A Summer Internship Project on

“Maruti Suzuki – The undisputed

leader of Indian car market”

A Report Submitted to Delhi business school, New Delhi

As a part fulfillment of
MBA + Post graduate programme (Industry Integrated) in
Entrepreneurship and Business
University – Punjab Technical University

Submitted to: Submitted by:

Director Academics Saurabh Sharma
Delhi business school Batch- (08-10)
New Delhi Roll No.-164
Sem- II
Internal guide:
Ms. Suman Suhag
Delhi Business School
New Delhi
 B-11/58, M.I.C.E., Mathura Road, New Delhi
Website: www.dbs.edu.in

ACKNOWLEDGEMENT

I would like to express my sincere gratitude to Sanga Aoutomobiles

Pvt. Ltd. for giving me the opportunity to work on this project. I am
very thankful to my project guide Mr. Lokesh Swarnkar(ASO) and
all the employees of Sanga Aoutomobiles Pvt. Ltd. who helped me
in learning and understanding of automobile industry.

I am highly obliged to Mr. Dr.D.Pathak (Director), Delhi Business

School for his guidance and cooperation. I am highly indebted to
Ms. Suman Suhag, my internal guide, who guided me in completion
of this project.

I am deeply indebted to my parents and friends who have been a

source of inspiration throughout my Summer Training Project.

Saurabh Sharma

2
 DECLARATION
I hereby declare that the project report entitled “Maruti Suzuki –The
undisputed leader of Indian car market” is the produce of my sincere
effort. This summer internship project report is being submitted by
me at Delhi Business School, New Delhi, for the partial fulfillment
of the course MBA+PGP in entrepreneurship and business (industry
integrated). This report has not been submitted to any other
educational institution for any other purpose.

Date:
Signature

3
 CONTENTS
Chapters Pg.No.

1. Executive Summary 5

2 Objective of the Project 7

3 Methodology 8

4. Introduction of Maruti 10

5. Indian four wheeler industry 17

6. Competitive forces 19

7. Competitor Analysis 23

8. Segmentation 27

9. Maruti network 28

10. Key strategies of Maruti 39

11. Various services offered by Maruti 31

12. Manufacturing process 39

13. Business performance 46

14. Customer satisfaction 51

15. Appendix/Annexure 57

16. Bibliography 58

4
 EXECUTIVE SUMMARY

Maruti Udyog Limited, the largest automotive manufacturer of India was

established in February 1981 though the production started only in 1983. The
company started as a 50-50 JV between Suzuki of Japan and Maruti. The
government of India held 18.28% stake until recently. This holding stake was
sold off to the financial institutions in May, 2007. Suzuki has gradually
increased its holding percentage to 54.2. The first offering from Maruti, the
800, was the bestseller for a long time till its sibling, the Alto, took over.
Selling over 500000 cars annually in the domestic market, Maruti exports
close to 30,000 units to several countries. Of late, the Indian giant was facing
stiff competition from various manufacturers and Maruti did well by
launching the Swift which is a modern and exudes a lifestyle image. The trend
continued with the SX4. The large portfolio takes care of the options available
to the customer.

Maruti Suzuki India Limited is Suzuki's largest and most valuable subsidiary
with an annual production of 626,071 units in 2006.
The company had a 54% market share of the passenger car market in India.
Nearly 75,000 people are employed directly by Maruti and its partners.

Maruti Suzuki offers 10 models, ranging from India's best selling car, Maruti
800, for less than INR 200,000 (US$ 5000) to the premium sedan Maruti SX4
and luxury SUV, Maruti Grand Vitara. Maruti 800 was the first model
launched by the company in 1983 followed by mini-van Maruti Omni in 1984.
Both models were huge success in their respective categories because of the
use of high-end technology and good fuel efficiency. Maruti Gypsy, launched
in 1985, came into widespread use with the Indian Army and Indian Police
Service becoming its primary customers. The short-lived Maruti 1000 too
achieved moderate success until it was replaced by Maruti Esteem in 1994, to
counter increasing competition in the medium-sedan category.

5
Maruti Zen, launched in 1993, was the company's second compact car model
and also became extremely popular in India because of its high performance.
The company went on to launch another compact car Maruti Wagon-R
followed by Maruti Baleno in 1999. However, with increasing competition
from Tata, Hyundai, Honda and Daewoo Motors, Maruti was not able to
achieve the same success with Wagon-R and Baleno as it had with its earlier
models.

In 2000, Maruti Alto was launched. The launch of Tata Indica and Hyundai
Santro had affected Maruti's sales but Alto helped secure the company's
position as the auto leader in India. It is currently the largest selling car in
India. The Maruti models include Maruti Suzuki Grand Vitara, launched in
2003, Maruti Versa, launched in 2004, Maruti Suzuki Swift, launched in 2005,
Maruti Zen Estilo and Maruti Suzuki SX4, launched in 2007.

These are the suggestions to the company to defend its market share –

● Definitely the Mruti Suzuki is the market leader in Indian car industry but
its time to change their strategy.
●Maruti’s cars are kwon for better fuel efficiency but the company should
develop the engines which have the blend of power, pick up, and fuel
efficiency.
●Maruti’s biggest competitor is Hyundai. Hyundai’s cars are not more fuel
efficient. So it is the advantage to Maruti and Maruti cars should have more
pick up to beat Hyundai.
●A youth icon should be its brand ambassador to promote its stylish cars.
●Swift diesel model and Swift Dzire are the hot model of the company.
Copany should increase the production to meet its demand.

