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Introduction To The Maruti Suzuki India Limited
Introduction To The Maruti Suzuki India Limited
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Maruti Suzuki India Limited (Formally known as Maruti Udyog Ltd) was established
in 1981, February 24th. It was organized as a legal corporation beneath the
provision of the Indian Companies ACT, 1956 to converge the rising demand of
personal transportation by the lack of an efficient public transport system. It
is the largest car manufacturing company in India accruing over 50% domestic car
market. Suzuki Motor Corporation is the largest manufacture of mini passenger
vehicles in Japan. According to Automotive Intelligence, Suzuki is eleventh
largest vehicle manufacturing company in the world and fourth in Japan in terms
of worldwide sales. The company offered different range of cars from passenger
cars to sports cars. From 1982, Maruti Udyog was a subsidiary of Suzuki Motor
Corporation of Japan. They licensed and joint venture agreement had been made
between two companies on October, 2 1982. 1
Maruti was also involved in various businesses like manufacturing, sales and
purchasing of motor vehicles and parts of automobiles. Other activities of Maruti
were facilitation of pre-owned car sales, fleet management and car financing.
They have seven subsidiary companies in India are Insurance Business Agency Ltd,
Maruti Insurance Distribution Services Ltd, Maruti Insurance agency Solution Ltd,
Maruti Insurance Agency Network Ltd, Maruti Insurance Agency services Ltd, Maruti
Insurance Agency Logistics Ltd.2 all these were affianced with promotion and
selling motor insurance policies to motorcycle owners and the seventh one True
Value Solution Ltd were in business of sales of certified pre-owned motorcycles
under the brand ‘Maruti True Value’. They have four manufacturing units in
different areas in Haryana state.3.
The first commercial car from the joint venture company was launched in 1983
called Maruti 800 which was very popular. In 1984 they launched Maruti Omni which
fits one full size family. In 1985 they introduced Maruti Suzuki Gypsy. In 1997
company exposed to foreign market and imported 500 cars to Hungary. In 1990 they
launched three box cars with 1000cc engine; this was the major transformation in
the company. In 1992 Suzuki Motor Corporation increased its share value to 50%
in Maruti. Later year they launched with Maruti Zen and in 1994 they introduced
1
Essays, UK. (November 2018). Introduction To The Maruti Suzuki India Limited Commerce
Essay. Retrieved from https://www.ukessays.com/essays/commerce/introduction-to-the-maruti-
suzuki-india-limited-commerce-essay.php?vref=1
Maruti Esteem into the market.4
Maruti has inaugurated its second plant in 1995. In 1997, Maruti started Maruti
Service Master as model workshop to take care of its sales in India. In 2002,
Suzuki Motor Corporation increased the share in Maruti to 54.2%. By 2002 they
established 10 finance companies in which 8 of them were finance companies and
two were joint ventures. They started a new business strategy for its purchase,
sales and trade of old cards is Maruti True Value. With the first worlds strategic
model with the help of Suzuki Motor Corporation they launched ‘the SWIFT’ in
2005.5
Maruti started working on new car plant and the diesel engine facility at Manesar
plant, Haryana in 2006-07. They opened a new institute of Driving Training and
Research (IDTR) in 2006 is a mutual project with Delhi Government for better
Research in the field of automobile. They introduced diesel cars like Swift and
SX4 luxury sedam in 2007. Maruti launched Multi Utility Vehicle (MUV) called
Grand Vitara stylish, muscular and 5 setter car in 2007. Formerly they changed
their name from Maturi Udyog Ltd to Maruti Suzuki India Ltd in 2007. After this
they made an joint venture agreement with Magneti Marelli Powertrain SpA, both
turned into Magneti Marelli Powertrain India Pvt Ltd and they were manufacturing
Electric Control Units for cars. They also went into other joint venture agreement
with Futaba Industrial Co Ltd and formed FMI Automotive Compoments Ltd for
manufacturing Exhaust System Components. In 2008-09, they introduced a new A2
segment car, A-star in India and in Europe as new alto. They also raised their
production capacity to 1million cars. In 2008, they launched a dual fuel called
Maruti 800 Duo which runs on Liquefied petroleum gas (LPG) as well as petrol. 6
Korea having manufactured about 5 million vehicles by may 2005. It also should
a remark as most booming automobile company as joint venture and they keep on
making profits since inception till 2000-01. Maturi also produced in service
profits on an income of Rs 92.5 billion high reduction on new products that have
launched resulted in a book loss. 8
Maruti’s profit increase to 98% rise in its economic second quarter net profits
and they are planning to invest $32.3 million. It is going to improve the Gurgaon
factory to northern state of Haryana increasing the facilities to improve 79,000
cars in year. They are trying to modernize its factory to produce cars faster.
