Maruti Suzuki India Ltd. (or Maruti Udhyog as you may know it) was the first company in India to mass-produce and sell more than a million cars. In India, Maruti Udhyog Limited (MUL) was established in February 1981, and the actual production of cars commenced in 1983. Maruti is largely credited for having brought in an automobile revolution to India.

In the following post, I talk about excerpts of my discussion with a Maruti Suzuki Sales Official over a flight (thanks to Jet for my free business class upgrade). Here, I reveal insights about the Indian automobile industry as seen by a leading industry sales expert.

What’s new planned with Maruti Suzuki?
MS EXECUTIVE: Maruti Suzuki will be selling a new car Kizashi from the next year. Kizashi which has been showcased at the Auto Expo will get production form soon. Maruti Kizashi is expected to be the first all-wheel drive sedan in the luxury D segment. It will be positioned in the Rs-10 lakh-plus price band and will compete with the Honda Civic, Toyota Corolla, Hyundai Sonata, Skoda Octavia, etc.

Does Maruti Suzuki have an early mover’s advantage in the Indian market? Since you launched Maruti 800 in India at a very early stage, you are still reaping the benefit?
MS EXECUTIVE: Yes, absolutely! Maruti Suzuki was the first company to have brought in the technology in India and bring a wave with our Maruti 800. Maruti 800 has been the leader on the sales list for a long-long time in the industry. We have built up on that well and we have a big market share. Over seven lakh Maruti Suzuki cars were bought during the last financial year which adds up to more sales than all competitors put together. We are complementing it now with R&D in India. Maruti Suzuki India Ltd. is investing INR10 billion to INR15 billion to build its parent Suzuki Motor Corp.’s first research and development facility outside Japan as it seeks to make the South Asian country a global research hub for small cars. The facility, to be built on 700 acres at Rohtak in the northern state of Haryana, will have an R&D center for cars with a test track, wind tunnel and crash facility.

How do things work at Maruti Suzuki India? What are your strengths?
MS EXECUTIVE: We have a management team which looks over sales, marketing, manufacturing issues, corporate clients & businesses. We manage the production, supply chain and the retail in Indian office. We have been well positioned in the market from the start. We have a very wide dealership network which gives outreach. And our dealers are well positioned in the various states and cities. We have a wide product range in India. You can find models at the band of INR 30000 and we range from small cars to luxury cars. We have customers and more than half market share. We also have the negotiation power with the spare part suppliers and the pricing. In service, maintenance and sales of spare parts, over 70 lakh Maruti Suzuki cars already on the road form a profitable market.
To promote our bottom line growth, we have Maruti Finance. Prior to the start of this service we had started two joint ventures Citicorp Maruti and Maruti Countrywide with Citi Group and GE Countrywide to assist our clients in securing loans. We have entered into a strategic partnership with SBI- the SBI-Maruti Finance. SBI-Maruti Finance is currently available in 166 cities across India.

Would Tata Nano change the equation of the existing small car models you are selling?
MS EXECUTIVE: Personally, I feel that Tata Nano is a wonderful car which will sell a lot in India, but it will be making a new market segment where by people travelling on two-wheelers or buses will be purchasing Nano, instead of the Maruti Alto drivers switching to Tata Nano. Also it can be used as a “helper” car in household. But we don’t feel Nano will change our market share, it will be creating a new segment of its own.

Is Maruti now eyeing the taxi business? Tell us more about the taxi roll planned in Mumbai.
MS EXECUTIVE: Personally, I feel Maruti Omni and Maruti 800 make a perfect taxi car. In Jaipur, Maruti 800 is rolled out as taxi with our corporate client Pink city Radio Taxi Pvt. Ltd. I find it very exciting since the taxis operate at Rs 10 per kilometer, which is almost the rate at which auto-rickshaws operate. We will learn more from the initial experiment in Jaipur and expand to other cities. We are also discussing with Mumbai Taxi drivers to convert the Feat taxis with Omni and provide attractive finance schemes to all. In a few months, you will see the Mumbai roads occupied with Omni taxis much more comfortable, economic to the driver and friendlier to the Mumbai environment.
Mumbai is one of the largest taxi markets in India with about 55,000 taxis plying on the road. We have a significant presence in the Delhi taxi segment with around 1,000 Maruti 800s, Esteems and Omnis. We have been emphasizing on the fact that CNG vehicles with their extremely low emissions are not only environment friendly but also economical. The running cost of Omni taxis with CNG is as low as 80 paise per kilometer.

Is Maruti Suzuki trying to change its image from a small car seller to also include the upper segments of sedan and luxury cars?
MS Executive: We are the leaders in the Indian automobile industry, and with the inclusion of higher end models from Maruti in the Indian market, we are very excited upon the opportunity. Our recent models of Swift Desire and Sx4 have been received very well in the market. The dynamics of luxury markets are very different from the small car markets, as they depend on branding more than value. The customers in the luxury segment do not mind paying more for an “elite” brand. Hence, we have launched a planned program for brand building and marketing.

Summarizing, Maruti Suzuki has a lot planned up for the future, and with the car sales expected to grow by around 10% in the coming fiscal (as reported by Bloomberg), the road ahead seems smooth. With their structured sustainable approach to business they will grow, but threats from the competitors like Hyundai and Toyota is keeping them on the foot to grow, expand and innovate.

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