. 4.
5. 6.
Determining the Demand Maruti estimates the demand curve and also the price elast
icity of demand. Based on these two principles Maruti had several times lowered
their prices when the market starts stagnating. Estimates Cost- In this industry
the companies keep account of all the costs as 75% of the cost is Raw Materials
and the industry is capital intensive by nature. Analyzing the Competitors The
company has always made price points through it can enter into the price points
of various within their own brand lines and as well as between the brand lines o
f the competitors in order the capture the maximum consumers. Pricing Methodolog
y (Value Pricing)Price Adaptations (Geographical Pricing ) Maruti has always giv
en differential pricing as per metropolitan cities. There are price differential
s Mumbai, Delhi, Kolkata and Chennai. This differential pricing is in terms of t
he product form pricing and location pricing. The company also gives allowance a
nd discounts and as well as promotional schemes.
Maruti as a market leader, MUL adopted aggressive pricing strategies. (I) Compan
y had products at various price points.
In the early 2000s when the passenger car industry was witnessing stagnant grow
th, Maruti slashed the prices of its various products, to revive the industry. K
hattar said, "We believe that Maruti Udyog should take the lead in getting the m
arket up and going once again. This is why MUL unleashed an aggressive pricing s
trategy." He called price-cut a, secondary evolution,, which would attract more
people to cars, thus, helping the overall growth of the market. In early 2000. I
n spite of the increased sales tax and higher costs due to new technology inputs
, MUL, opted price cuts. Explaining the price cuts, Khattar said, The focus was o
n offering new upgraded vehicles at a low price. However industry analysts perc
eived these price cuts as a desperate measure to revive flagging sales and regai
n market share. Maruti caters to all segments and has a product offering at all
price points. It has a car priced at Rs.1, 87,000.00 which is the lowest offer o
n road. Maruti gets 70% business from repeat buyers who earlier had owned a Maru
ti car. Their pricing strategy is to provide an option to every customer looking
for up gradation in his car. Their sole motive of having so many product offeri
ng is to be in the consideration set of every passenger car customer in India. H
ere is how every price point is covered.
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Maruti Suzuki India Ltd.
Product line pricing Maruti pricing is based on Product line pricing as above we
can infer that the Versa brand has several price points where the brand variant
s shall provide different within a price range. Optional Feature Pricing Maruti
also provides optional feature pricing example -Maruti 800 had A/C and Non A/C v
ariants which have different price points. Thus the company caters to huge segme
nt of consumers. (II) Offering one stop shop to customers or creating different
streams.
Maruti has successfully developed different revenue streams without making huge
investments in the form of MDS, N2N, Maruti Insurance and Maruti Finance. These
help them in making the customer experience hassle free and helps building custo
mer satisfaction.
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Maruti Suzuki India Ltd.
Maruti Finance: In a market where more than 80% of cars are financed, Maruti has
strategically entered into this and has successfully created a revenue stream f
or Maruti. This has been found to be a major driver in converting a Maruti car s
ale in certain cases. Finance is one of the major decision drivers in car purcha
se. Maruti has tied up with 8 finance companies to form a consortium. This conso
rtium comprises Citicorp Maruti, Maruti Countrywide, ICICI Bank, HDFC Bank, Kota
k Mahindra, Sundaram Finance, Bank of Punjab and IndusInd Bank Ltd.( erstwhileAs
hok Leyland Finance). Maruti Insurance : Insurance being a major concern of car
owners. Maruti has brought all car insurance needs under one roof. Maruti has ti
ed up with National Insurance Company, Bajaj Allianz, New India Assurance and Ro
yal Sundaram to bring this service for its customers. From identifying the most
suitable car coverage to virtually hassle-free claim assistance it s your dealer
who takes care of everything. Maruti Insurance is a hassle-free way for custome
rs to have their cars repaired and claims processed at any Maruti dealer worksho
p in India. True Value Initiative to capture used car market: Another significan
t development is MUL s entry into the used car market in 2001, allowing customer
s to bring their vehicle to a Maruti True Value outlet and exchange it for a n
ew car, by paying the difference. They are offered loyalty discounts in return.