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 Objective of the Project
● To do the analysis of Indian car industry.

●To find out the Competitive forces of Indian passenger car

market.

●To find out the key strategic initiatives, taken by Maruti Suzuki to
defend its market share in this huge competition.
●Finding the various facilities offered by Maruti Suzuki.

●Finding the customer satisfaction and customer behavior with

Maruti Suzuki.

●To know the segmentation, targeting and positioning

of Maruti Suzuki.

●Why does consumers prefer Maruti cars.

●To Find out the major future strategies of Maruti

Suzuki.

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 Methodology

RESEARCH AREA

● In this tough competition, Maruti need to know its competitors strategies.

●T he business of Maruti and the company through its researchers, wants to
know the brand image, demand for the cars and the potential in order to
defend its market share.
.
RESEARCH DESIGN

● Determined the Information Sources: The researcher gathered data through

the primary sources as well as secondary sources.

• PRIMARY DATA is collected through interaction with customers.

• SECONDARY DATA is collected from, newspapers, broachers of the

company and internet.

DATA COLLECTION
The researcher collected information through the official websites, magazines
and journals.

DEVELOPED THE RESEARCH FRAME:

This included deciding upon various aspects for the project on which the
entire research is based. The research frame included:

NATURE OF STUDY
The project on which the researcher worked is descriptive and inferential in
nature.

DATA SOURCE:
The researcher took the help of both primary as well as secondary sources.
Secondary sources are interaction with various customers, internet and the
official sites of the company.

INSTRUMENT USED
The researcher for the research directly interacts with customers and public.

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Major players in the Indian automobiles
industry of Passenger Cars

Suzuki’s JV in India and the largest passenger car manufacturer in

India
The third largest passenger car manufacturer in India and one of the
Largest exporter of vehicles. It has established India as one of its
manufacturing bases in the world. It is planning to invest heavily to boost
exports from India

The largest player in the Indian industry. Plans to launch new and exciting
products in the Indian markets, including the ‘100,000’ car

Has vision of capturing 10 % share of the

Indian passenger car market by 2010

One of the leading players in the Indian premium cars

segment

One of the leading players in the Indian premium cars

segment

One of the leading players in the Indian premium cars

segment.

One of the largest players in the UV / MUV

segment

The 2nd largest CV manufacturer in India

Other global players who are in India / have plans for

India include -
Volvo, Daimler Chrysler, BMW and Nissan Motors

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 Maruti Udyog Limited – An Introduction

Maruti Udyog Limited (MUL) was established in Feb 1981 through an Act of
Parliament, to meet the growing demand of a personal mode of transport
caused by the lack of an efficient public transport system. It was established
with the objectives of - modernizing the Indian automobile industry,
producing fuel efficient vehicles to conserve scarce resources and producing
indigenous utility cars for the growing needs of the Indian population. A
license and a Joint Venture agreement were signed with the Suzuki Motor
Company of Japan in Oct 1983, by which Suzuki acquired 26% of the equity
and agreed to provide the latest technology as well as Japanese management
practices. Suzuki was preferred for the joint venture because of its track
record in manufacturing and selling small cars all over the world. There was
an option in the agreement to raise Suzuki’s equity to 40%, which it exercised
in 1987. Five years later, in 1992, Suzuki further increased its equity to 50%
turning Maruti into a non-government organization managed on the lines of
Japanese management practices.
Maruti created history by going into production in a record 13 months. Maruti
is the highest volume car manufacturer in Asia, outside Japan and Korea,
having produced over 5 million vehicles by May 2005. Maruti is one of the
most successful automobile joint ventures, and has made profits every year
since inception till 2000-01. In 2000-01, although Maruti generated operating
profits on an income of Rs 92.5 billion, high depreciation on new model
launches resulted in a book loss

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 COMPANY HISTORY AND BACKGROUND

The Evolution
Maruti’s history of evolution can be examined in four phases: two phases
during pre-liberalization period (1983-86, 1986-1992) and two phases during
post-liberalization period (1992-97, 1997-2002), followed by the full
privatization of Maruti in June 2003 with the launch of an initial public
offering (IPO).The first phase started when Maruti rolled out its first car in
December 1983. During the initial years Maruti had 883 employees, a capital
of Rs. 607 mn and profit of Rs. 17 mn without any tax obligation. From such a
modest start the company in just about a decade (beginning of second phase in
1992) had turned itself into an automobile giant capturing about 80% of the
market share in India. Employees grew to 2000 (end of first phase 1986),
3900 (end of second phase 1992) and 5700 in 1999. The profit after tax
increased from Rs 18.67 mn in 1984 to Rs. 6854.54 mn in 1998 but started
declining during 1997-2001.
During the pre-liberalization period (1983-1992) a major source of Maruti’s
strength was the wholehearted willingness of the Government of India to
subscribe to Suzuki’s technology and the principles and practices of Japanese
management. Large number of Indian managers, supervisors and workers
were regularly sent to the Suzuki plants in Japan for training. Batches of
Japanese personnel came over to Maruti to train, supervise and manage.
Maruti’s style of management was essentially to follow Japanese management
practices.
The Path to Success for Maruti was as follows:
(a) teamwork and recognition that each employee’s future growth and
prosperity is totally dependent on the company’s growth and prosperity (b)
strict work discipline for individuals and the organization (c) constant efforts
to increase the productivity of labor and capital (d) steady improvements in
quality and reduction in costs (e) customer orientation (f) long-term objectives
and policies with the confidence to realize the goals (g) respect of law, ethics
and human beings. The “path to success” translated into practices that
Maruti’s culture approximated from the Japanese management practices.
Maruti adopted the norm of wearing a uniform of the same color and quality
of the fabric for all its employees thus giving an identity. All the employees
ate in the same canteen. They commuted in the same buses without any
discrimination in seating arrangements. Employees reported early in shifts so

11
that there were no time loss in-between shifts. Attendance approximated
around 94-95%. The plant had an open office system and practiced on-the-job
training, quality circles, kaizen activities, teamwork and job- rotation. Near-
total transparency was introduced in the decision making process. There were
laid-down norms, principles and procedures for group decision making. These
practices were unheard of in other Indian organizations but they worked well
in Maruti. During the pre- liberalization period the focus was solely on
production. Employees were handsomely rewarded with increasing bonus as
Maruti produced more and sold more in a seller’s market commanding an
almost monopoly situation.