As the quarterly profit is benefited there is a huge demand from local market as
well as international market. 9
Implementation of PLM:
Maruti’s product development aims are, necessitate for short cycle times is
necessary all times for the company to be at top position. Maruti’s management
desires to launch new models as earlier as possible and try to decrease the time
required for small modifications and expansion of different products. Another
aim is to co-development. Main goal of Maruti is to get closer through global
team and supplies to come up with new products and stand in the market. Other
aim is to reform the method of vehicle localization and improvising quality and
reliability. All these aims piercing straight to implement Product lifecycle
management (PLM) answer with capabilities for information management, knowledge
capture, process management and supporting for global collaboration.10 PLM
solution will directly verbalize to Maruti’s business challenges.
Information management potential to solve the issues of different platforms,
local variants and export destinations.
Knowledge capture improves innovation and at the same time condenses prices by
growing part re-use.11
Maruti implemented UGS PLM software as “UGS leverages the business value by
offering a comple PLM solution” according to C. V. Raman, General manager,
Engineering Division, Maruti Udyog Ltd. PLM execution consists of Teamcenter, NX
and Tecnomatix software. Teamcenter offers broad range of practicality for
release management which includes statements of material management and change
management. NX maintains vehicle design which provides advance tools for styling,
product design and digital mockup. System based modeling solution of NX make
simpler for creating product variants. It is also used for tool design and the
development of machining programs. Tecnomatrix software computerizes develops
process planning. Maruti has won the Asia Pacific PLM excellence Award for 2006
by UGS Corp, which is a company for providing worldwide provider of product
lifecycle management (PLM) software and solutions.12
Workforce of maruti has grown quickly and expanded to 5,000 workers all over the
India. Maruti rapidly discovered that by incompatible systems to manage human
resources is insufficient. They needed a system that runs and maintains their
employee details. Executing Oracle Human Resources in the company reported
improved its HR functions as recruitment, compensation management, leave
management, payroll, competency assessments and staff development. Each employee
particulars are accumulated at a solitary database and from where HR department
staff can access from the database for complete personal and history of the
employees. For example, if a new position is opened they can search the database
and find the best match for the opened position. It also helps to find the
employee skill levels and training programs for better service and to have better
knowledge.13
For Instance when new business units open up and the company needs to make sure
their productivity is not affected and the servers need to be managed manually
in order to make sure everything is going as expected. This would definitely
involve either a change in system, that is more scalable with the growing business
and reduce the manual intervention in to the maintenance task. Otherwise it’s
a way of revising their ways of managing.18
Oracle fitted the slot in an appropriate way, which replaced the till then
products used by Maruti. Most of them being internal were not a best option,
keeping the current business scenario in view as they lacked co-ordination among
them and manual intervention was imminent. Maruti wanted this change to be as
smooth as possible and hence played the responsibility with Oracle itself which
had a specialized consulting domain. The joint decision was made by oracle
considering the requirements of Maruti. The decision was focused on the key
factors like design; deploy the software involved in the revision of the
technology and also the co-ordination of the teams participating in the task.
