Maruti Suzuki - History and Success in India [Case Study]

The Indian automobile industry is one of the most competitive sectors in the economy. There are approximately 5000 car dealers in India wherein approximately around 11 – 12 cars are being sold every minute. Be it SUV or sedan, as the standard of living is rising in India, people feel like having a car is a necessity.

In the past decade, the popularity of having cars has increased a lot. Due to the advancement in technology, cars have become affordable as well as eco-friendly. With the increasing needs of people in India, the competition in the automobile industry is beyond par. Even when there are many automobile companies in India who sell affordable, luxury all kinds of cars, there is one company that has always been on the top priority of people and that is Maruti Suzuki.

Maruti Suzuki India Ltd has grown to be India's largest passenger car company, which accounts for over 50% of the domestic car market. Maruti Suzuki is a subsidiary of Suzuki Motor Corporation, Japan, where the Japanese car company boasts of holding around 56.37% of stakes, according to the reports dated September 2020.

The company offers a wide range of cars starting from entry-level cars to stylish hatchbacks and the most modern sedans including DZire, SX4, Grand Vitara, and more. It takes care of the business of the manufacturing, purchase, and sale of motor vehicles and their spare parts (automobiles). Furthermore, it is also engaged in the financing of cars and the facilitation of pre-owned car sales fleet management. The Maruti automobile company has 2 manufacturing plants in Gurgaon and Manesar in Haryana and 1 manufacturing complex in Gujarat. According to the recent announcement of the company in May 2021, the company is capable of manufacturing around 200 cars per day in total.

In this Maruti Suzuki Case Study, you will know all about the History and Success of Maruti Suzuki in India.

How Maruti Suzuki Started in India - History
How Maruti Suzuki Became Successful
FAQ

Maruti Suzuki in India - History

Maruti Suzuki was started back on February 24, 1981, to manufacture cars for middle-class Indians. The company was formed as a government company, incorporated as Maruti Udyog Ltd. with Suzuki as its minor partner. Maruti Udyog then signed the license and joint venture agreement with Suzuki Motor Corporation, Japan, on October 2, 1982, which began the start of the long-lasting and successful partnership.

The company started its productions in 1983, which then came to be the choice of every Indian household. The first car it launched was Maruti 800. It was affordable back then and was thus incredibly popular. This model of Maruti is still considered to be a Maruti classic to date. Although the journey of Maruti Suzuki India Ltd. started off in a very different way.

Maruti Suzuki - 1980

In India, till the early 1980s, the government of India controlled the Indian automobile sector, and privatization did not enter yet. There were only two automobile companies – Premier Automobiles Ltd, which had their popular car, Premier Padmini, and Hindustan Motors Ltd, which made the Ambassador cars. Maruti Udyog Ltd. entered this era with Suzuki Motor Corporation as its minor partner.

Maruti Suzuki - 1983

Maruti Udyog signed a license and joint venture agreement (JVA) with Suzuki Motor Corporation of Japan in 1982. This is when the very first factory of Maruti Suzuki was established in Gurgaon, Haryana. In the first 2 years when Maruti was set up, the company was engaged in the importing of fully-built cars from Suzuki, which later grew to include only 33% native parts. This was not what the indigenous company had planned.

Though Maruti was ready with the idea of its own manufacturing facility in India, the company couldn't continue with its plan fearing the small market here in the subcontinent. Besides, our country was in need of producing fuel-efficient vehicles to meet the increasing demands as the local transport was inefficient. This is why the company thought of adjusting the petrol tax and also reduce the excise duty to ramp up their sales.

Maruti Suzuki began its local production in December 1983 and introduced its Suzuki Alto (SS30/SS40), Suzuki Fronte, and Alto-based Maruti 800.

Maruti Suzuki - 1986-1987

Maruti Suzuki came up with a new and powerful Suzuki Alto (SS80), a 796 cc hatchback, which replaced the former Maruti 800 model in 1986. The company also successfully manufactured its 100,000th vehicle in the same year.

By this time the company was already recognized for its stronghold in the automobile and at the turn of the new year, Maruti Suzuki also began its foreign exports. It started with exporting a lot of 500 cars to Hungary

Market Liberalization and Maruti Suzuki - 1991

1991 was the year of the liberalization of the Indian economy and by then, the company witnessed around 65% of its components being indigenized. It was also in this year that Maruti further increased its stakes in Maruti. Maruti Udyog then became a 50-50 joint venture with the Government of India and a Japanese automotive company as stakeholders.

Maruti Suzuki - 1994

Maruti Suzuki saw the production of its 1 millionth vehicle in 1994 since it started manufacturing automobiles. This year also saw the inauguration of the second plant of Maruti. Furthermore, the automobile manufacturers also started their 24-hour on-road emergency vehicle service.

Maruti Suzuki - 2000-2002

Maruti emerged as the first Indian car company to launch a call center for its internal processes and customer service in the year 2000. The company also saw the release of many more models of its cars in the next 2 years that followed, including the Esteem Diesel, which was launched in 2002. Meanwhile, Suzuki Motor Corporation also increased its stake in Maruti, which now became 54.2%.