12
 Company Profile
Maruti Suzuki is one of India's leading automobile manufacturers and the
market leader in the car segment, both in terms of volume of vehicles sold and
revenue earned. Until recently, 18.28% of the company was owned by the
Indian government, and 54.2% by Suzuki of Japan. The Indian government
held an initial public offering of 25% of the company in June 2003. As of May
10, 2007, Govt. of India sold its complete share to Indian financial
institutions. With this, Govt. of India no longer has stake in Maruti Udyog.

Maruti Udyog Limited (MUL) was established in February 1981, though the
actual production commenced in 1983 with the Maruti 800, based on the
Suzuki Alto kei car which at the time was the only modern car available in
India, its' only competitors- the Hindustan Ambassador and Premier Padmini
were both around 25 years out of date at that point. Through 2004, Maruti has
produced over 5 Million vehicles. Marutis are sold in India and various
several other countries, depending upon export orders. Cars similar to Marutis
(but not manufactured by Maruti Udyog) are sold by Suzuki and
manufactured in Pakistan and other South Asian countries.

The company annually exports more than 50,000 cars and has an extremely
large domestic market in India selling over 730,000 cars annually. Maruti 800,
till 2004, was the India's largest selling compact car ever since it was launched
in 1983. More than a million units of this car have been sold worldwide so far.
Currently, Maruti Alto tops the sales charts.

Due to the large number of Maruti 800s sold in the Indian market, the term
"Maruti" is commonly used to refer to this compact car model. Till recently
the term "Maruti", in popular Indian culture, was associated to the Maruti 800
model.

Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of

Japan, has been the leader of the Indian car market for over two decades.

It’s manufacturing facilities are located at two facilities Gurgaon and Manesar
south of New Delhi. Maruti’s Gurgaon facility has an installed capacity of
350,000 units per annum.

The Manesar facilities, launched in February 2007 comprise a vehicle

assembly plant with a capacity of 100,000 units per year and a Diesel Engine

13
plant with an annual capacity of 100,000 engines and transmissions. Manesar
and Gurgaon facilities have a combined capability to produce over 700,000
units annually.

More than half the cars sold in India are Maruti cars. The company is a
subsidiary of Suzuki Motor Corporation, Japan, which owns 54.2 per cent of
Maruti. The rest is owned by the public and financial institutions. It is listed
on the Bombay Stock Exchange and National Stock Exchange in India.

During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were
exported. In all, over six million Maruti cars are on Indian roads since the first
car was rolled out on December 14, 1983.

Maruti Suzuki offers 12 models, Maruti 800, Omni, Alto, Versa, Gypsy, A
Star, Wagon R, Zen Estilo, Swift, Swift Dzire, SX4, Grand Vitara. Swift,
Swift dzire, A star and SX4 are maufactured in Manesar, Grand Vitara is
imported from Japan as a completely built unit (CBU), remaining all models
are manufactured in Maruti Suzuki's Gurgaon Plant.

Suzuki Motor Corporation, the parent company, is 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.

Maruti is clearly an “employer of choice” for automotive engineers and young

managers from across the country. Nearly 75,000 people are employed
directly by Maruti and its partners.

The company vouches for customer satisfaction. For its sincere efforts it has
been rated (by customers)first in customer satisfaction among all car makers
in India for nine years in a row in annual survey by J D Power Asia Pacific.

Maruti Suzuki 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, the
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.

14
Maruti’s entry into the Indian Passenger Car Market:

MUL was the result of the joint venture created in February 1981 between
Japan's Suzuki Motor Company and the Indian Government when the latter
decided to produce small, economical cars for the masses.
The intention of the venture was to produce a 'People's car'. To get the
project off the ground MUL took over the assets of the erstwhile Maruti Ltd.,
which was set up in 1971 and closed in 1978.
It was on December 14, 1983 that MUL launched the first Maruti vehicle - the
Maruti 800. The first model was the SS80, a 796cc hatchback car priced at Rs.
47,500.
Subsequently, in spite of price hikes, the car has remained within the reach of
the Indian middle class and has been a runaway success. Available in vibrant
colures when India's passenger car population comprised mainly Ambassadors
and Fiats in black and white, M800 gave Indians the first taste of global
quality and reliability.
In late1980s, Suzuki increased its equity stake in MUL from 26% to 40% and
further to 50% in 1992, converting Maruti into a non-government company.
In the years that followed, MUL consolidated its position with a line of Indian
classics, such as the eight-seat Omni, the rough-terrain Gypsy, and, in October
1990, a 3-box Maruti 1000. MUL took the lead in the green drive by
launching its CNG-run Omni and Maruti 800 in 1999.
MUL redefined the premium compact segment with the launch of the Zen in
October 1993. It was the company's first 'world car, selling across multiple
markets. A year later, the Zen had won several awards, including 'No. 1 car in
Europe' (Auto Week, 1994), 'No.1 import in Europe' (1997) and 'most fuel-
efficient car' (ADAC).
In 1999, MUL launched Baleno and WagonR. Baleno targeted the premium
mid-segment while WagonR was positioned as a multi-activity vehicle.
In1999, to improve customer satisfaction, it even established a chain of model
workshops and soon after, set up Customer call centers in the metros.