The after transformation support was also a prime factor to consider during the
plan was being designed.19
With the loss of market share and decline in profits, Maruti pioneered strategic
acts to redesign itself to face the competition in the Indian market and also to
deal with the India’s liberalization process. During its redesign process Maruti
consulted AT Kearney & McKinsey which are the consultancy firms, and also an OD
consultant Dr.Athreya who is internationally reputed for the development of
organization and modes of strategy.21 In its redesign process, the strategies
followed are: to launch a new model every year satisfying different segments of
the market, to decrease cost of production by accomplishing 85-90% indigenization
for new models, increasing the dealer network from 150 to 300 focusing on bulk
sales to attain its market share back, to reduce number of vendors and introduce
competitive bidding. The mission statement of the organization is to come up
with new models like fuel efficient vehicle with latest technology. Leader in
domestic market and be among global players in the overseas market. Creating
customer delight and shareholders wealth. With the redesign process the total
production capacity increased to over 3, 70, 000 vehicles per year with the
investment of around Rs. 4000 mn for the expansion project. Along with its
redesign process, there has been a change in business focus of Maruti. The
business focus of Maruti previously when it controlled the largest market share
was to “sell what we produce”. After it began redesign process business focus
of whole organization had a shift from production, production and production to
“marketing and customer focus”. 22
Maruti has started a number of plans in purpose of well customer service. They
have even changed their interior of showroom allowing customers to walk minimum
in the showroom and there are schedules for customer service times and delivery
of vehicles. The Dealer Sales Executive, who is trained on greeting notes, is
the first person to interact with the customer of Maruti when he walks into the
Maruti showroom. Under CRM department Maruti has a cell to handle customer
complaints. Another effort by Maruti is the call center where Maruti can closely
interact with its customer. The Market Research department of Maruti studies
varying consumer behavior and needs of market. Maruti’s claim of being customer
friendly further strengthens because of seventy percent of repeat buyers. There
is a lot of investment and effort involved in developing customer loyalty
schemes.26
The compact cars, which currently make up 80% of the market is the root of growth
for Maruti in the future. Strong economic growth, affordable finance, up
gradation in infrastructure, proper framework favors the growth of car customers.
The rise in income levels and low penetration levels at 7 per thousand are the
favourable things for development automobile industry. Maruti while researching
found that rural people had strange opinions in having a car that EMI (Equated
monthly installments) ranges between Rs 4,000 and Rs 5,000 and along with it for
the car maintenance it would be Rs 1,500-2,000 per month, plus another Rs 1,000
for fuel. Taking their inputs Maruti started working in developing an innovative
idea to counter their apprehension. Controlling the fuel bill is in consumer
hands where maintenance need not be. Khattar says “What the company is doing
now is saying how much you spend on fuel is in your hands anyway. As far as the
maintenance cost is concerned, if you want it that way, we will charge a little
extra in the EMI and offer free maintenance.” Thus Maruti laid another innovation
in the automobile industry.28
Maruti Finance: In a market where car sales of more than 80% are financed, Maruti
has successfully entered and created a financial strategy for Maruti. This
strategy has become a crucial factor in converting a Maruti car sale in certain
cases. Finance plays a key role in making decisions for car purchase. Maruti has
grouped up with 8 other finance companies to form a consortium. The eight other
companies are Citicorp Maruti, Maruti Countrywide, ICICI Bank, HDFC Bank, Kotak
Mahindra, Sundaram Finance, Bank of Punjab and IndusInd Bank Ltd. (previously-
Ashok Leyland Finance).32
Maruti Insurance: The major concern of car owners is the insurance. Maruti has
gathered all car insurance needs under one roof. Maruti has grouped up with
National Insurance Company, Bajaj Allianz, New India Assurance and Royal Sundaram
to make this service available for its customers. From finding out the most
suitable car insurance policy and assisting in claiming insurance hassle-free
it’s the complete responsibility of the dealer. Maruti Insurance makes its
service easily available for customers at any Maruti dealer workshop in India to
have their cars repaired and processing of insurance claims.33
True Value – Initiative to capture used car market: Maruti’s another important
development is its entry into the market of used cars in 2001, allowing customers
to exchange their old car with the new one by bringing their vehicle to ‘Maruti
True Value’ outlets and paying the difference with loyal discounts. This helps
in building satisfaction and retaining the customers. With Maruti True Value, it
filled this gap in making customer trust in Indian used car market. In this
highly unorganized and deceptive market where biggest concern in making a car
sale is trust, Maruti could achieve this based upon its strength in Indian market.