Maruti Suzuki - 2003-2004

The company started the year 2003 with the introduction of the Suzuki Grand Vitara XL-7 and upgrading its Zen and Wagon R models. Later in the same year, the company manufactured the 4 millionth Maruti vehicle and also entered started its new partnership with the State Bank of India. Moreover, the company was also listed on BSE and NSE after which it went public with issues that were oversubscribed tenfold.

Maruti 800, which was the best-selling Maruti car till 2004 was overtaken by the incredible popularity of the Alto model after 2 decades in the same year. Maruti Udyog concluded the financial year 2003–04 with a record 472,122 units as its annual sale, which reached an all-time high since the company began operations.

Maruti Suzuki - 2007

On May 10, 2007, the government of India took an exit from the country's largest car maker Maruti Udyog Ltd by selling the residual stakes, which amounted to Rs 2,360 crores to a bunch of financial institutions led by the Life Insurance Corporation. In July 2007, Suzuki decided to change the name of its subsidiary to Maruti Suzuki India Limited.

Maruti Suzuki - 2012 and the Later Years

Maruti Suzuki successfully sold its 10 millionth vehicle in February 2012. The company boasted of having a market share of 45% in July 2014 and then in May 2015, it witnessed the production of the 15 millionth vehicle in India with the launch of the Maruti Suzuki Swift DZire.

Maruti Suzuki was cautious of the environmental factors and understood the need of embracing environmentally friendly automobiles. This is why the company declared that it would phase out the manufacturing of diesel cars by 1 April 2020. Furthermore, by this time the Bharat Stage VI emission standards also came into effect, which announced that the company must significantly invest in its diesel cars to comply with the stringent emission standards.

The company plans to launch its first electric car in the second half of 2021, according to the reports. The car would be named Maruti Suzuki WagonR Electric, which is currently put to test.

How Maruti Suzuki Became Successful

Maruti has carved its own league of success throughout the years that it has remained in business. The company now boasts of having 9 subsidiary companies in total, namely:

True Value Solutions Ltd
Maruti Insurance Agency Logistics Ltd
Maruti Insurance Agency Solutions Ltd
Maruti Insurance Distribution Services Ltd
Maruti Insurance Business Agency Ltd
Maruti Insurance Agency Services Ltd
Maruti Insurance Agency Network Ltd
J J Impex (Delhi) Pvt Ltd
Maruti Insurance Broker Ltd

Maruti Suzuki had surely achieved great success. 5 Main things that ushered in the success of the company are - Affordability, Goodwill, Hatchbacks, Low Maintenance & NEXA

Affordability

In the early ’80s cars weren’t something that every Indian man or a middle-class family could afford. It was a luxury resource about which only a few people could dream. There weren’t many car companies since liberalization came late in India.

When Maruti Suzuki entered the Indian market, the most prominent factor which made it the market leader at that time was the price of its cars. They were very successful in launching cars with excellent features at an Indian budget-friendly price which made it ‘people’s car’.

Even to date company’s cars are known to be in a range which any middle-class man today can afford to buy.

Goodwill

Over a decade ago, Maruti Suzuki launched an advertisement video which said ‘Ghar aa Gaya Hindustan’ which became an instant sensation among people of India. Since the initial years, Maruti Suzuki has been successful in creating a notion into the minds of people that they associate home, the nation with their car.

Their commercial still instills that India comes home in a Maruti Suzuki. The company has received great acceptance for the brand and its customers are very loyal to them. All these years, customer satisfaction has proved that Maruti Suzuki’s goodwill and brand loyalty are very strong and enthralling.

Hatchbacks

Hatchbacks are the most idol cars for Indian roads and they rule the market. They are everywhere present in the market and are the most preferred body type throughout the nation. Maruti Suzuki initiated the concept in India and its most popular hatchback car Alto is one is the most demanded cars in India to date.

Low maintenance

When comparing the services of different automobile companies in India, Maruti Suzuki’s service charges are lower. The best thing about their services is that they have various stations and centers across the nation where they serve a huge number of cars daily. Today they make most parts in India under the Made in India and hence their spare parts and components are variably low when compared to other automobile companies.

NEXA

Since Maruti Suzuki’s cars were always looked at as the mid-range cars that serve the middle-class category they wanted to enter the other market too. That is when Maruti Suzuki launched NEXA. In 2015 they started the delivery and operations of its premium range cars. This helped them engage with their high-end customer category.

Conclusion

The automobile sector has been growing rapidly over the past decade, even after the Covid-19 pandemic. Maruti Suzuki cars have emerged as budget-friendly and low-cost cars with superior after-sales services that have made it India’s top choice for many car owners.

Maruti Suzuki will play a very important role in making cars assessable and available to many Indians in the future as well. Its aggressive management and promotion strategies will cater to huge demand in the Indian automobile market.

FAQ

What is the net worth of Maruti Suzuki?

As of 2020, the total assets of Maruti Suzuki is ₹63,627 crore (US$8.9 billion).

Who is the chairman of Maruti Suzuki?

Shri Ravindra Chandra Bhargava is the chairman of Maruti Suzuki.

Is Maruti a Govt company?

Maruti was a Govt company, but in 2002, the Indian government gave the charge of the management of Maruti Udyog Ltd. to Suzuki for a consideration of Rs1000 crore.

Author: Manav Makhija

Source : https://startuptalky.com/maruti-suzuki-case-study-india/

Date : 2021-08-27T11:42:00.000Z