In 2000, Maruti Suzuki introduced Alto - a premium small car targeting the
export market - and in October 2001,Versa, a multipurpose vehicle.
In May 2002, Suzuki took management control of Maruti.

15
In April 2003, MUL rolled out its latest offering, the Grand Vitara XL-7, a
luxury SUV imported from Suzuki Motor Corporation. The Grand Vitara was
a concept that was radically different from the models that comprised the bulk
of MUL's sales.
Since 1980 with its product excellence, operational efficiency and customer
intimacy Maruti Suzuki has been the leader in Indian passenger car market.

16
 INDIAN FOUR WHEELER INDUSTRY

Evolution
The Indian automobile industry developed within the broader context of
import substitution during the 1950s. The distinctive feature of the automobile
industry in India was that in line with the overall policy of State intervention
in the economy, vehicle production was closely regulated by an industrial
licensing system till the early 1980s that controlled output, models and prices.
The cars were built mostly by two companies, Premier Automobiles Limited
and HM. However, the Indian market got transformed after 1983 following
the relaxation of the licensing policy and the entry of MUL into the car
market. In 1991, car imports were insignificant, while component imports
were equivalent to 20% of the domestic production, largely because of the
continuing import of parts by MUL. The liberalization of the Indian
automotive industry that began in the early 1990s was directed at dismantling
the system of controls over investment and production, rather than at
promoting foreign trade. Multinational companies were allowed to invest in
the assembly sector for the first time, and car production was no longer
constrained by the licensing system. However, QRs on built-up vehicles
remained and foreign assemblers were obliged to meet local content
requirements even as export targets were agreed with the Government to
maintain foreign exchange neutrality. The new policy regime and large
potential demand led to inflows of foreign direct investment (FDI) by the mid-
1990s. By the end of 1997, Daewoo, Ford India, GM, DaimlerChrysler and
Peugeot had started assembly operations in India. They were followed by
Honda, HMIL, and Mitsubishi.

Current Scenario
Major Players

Bajaj Tempo Limited, DaimlerChrysler India Private Limited, Fiat India

Automotive Private Limited, Ford India Limited, General Motors India
Limited, Hindustan Motors Limited, Honda Siel Cars India Limited, Hyundai
Motor India Limited, Mahindra & Mahindra Limited, Maruti Udyog Limited,
Skoda Auto India Limited, Tata Motors Limited, Toyota Kirloskar Motors
Limited.

17
Current scenario in Passenger Car Category
The dominant basis of competition in the Indian passenger car industry has
changed from price to price-value, especially in the passenger car segment.
While the Indian market remains price sensitive, the stranglehold of Economy
models has been slackening, giving way to higher-priced products that better
meet customer needs. Additionally, a dominant trend in the Indian passenger
car segment is the increasing fragmentation of the market into sub-segments,
reflecting the increasing sophistication of the Indian consumer. With the
launch of new models from FY2000 onwards, the market for MUVs has been
redefined in India, especially at the upper-end. Currently, the higher-end
MUVs, commonly known as Sports Utility Vehicles (SUVs), occupy a niche
in the urban market, having successfully shaken off the tag of commercial
vehicles attached to all MUVs till recently. Domestic car manufacturers are
now venturing into areas such as car financing, leasing and fleet management,
and used-car reconditioning/sales, to complement their mainstay-business of
selling new cars.

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COMPETITIVE FORCES IN INDIAN PASSENGER CAR
MARKET
Critical Issues and Future Trends

The critical issue facing the Indian passenger car industry is the attainment of
break-even volumes. This is related to the quantum of investments made by
the players in capacity creation and the selling price of the car. The amount of
investment in capacities by passenger car manufacturers in turn depends on
the production

Threat from the new players: Increasing

1-Most of the major global players are present in the Indian market; few more
are expected to enter.

2-Financial strength assumes importance as high are required for building

capacity and maintaining adequacy of working capital.

3-Access to distribution network is important.

4-Lower tariffs in post WTO may expose Indian companies to threat of

imports.

Rivalry within the industry: High

1-There is keen competition in select segments. (compact and mid size

segments).

2-New multinational players may enter the market.

Market strength of suppliers: Low

1-A large number of automotive components suppliers.

2-Automotive players are rationalizing their vendor base to achieve

consistency in quality.

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Market strength of consumers: Increasing

1-Increased awareness among consumers has increased expectations. Thus the

ability to innovate is critical.

2-Product differentiation via new features, improved performance and after-

sales support is critical.

3-Increased competitive intensity has limited the pricing power of

manufacturers.

Threat from substitutes: Low to medium

With consumer preferences changing, inter product substitution is taking place

(Mini cars are being replaced by compact or mid sized cars).Setting up
integrated manufacturing facilities may require higher capital investments
than establishing assembly facilities for semi knocked down kits or complete
knocked down kits. In recent years, even though the ratio of sales to capacity
(an important indicator of the ability to reach break-even volumes) of the
domestic car manufacturers have improved, it is still low for quite a few car
manufacturers in India. India is also likely to increasingly serve as the
sourcing base for global automotive companies, and automotive exports are
likely to gain increasing importance over the medium term. However, the
growth rates are likely to vary across segments. Although the Mini segment is
expected to sustain volumes, it is likely to continue losing market share;
growth in the medium term is expected to be led largely by the Compact and
Mid-range segments. Additionally, in terms of engine capacity, the Indian
passenger car market is moving towards cars of higher capacity. This apart,
competition is likely to intensify in the SUV segment in India following the
launch of new models at competitive prices.