This helps them retain the customer. With Maruti True Value customer has a trust
ed 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 knows its str
ength in Indian market and has filled this gap of providing trust in Indian used
car market. Maruti has created a system where dealers pick up used cars, recond
ition them, give them a fresh warranty, and sell them again. All investments for
True Value are made by dealers. Maruti has build up a strong network of 172 sho
wrooms across the nation. The used car market has a huge potential in India. The
used car market in developed markets was 2-3 times as large as the new car mark
et. N2N: Car maintenance is a time-consuming process, especially if you own a fl
eet. Maruti s N2N Fleet Management Solutions for companies takes care of the A-Z
of automobile problems. Services include end-to-end backups/solutions across th
e vehicle s life: Leasing, Maintenance, Convenience services and Remarketing. Ma
ruti 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 th
e car. This brings that customer to Maruti showroom and Maruti ends up creating
a customer.
55
Maruti Suzuki India Ltd.
Brand Ambassadors
Tag Lines for various Maruti brands:
1. Maruti Suzuki - Way of Life - The theme of the pavilion symbolizes the compan
y s philosophy of constantly trying to find what the customers want and creating
products and services to delight and enrich the customers lives. The four crit
ical pillars of Way of Life namely Value, Spirited, Sporty and Straight Forwardn
ess will be showcased though the four neat zones of the pavilion. 2. Kizashi - A
Sign of Great Things to Come 3. Grand Vitara - Play it Your Way 4. DZire - The
Heart Car 5. Maruti SX4 - Men are Back 6. Maruti Swift - You re The Fuel 7. Ritz
- Live The Moment 8. A-Star - Stop @ Nothing 9. Maruti EECO - Happiness Family
Size! 10. Wagon R - For the Smarter Race 11. Maruti Gypsy -There is a Gypsy in e
veryone 12. Omni - Fits All 13. Zen Estillo - Take a Fresh View of Life 14. Alto
- Lets Go. 15. Maruti 800 - Change your Life
Brand Ambassadors
1. R Madhavan for Wagon R - South Indian actor R Madhavan, who is also quite pop
ular in Hindi cinema, was chosen as the brand ambassador of Wagon R. The company
felt that he was a true personification of the WagonR brand. Brand WagonR stand
s for being Contemporary, Pragmatic, Intelligent, Leader-like, Balanced and Cari
ng. The same attributes stand true for Madhavan as well. He would represent Wago
nRs values, strengthen the Brand further, and at the same time add youthfulness t
o the Brand. The company brought on board an ambassador whom they felt could con
nect with their target group i.e. basically urban upper middle and middle class
families. Madhavan was well known across the country and was not divided as a fa
ce of the North or the South and this was an important fact while choosing him.
Additionally, his popularity in South added to the brand s popularity in the Sou
th Indian markets.
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Maruti Suzuki India Ltd.
After conducting a research, the company was sure that associating with a person
ality such as Madhavan will certainly reinforce the brand values of WagonR with
the TG at an all-India level. Additionally, the tie-up would give a boost to Wag
onRs KPI (Key Performance Indicators) in key Southern cities such as Bengalaru, H
yderabad, Chennai, Cochin etc. 2. Zubin Antalia for Maruti Suzuki Maruti Suzuki
contributes towards road safety through its Institute of Driving Training and Re
search (IDTR) and Maruti Driving School (MDS) initiatives and has already traine
d around 450,000 persons in safe driving in the last few years. Through the Nati
onal Road Safety Mission, the company plans to train an additional 500,000 peopl
e in safe driving in the next three years across India. Of the 500,000 people to
be trained, at least 100,000 will be people from the underprivileged section of
society, who are keen to take driving as a profession. Zubin Antalia, in the Ma
ruti Suzuki-Autocar Young Driver contest, beat 32 other competitors from across
the country and was chosen as Maruti Suzuki s ambassador for safe driving and pr
omoting road safety awareness. Through this initiative, the company wanted to en
courage a safe driving culture among the young drivers today. 3. Farhan Akhtar f
or A Star - The success of Rock On made Farhan popular among the youth. He was ch
osen as the brand ambassador of A-Star to attract his new fan following as Marut
i was the only brand which could make ample cars as the demand would be more
rocking than the supply ! 4. JohnAbraham for SX4 - John is one of the big name
s in the Bollywood circuit where advertisements are concerned. His tough image c
oupled with films like Dhoom to his credit, makes the handsome hunk an ideal mod
el for most products. Prior to this, the actor has not been associated with any
car brand but signed up for all products associated with the motor and bike indu
stry, be it bikes or lubricants. 5. Abhishek & Amitabh Bachhan for Versa - Versa
has versatile characteristics to ensure driving pleasure, easy maneuvering, spa
cious interiors, safety and flexibility. The company chose Big B as he is idoliz
ed by most Indians and is a respectful personality in Bollywood. The Bachhans to
gether epitomize the best of both worlds... just like the VERSA, which offers th
e best combination of space and car-like drivability. To be fair, the Big B magi
c did work and the ads created significant interest, drawing people into the sho
wroom. But perhaps the positioning itself was faulty as people were expecting a
larger than life car, just like the brand ambassador. As a result, Versa was re-
positioned as a family car, with the core proposition being, the joy of travelli
ng together. Due to the new positioning, Versa started doing well and witnessed
an upswing.