Maruti has developed a system where dealers pick up used cars, improve the
condition, issue a new warranty and sell them again. Dealers make all investments
for True Value. Maruti has established 172 showrooms across the nation building
up a strong network. The used car market is 2-3 times as large as new car market
in developed markets having a huge potential in India.34
N2N: Maintenance of car consumes loads of time, especially if you own a group of
automobiles. N2N Fleet Management Solutions by Maruti for companies takes the
responsibility of A-Z automobile problems. Services comprise complete solutions
across life of the vehicle like Leasing, Maintenance, Convenience services and
Remarketing.35
Maruti Driving School (MDS): Maruti has started this in order to achieve the
market where there is suppression in buying cars due to lack in car driving
skills. This strategy brings such customer to the showroom and potentially learns
car driving.36
As the Indian market matured, customers began to change cars faster. Says Kalsi:
“So the question was, if a car is going to see three users in, say, a life span
of 10 years, So Maruti has changed gears to take a big share of this final one-
third spent on maintenance. Maintenance market has a huge market potential. Even
after having fifty lakh vehicles on road Maruti is only catering to approximately
20000 vehicles through its service stations every day.38
For this they are conducting free service workshops to encourage consumers to
come to their service stations. 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. 39
Conclusion
Maruti’s vision statement is, its goals consist of continue leadership in the
Indian automobile industry, enlarging the shareholders, establish customer
pleasure. Maruti has highest level of customer satisfaction consistence for six
years according to the J.D. Power Asia Pacific 2005 India Customer Satisfaction
Index (CSI) study. They gave importance for the customers and started many
projects for better service. Maruti was ranked top in Indian sales satisfaction
study. Maruti Suzuki has a sales network of 307 state-of -the-art showrooms
across 189 cities, with a workforce of over 6000 trained sales personnel to guide
MUL customers in finding the right car.
Maruti Suzuki scored the highest across all 7 parameters: least problems
experienced with vehicle serviced, highest service quality, best in-service
experience, best service delivery, best service advisor experience, most user-
friendly service and best service initiation experience. 92% of Maruti Suzuki
owners feel that work gets done right the first time during service. The J.D.
Power CSI study 2004 also reveals that 97% of Maruti Suzuki owners would probably
recommend the same make of vehicle, while 90% owners would probably repurchase
the same make of vehicle. At Maruti Suzuki, customers will find all car related
needs met under one roof. Whether it is easy finance, insurance, fleet management
services, exchange- Maruti Suzuki is set to provide a single-window solution for
all car related needs.
The acquisition cost is unfortunately not the only cost customers face when
buying a car. Although a car may be affordable to buy, it may not necessarily be
affordable to maintain, as some of its regularly used spare parts may be priced
quite steeply. Not so in the case of a Maruti Suzuki. It is in the economy
segment that the affordability of spares is most competitive, and it is here
where Maruti Suzuki shines. The highest satisfaction ratings with regard to cost
of ownership among all models are all Maruti Suzuki vehicles: Zen, Wagon R,
Esteem, Maruti 800, Alto and Omni. It has introduced the superior 16 * 4 Hypertech
engines across the entire Maruti Suzuki range. This new technology harnesses the
power of a brainy 16-bit computer to a fuel-efficient 4-valve engine to create
optimum engine delivery. This means every Maruti Suzuki owner gets the ideal
combination of power and performance from his car.
Maruti was also involved in various businesses like manufacturing, sales and
purchasing of motor vehicles and parts of automobiles. Other activities of Maruti
were facilitation of pre-owned car sales, fleet management and car financing.
They have seven subsidiary companies in India are Insurance Business Agency Ltd,
Maruti Insurance Distribution Services Ltd, Maruti Insurance agency Solution Ltd,
Maruti Insurance Agency Network Ltd, Maruti Insurance Agency services Ltd, Maruti
Insurance Agency Logistics Ltd. They also went into other joint venture agreement
with Futaba Industrial Co Ltd and formed FMI Automotive Compoments Ltd for
manufacturing Exhaust System Components.
Maruti’s profit increase to 98% rise in its economic second quarter net profits
and they are planning to invest $32.3 million. Maruti Suzuki has created history
in automobile industry through going keen on production record in 13 months. It
is top number of car manufacturer in Asia, outside Japan and Korea having
manufactured about 5 million vehicles by may 2005. It also should a remark as
most booming automobile company as joint venture and they keep on making profits
since inception till 2000-01. They are trying to modernize its factory to produce
cars faster.