20
 AVAILABLE CAR MODELS

Starting Price
Available Car Models
(Ex-showroom, Mumbai)

Maruti Suzuki 800

Rs. 1,97,214

Maruti Suzuki Omni

Rs. 2,03,565

Maruti Suzuki Alto

Rs. 2,36,843

Maruti Suzuki Zen Estilo

Rs. 3,13,085

Maruti Suzuki Wagon R

Rs. 3,22,157

Maruti Suzuki Wagon R Duo

Rs. 3,39,532

Maruti Suzuki A-Star

Rs. 3,58,942

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Maruti Suzuki Versa
Rs. 3,86,953

Maruti Suzuki Ritz

Rs. 4,05,872

Maruti Suzuki Swift

Rs. 4,22,859

Maruti Suzuki Swift Dzire

Rs. 4,82,300

Maruti Suzuki Gypsy

Rs. 5,23,325

Maruti Suzuki SX4

Rs. 6,81,091

Maruti Suzuki Grand Vitara

Rs. 16,92,000

22
 COMPETITOR ANALYSIS

HYUNDAI MOTOR INDIA LIMITED

Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of

Hyundai Motor Company, South Korea and is the second largest and the
fastest growing car manufacturer in India . HMIL presently markets over 25
variants of passenger cars in six segments. The Santro in the B segment, and
Getz in the B+ segment.

HYUNDAI SANTRO

We are mainly going to concentrate on the various marketing and positioning

strategies of Hyundai Santro as against that of Maruti Zen and Alto and
Hyundai Getz as against Maruti Swift.

POSITIONING OF SANTRO

The old positioning of the Santro was that pf a ‘family car’, this positioning
strategy was changed in around 2002 and Santro was repositioned as to that of
‘a smart car for young people.’ The target age group for the car had now
shifted from 30-35 years to 25-30 years. The repositioning followed the face-
lifts the car has been getting from time to time in the form of engine
upgradation, new power steering, automatic transmission, etc, to keep the
excitement around it alive in the highly competitive small car market. The
repositioning also comes ahead of the possible launch of a new design Santro,
and the super B-segment car ‘Getz’, sometime in 2003.

The Santro was given a fresh new positioning — from a ‘complete family
car’ to a ‘sunshine car’ denoting a fresh new attitude and a ‘changing your
life’ positioning.As the average age of a car owner has declined from around
30-35 three years ago to 25-30, primarily because of changing lifestyles,
cheap and easily available finance, etc. the company thought that instead of
promoting the Santro as a family car, it should be promoted as a car that can

23
change the life of a young person since many of the buyers were young
buyers.

HYUNDAI’S PRICING STRATEGY

With the launch of Maruti Swift recently a price war was expected to kick
in.Immediately after maruti raised prices on its debutante Hyundai Motor
India hit back with Rs 16,000-19,000 markdown on three new variants of
Santro Xing.

The company has introduced the XK and XL variants at a lower tag of Rs

3,26,999 and Rs .3,45,999 respectively.The new price variants are likely to
give Maruti’s existing B-segment models, Zen and WagonR a run for their
money. Hyundai has also launched a new non-AC variant of the Santro at Rs
2.79 lakh, a tad higher than what the existing non-Ac Santro costs. The next
offensive is due from Maruti. With the Santro’s new price positioning, Zen
and particularly WagonR may be due for a correction, or at least a limited-
period subvention. If that happens the domino effect will kick in across the B-
segment.

Hyundai is positioning its new variants on the tech platform. Strapped with
1.1 litre engine with eRLX Active Intelligence technology, the new variants
also come with new colour-coordinated interiors, a new front grill and a 4-
speed AC blower that makes the air conditioning more efficient.

TATA MOTORS

Established in 1945, Tata Motors is India's largest and only fully integrated
automobile company. Tata Motors began manufacturing commercial vehicles
in 1954 with a 15-year collaboration agreement with Daimler Benz of
Germany.

TATA INDICA – Tata motors flagship brand.

24
The company's passenger car range comprises the hatchback Indica, the
Indigo sedan and the Marina, its station wagon variant, in petrol and diesel
versions. The Tata Indica, India's first indigenously designed and
manufactured car, was launched by Tata Motors in 1999 as part of its ongoing
effort towards giving India transport solutions that were designed for Indian
conditions. Currently, the company's passenger cars and multi-utility vehicles
have a 16-per cent market share.

POSITIONING OF INDICA

Tata has positioned Indica as `more car per car'. The new car offers more
space, more style, more power and more options. Emphasizing the delivery of
world class quality. They have tried to redefine the small car market as it has
been understood in India.True to its "More car per car" positioning, the Indica
CNG offers all the core benefits of the Indica combined with the advantage of
CNG. One of the most popular advertisements on television currently, is the
one where the guy portrayed as the ‘loveable liar’, gets socked every time he
lies ; but not when he speaks about the Indica thus implying- “ must be true”.
Elaborating on the campaign, the new ad was launched with the intention of
giving the Indica V2 brand a touch of youthfulness.