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Maruti Suzuki India Ltd.
Future strategy of Maruti
FY2010-11. The GDP grew at 8.5 per cent, aided by recovery in agriculture and go
od performance in the industry and services sector. As a consequence, the domest
ic car market remained buoyant and posted a healthy growth rate of 29 per cent,
higher than 26 per cent achieved in the previous year (FY2009-10), which was sub
stantially higher than what was anticipated at the beginning of the year. Despit
e the unexpected demand for cars and the capacity limitations in the Company, we
could produce and sell 1,271,005 units, a growth of 24.8 per cent over the prev
ious year. This became possible due to higher levels of productivity and many in
novative practices at the shop floor level. The vendors, despite being taken by
surprise, also managed to support the Company in its efforts to increase product
ion. As a consequence, the Company was able to marginally improve its market sha
re. Customers continued to rate the Company best in sales and service satisfacti
on, as measured by JD Power surveys. The Company has now been rated best in serv
ice satisfaction for eleven years in a row. The Company has instituted projects
to further strengthen its market position and profitability and to build R&D cap
ability and capacity for the future. Production capacity is being enhanced with
two more plants at Manesar. Each of these plants will have an installed annual c
apacity of 250,000 cars. The Company developed in-house i-GPI (Integrated Gas Po
rt Injection) Technology and launched factory-fitted CNG variants for five of it
s models: Alto, WagonR, Eeco, Estilo and SX4. This i-GPI technology delivers hig
her fuel efficiency compared to conventional CNG cars. Besides, the loss of powe
r compared to gasoline engine cars, a shortcoming of conventional CNG technology
, is negligible in the case of i-GPI. The Company believes that once CNG availab
ility improves across the country, it could become a popular option owing to its
low cost and environment friendliness. Apart from launching new products, the C
ompany added 131 new sales outlets to reach 933 outlets in 668 cities and increa
sed its service reach to 1,395 cities with 2,946 outlets. The Companys network is
now servicing about 1.2 million vehicles every month. With increasing service l
oad, the importance of training has taken priority. The Company has initiated ti
eups
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Maruti Suzuki India Ltd.
with 28 ITIs (Industrial Training Institutes) to enhance availability of technic
al manpower at workshops. On the environmental front, in FY2010-11 the Company m
ade improvements on its energy and water consumption at its manufacturing sites
at Gurgaon and Manesar. Emission levels at both sites were strictly monitored. T
o reduce emissions due to transportation, the Company is working on a project to
transport cars by rail.
The Company benefited from sales in both the top cities and the rural hinterland
with the help of its network reach. In the last four years, rural sales have gr
own to contribute 20 per cent of total domestic sales. About 40 per cent of the
Companys sales outlets are in the rural format, with a scaled down investment tha
t enables viability on lower volumes. Thus focusing on this segment also reaps b
enefits for longer duration for the company.
59
Maruti Suzuki India Ltd.
Maruti Suzuki India unleashed all-new XA Alpha Concept sports utility vehicle
at the Auto Expo 2012 in New Delhi. It has been developed in-house by Maruti Suz
uki s research and development team. It is expected that XA Alpha Concept SUV wi
ll transform into production vehicle by the end of 2013 and it is also expected
that it will carry most of the design and styling elements of the concept. It wi
ll be available in both petrol and diesel. The petrol variant will be powered by
K-series engine which is very fuel efficient. The diesel variant will be powere
d by Fiat s tried and tested 1.3 litre diesel engine. In terms of styling the XA
Alpha looks very muscular featuring huge alloy wheels, thick c-pillar and L-sha
ped tail lamps. It is expected that XA Alpha will replace the aging Gypsy and wi
ll compete with the likes of Ford EcoSport, Renault Duster and Premier Rio.
Profit and Loss Account (Forecasted)
1
Parameters Volumes (Nos) Domestic Export Total
2007-08
2008-09
2009-10
2010-11 1,132,739. 0 138,266.0 1,271,005. 0 404,190.0 380,057.0 24,133.0 42,908.