TATA’S PRICING STRATEGY

After the price war was being triggered off by Hyundai being the first
company to introduce what came to be known as, pricing based on customer's
value perceptions, all others followed suit. Telco’s Indica came in the range of
Rs 2.56 lakh to Rs 3.88 lakh with 4 models. The price-points in the car market
were replaced by price-bands. The width of a price-band was a function of the
size of the segment being targeted besides the intensity of competition. The
thumb rule being 'the higher the intensity, the wider the price-band.'

25
MARKET SHARE OF MARUTI SUZUKI IN INDIAN
PASSENGER VEHICLE INDUSTRY

TOTAL SALES OF MARUTI SUZUKI

26
 SEGMENTATION

Segment Description-Length Model

A1 Mini – up to 3400mm Maruti 800

A2 Compact – 3401 to WagonR, Alto, Palio

4000mm Stile, Zen Estilo, Swift,
i10, Spark, Vista, A-
Star, Xing, Getz Prime,
Aveo U-VA, Fabia, i20
A3 Mid size – 4001 to 4500 Dzire, Verna, Accent,
mm Ikon, City,
Ambassador, Fusion,
Indigo, Fiesta, Aveo,
SX4, Logan
A4 Executive – 4501 to 4700 Octavia, Jetta, C Class,
mm Audi A4, Corolla,
Optra, Laura, Civic,
Linea
A5 Premium-4701 to 5000mm Camry, Sonata,
Accord, Mondeo, E
Class, Audi A6, Skoda
Superb, Nissan Teana
A6 Luxury – 5001 above S Class, Audi 8

C Van Type Omni, Versa, Ace

magic, Tata Winger
B1 (SUV ) Passenger Carrier Grand Vitara,
Endeavour, Prado,
Gypsy, Tucson,
Captiva, CRV, Pajero,
Safari
B2 (MUV) Passenger Carrier Innova, Tavera, Sumo,
Sumo Grande, Scorpio,
Bolero, Xylo

27
 MARUTI SUZUKI NETWORK HIGHLIGHTS

• MSIL has over 2800 service centers, Approximately ‘7’ times its
nearest competitor.
• MSIL’S used car showrooms alone, exceed the new car showrooms of
Hyundai & Tata Motors.

No. of Cities with Sales outlets 410 (243+167)

No. of Sales Dealerships 439 outlets in 243 cities

True Value Showrooms 300

No. of Sales Executive 14685

Maruti Authorized Service Station 1934

Dealer Workshops 702

Total No. of Service Stations 2636

No. of Towns with Service Centers 1253

No. of extension counters; cities 183 & 164

No. of MGP Distributors 76

Source Maruti Dec 2008

Network Comparison
Basis MSIL Hyundai Tata Motors
Service Centers 2636 208 365
Dealer Network 439 201 218

28
KEY STRATEGIC INITIATIVES BY MARUTI

A) TURNAROUND STRATEGIES MARUTI FOLLOWED

Maruti was the undisputed leader in the automobile utility-car segment sector,
controlling about 84% of the market till 1998. With increasing competition
from local players like Telco, Hindustan Motors, Mahindra & Mahindra and
foreign players like Daewoo, PAL, Toyota, Ford, Mitsubishi, GM, the whole
auto industry structure in India has changed in the last seven years and
resulted in the declining profits and market share for Maruti. At the same time
the Indian government permitted foreign car producers to invest in the
automobile sector and hold majority stakes.

In the wake of its diminishing profits and loss of market share, Maruti
initiated strategic responses to cope with India’s liberalization process and
began to redesign itself to face competition in the Indian market. Consultancy
firms such as AT Kearney & McKinsey, together with an internationally
reputed OD consultant, Dr.Athreya, have been consulted on modes of strategy
and organization development during the redesign process. The redesign
process saw Maruti complete a Rs. 4000 mn expansion project which
increased the total production capacity to over 3,70,000 vehicles per annum.
Maruti executed a plan to launch new models for different segments of the
market. In its redesign plan, Maruti, launches a new model every year, reduce
production costs by achieving 85-90% indigenization for new models, revamp
marketing by increasing the dealer network from 150 to 300 and focus on bulk
institutional sales, bring down number of vendors and introduce competitive
bidding. Together with the redesign plan, there has been a shift in business
focus of Maruti. When Maruti commanded the largest market share, business
focus was to “sell what we produce”. The earlier focus of the whole
organization was "production, production and production" but now the focus
has shifted to "marketing and customer focus". This can be observed from the
changes in mission statement of the organization:

1984: "Fuel efficient vehicle with latest technology".

1987: "Leader in domestic market and be among global players in the

overseas market".

29
1997: "Creating customer delight and shareholders wealth".

Focus on customer care has become a key element for Maruti. Increasing
Maruti service stations with the scope of one Maruti service station every 25
km on a highway. To increase its market share, Maruti launched new car
models, concentrated on marketing and institutional sales. Institutional sales,
which currently contributes to 7-8% of Maruti’s total sales. Cost reduction and
increasing operating efficiency were another redesign variable. Cost reduction
is being achieved by reaching an indigenization level of 85-90 percent for all
the models. This would save foreign currency and also stabilize prices that
fluctuate with exchange rates. However, change in the mindset was not as fast
as required by the market. Maruti planned to reduce costs, increase
productivity, quality and upgrade its technology (Euro I&II, MPFI). In
addition, it followed a high volume production of about 400,000 vehicles /
year, which entailed a smooth relationship between the workers and the
managers.

Post 1999, the market structure changed drastically. Just before this change,
Maruti had wasted two crucial years (1996-1998) due to governmental
interventions and negotiation with Suzuki of Japan about the break-up of the
share holding pattern of the company. There was a change in leadership, Mr.
Sato of Suzuki became the Chairman in June 1998, and the new Mr.J. Khatter
was appointed as the new Joint MD. Khatter was a believer in consensus
decision making and participative style of management.As a result of the
internal turmoil and the changes in the external environment, Maruti faced a
depleting market share, reducing profits, and increase in inventory levels,
which it had not faced in the last 18 years.

After their fall in market share they redesigned their strategies and through
their parent company Suzuki they learned a lot.The organizational learning of
Maruti was moderately successful, the cost was relatively inexpensive as
Maruti had its strong Japanese practices to fall back upon. With the program
of organizational redesign, rationalization of cost and enhanced productivity,
Maruti bounced back to competition with 50.8% market share and 40% rise in
profit for the FY2002-2003.

30
B) CURRENT STRATEGIES FOLLOWED BY MUL

I. PRICING STRATEGY - CATERING TO ALL SEGMENTS

Maruti caters to all segment 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 on road. Maruti
gets 70% business from repeat buyers who earlier had owned a Maruti 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 offering is
to be in the consideration set of every passenger car customer in India. Here is
how every price point is covered

II. OFFERING ONE STOP SHOP TO CUSTOMERS OR CREATING

DIFFERENT REVENUE 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 customer satisfaction.

Various Services Offered By Maruti

1. Authorized Service Stations

Maruti is one of the companies in India which has unparalleled service
network. To ensure the vehicles sold by them are serviced properly,
Maruti has 2628 listed Authorized service stations and 30 Express
Service Stations on 30 highways across India.

Service is a major revenue generator of the company. Most of the

service stations are managed on franchise basis, where Maruti trains
the local staff. Other automobile companies have not been able to
match this benchmark set by Maruti. The Express Service stations help
many stranded vehicles on the highways by sending across their repair
man to the vehicle

31
2. Maruti Insurance
Launched in 2002 Maruti provides vehicle insurance to its customers
with the help of the National Insurance Company, Bajaj Allianz, New
India Assurance and Royal Sundaram. The service was set up the
company with the inception of two subsidiaries Maruti Insurance
Distributors Services Pvt. Ltd and Maruti Insurance Brokers Pvt.
Limited

This service started as a benefit or value addition to customers and

was able to ramp up easily. By December 2005 they were able to sell
more than two million insurance policies since its inception.

Benefits of Maruti Insurance (USP)

Near cash-less accident repairs

All Maruti dealers and a select group of Maruti Authorized Service Stations
(MASSs) will provide the customer with near cash-less repairs in their claim
settlement. This means that the customer would not have to pay to the dealer
for the repair charges to the extent it is payable by Insurance Co. Customer
will just pay for the compulsory excess (fixed as per tariff according to the
cubic capacity (cc) of the car) and applicable depreciation, which varies
depending on the age of the vehicle and the type of the replaced parts. The
rates at which the depreciation is charged are mentioned on the face of the
policy. Rest of the amount will be settled directly between the dealer and the
Insurance Company.

32
 3. Maruti Finance
To promote its bottom line growth, Maruti launched Maruti Finance in
January 2002. Prior to the start of this service Maruti had started two joint
ventures Citicorp Maruti and Maruti Countrywide with Citi Group and GE
Countrywide respectively to assist its client in securing loan. Maruti tied up
with ABN Amro Bank, HDFC Bank, ICICI Limited, Kotak Mahindra,
Standard Chartered Bank, and Sundaram to start this venture including its
strategic partners in car finance. Again the company entered into a strategic
partnership with SBI in March 2003 Since March 2003, Maruti has sold over
12,000 vehicles through SBI-Maruti Finance. SBI-Maruti Finance is currently
available in 166 cities across India.

"Maruti Finance marks the coming together of the biggest players in the car
finance business. They are the benchmarks in quality and efficiency.
Combined with Maruti volumes and networked dealerships, this will enable
Maruti Finance to offer superior service and competitive rates in the
marketplace".

— Jagdish Khattar, Managing director of Maruti Udyog Limited in a press

conference announcing the launch of Maruti Finance on January7, 2002

Citicorp Maruti Finance Limited is a joint venture between Citicorp Finance

India and Maruti Udyog Limited its primary business stated by the company is
"hire-purchase financing of Maruti vehicles". Citi Finance India Limited is a
wholly owned subsidiary of Citibank Overseas Investment Corporation,
Delaware, which in turn is a 100% wholly owned subsidiary of Citibank N.A.
Citi Finance India Limited holds 74% of the stake and Maruti Udyog holds
the remaining 26%. GE Capital, HDFC and Maruti Udyog Limited came
together in 1995 to form Maruti Countrywide.Maruti claims that its finance
program offers most competitive interest rates to its customers, which are
lower by 0.25% to 0.5% from the market rates.

33
 4. Maruti True Value
Maruti True service offered by Maruti Udyog to its customers. It is a
market place for used Maruti Vehicles. One can buy, sell or exchange
used Maruti vehicles with the help of this service in India.

Planning to sell your car?

You’ve reached the right place. Only Maruti True Value guarantees that you
get the full value for your car. We start by ensuring that you get the highest
price for your car through our scientific and transparent evaluation process.
What’s more, we will make sure that there are no post-sales hassles or
obligations for you.
We will do this by taking care that your car goes into the right hands by
properly checking the bona fides of the future buyer. And if that’s not enough,
we will also ensure that you get your payment fast, without commissions and
without hassles.