0
2011-12 1,313,977. 2 160,388.6 1,477,543. 3 469,870.9 440,866.1 27,994.3 64,627.
1
2012-13
870,790.0 147,575.0 1,018,365. 0 209,493. 0 dies, 30,890.0 27,269.0 19,539.0 28,
488.0 230,852. 0 318,073.0 298,534.0
1,524,213.6 186,050.7 1,717,644.1 546,224.9 511,404.7 32,473.4 74,967.4
2
3
Gross Sales Vehicles Spares, moulds Excise duty
60
Maruti Suzuki India Ltd.
4
Net sales (2-3)
178,603. 0
203,583. 0
289,585.0
361,282.0
405,243.8
436,437.3
5 6 7 8
Income from services 759.0 Total operating income Other income 8,371.0 187,733.
Total income 0 Consumption of raw materials Employee costs Manufacturing, Admin
and other costs Selling and distribution expenses Financial expenses Depreciatio
n Total expenditure PBT (8-15) Current tax Deferred tax PAT (16-17-18) 130,342.
0 3,562.0
970.0
1,404.0 290,989.0 10,243.0 301,232.0
1,715.0 362,997.0 12,227.0 375,224.0
2,250.5 452,824.1 13,872.9 466,697.0
2,953.1 564,879.7 15,740.4 580,620.1
9,985.0 214,538. 0 150,598. 0 4,711.0
9 10 11
224,134.0 5,456.0
287,943.0 7,036.0
350,022.7 8,828.2
435,465.0 11,076.8
10,793.0
15,685.0
17,972.0
29,178.0
40,646.8
56,623.6
12 13 14 15
5,602.0 5,682.0
7,382.0 7,065.0
9,160.0 335.0 8,250.0 265,307.0 35,925.0 11,230.0 -281.0 24,976.0
9,600.0 244.0 10,135.0 344,136.0 31,088.0 8,101.0 101.0 22,886.0
11,488.1 0.0 12,291.3 423,277.1 43,419.9 13,026.0 101.0 30,292.9
13,747.5 0.0 14,906.4 531,819.3 48,800.7 14,640.2 101.0 34,059.5
16 17 18 19
25,030.0 7,509.0 26.0 17,308.0
16,758.0 4,592.0 -118.0 12,187.0
Risk Factors
The Company operates in an environment which is affected by various factors some
of which are controllable while some are outside the control of the Company. Th
e activity of risk management in the Company is reviewed by the Audit Committee
through a management subcommittee, namely the Executive Risk Management Committe
e (ERMC). The ERMC consists of the Managing Director & CEO and all executive off
icers of the Company. It reviews the risk management activities on a regular bas
is in addition to scanning for any new risks that may arise due to changes in th
e business environment. While the possibility of a negative impact due to one or
more such risks cannot be totally precluded the Company proactively takes
61
Maruti Suzuki India Ltd.
reasonable steps and makes efforts to mitigate significant risks that may affect
it. Some of the risks that are potentially significant in nature and need caref
ul monitoring are listed hereunder: 1. Macroeconomic Factors 2. Preparedness of
value chain partners 3. Inappropriate product portfolio 4. Competition product l
aunches 5. Talent acquisition & retention 6. Geographic concentration 7. Changes
in government policy and legislation
Outlook
The market for passenger vehicles in India is estimated to grow to 4.5 million t
o 5 million units by 2015- 16. Although rising inflation, interest rates and cru
de oil prices are concerns in the short term, the Company is optimistic about th
e medium and long term. The Company is gearing up for growth. Initiatives to exp
and manufacturing capacity are underway. The Companys products are well received
by customers. SMCs design philosophy of aggressive and sporty cars, K-series tech
nology and the popularity of the Companys diesel car offerings augur well for the
future. To supplement this, the Company is stepping up its R&D capability to wo
rk in a unified way with SMC and offer a regular pipeline of new and refreshed m
odels. The Companys network of sales and service outlets continues to be its stre
ngth. Network is set to expand in the future, and will help tap opportunity as e
conomic prosperity widens and deepens in the country. High commodity prices and
adverse currency movements continue to be the challenges. Besides existing effor
ts to boost productivity, reduce waste and enhance value, the Company is working
on new initiatives like higher localization and hedging to reduce the impact of
commodity prices and currency. The Company is conscious that talent will be the
key to achieving the goals envisaged for the medium term. Specific initiatives
are being taken in the area of recruitment and development. The Company is worki
ng closely with suppliers and dealers to prepare them for growth as well as high
er competitive intensity.