5. Maruti Genuine Accessories

Many of the auto component companies other than Maruti Udyog started to
offer components and accessories that were compatible. This caused a serious
threat and loss of revenue to Maruti. Maruti started a new initiative under the
brand name Maruti Genuine Accessories to offer accessories like alloy
wheels, body cover, carpets, door visors, fog lamps, stereo systems, seat
covers and other car care products. These products are sold through dealer
outlets and authorized service stations throughout India

34
Benefits of MGA

CUSTOMERS

• MSIL assurance
• All types of accessories are available under the same roof
• Accessories tailor made for the vehicles
• Skilled manpower to fit the accessories
• Better resale value

MGA Selling Process

MGA can be used to
make the product more
• Preparation Attractive and Desirable
• Opening Need assessment to the customer

• Product presentation
• Attempted closing
• Deal & finance
• Vehicle Delivery
• Post-sale Follow-up

6. Maruti Driving School

As part of its corporate social responsibility Maruti Udyog launched the
Maruti Driving School in Delhi. Later the services were extended to other
cities of India as well. These schools are modelled on international standards,
where learners go through classroom and practical sessions. Many
international practices like road behaviour and attitudes are also taught in
these schools. Before driving actual vehicles participants are trained on
simulators.[25]

"We are very concerned about mounting deaths on Indian roads. These can be
brought down if government, industry and the voluntary sector work together
in an integrated manner. But we felt that Maruti should first do something in
this regard and hence this initiative of Maruti Driving Schools."

— Jagdish Khattar, at the launch ceremony of Maruti Driving School,

Bangalore

35
7. N2N Fleet Management
N2N is the short form of End to End Fleet Management and provides
lease and fleet management solution to corporates. Its impressive list of clients
who have signed up of this service include Gas Authority of India Ltd,
DuPont, Reckitt Benckiser, Sona Steering, Doordarshan, Singer India,
National Stock Exchange and Transworld. This fleet management service
include end-to-end solutions across the vehicle's life, which includes Leasing,
Maintenance, Convenience services and Remarketing.
• Fleet sales is a branch of Institutional / Corporate Sales.
• This is a specialized field of sales with a world of difference from
Showroom / Retail Sales
• Fleet Sales Has gained all-the-more importance in recent times
since large Corporates, Such as in the IT sector have started
providing their employees with Company Cars and Cabs.

Services Offered in Maruti N2N

1. Fleet Acquisition:
Fleet Policy for Maruti-action

• Recommending a fleet composition suiting company’s

budget, range of cars & requirements.

Fleet Financing

• Attractive Financial & Operating leasing schemes. Vehicles

are delivered at door-step after registration, Insurance, fitment
of MGA chosen and through inspection.

2. Fleet Operation
Vehicle Servicing

• Complete Management of services as per Periodic

Maintenance Schedule and running repairs including
components not covered under warranty.

36
 Emergency Assistance

• N2N offers on-the-spot emergency repairs, towing service,

pick-up & drop service for stranded customers in case of
accident & vehicle breakdown supported by 24 hrs call centre.

3. Value Added Services

• This include replacement vehicle (in case of maintenance,

breakdown, accident), Valet service to pick-up and drop the
vehicle for servicing, corporate driving training & safety
programs.

4. Insurance Management

• Complete accident management services from attending the

vehicle at site to processing from Insurance Company.

5. Fleet Resale

Assistance in selling existing fleet in transparent & hassle free manner

through Maruti True Value.

37
Main objectives of MUL as set forth in their Memorandum
of Association are:

1. T
 o acquires and takes over from GoI the right, title, and interest in relation
to the undertakings of Maruti Ltd. As Provided for in the appropriate
enactment of GoI together with the liabilities of GoI so far as they are Related
to the Undertakings of the Company.

2. To carry on the business of manufacturers of, and dealers in, automobiles,

motorcars, lorries, buses, vans, Motorcycles, cycle-cars, motor, scooters,
carriages, amphibious vehicles, and vehicles suitable for propulsion on land,
sea, or in the air or in any combination thereof and vehicles of all descriptions
(all hereinafter comprised in the term “motor and other things”), whether
propelled or assisted by means of petrol, diesel, spirit, steam, gas, electrical,
animal, or other power, and of internal combustion and other engines, chassis-
bodies and other components, parts and accessories and all machinery,
implements, utensils, appliances, apparatus, lubricants, cements, solutions
enamels and all things capable of being used for, in, or in connection with
manufacture, maintenance, and working of motors and other things or in the
construction of any track or surface adapted for the use thereof.

3.To carry on the business of garage keepers and suppliers of and dealers in
petrol, electricity and other motive power for motors and other things.

4.To carry on in the business of iron founders, mechanical engineers, and

manufacturers of machinery, tool makers, brass founders, metal workers,
boiler makers, mill rights, machinists, iron and steel converters, smiths, wood
workers, builders, electroplaters, chromium platers, lacquerers, enamellers,
painters, metallurgists, electrical engineers, and printers and to carry on any
branch of manufacturing and engineering business.

38
 Manufacturing Process

The manufacturing process at Maruti facility is depicted below:

The production of a car at Maruti facility occurs in the following stages:

Press Shop: Press shop has five transfer presses and two blanking lines. In the
press shop, steel coils are cut to the required size and panels are prepared by
pressing them between various die sets such as doors, roofs and bonnet. An
anti-rust coat is applied at this stage.

39
Weld Shop: There are three welding shops with 122 six-axis robots and 25
in-house manufactured two-to-four axis robots. In this shop, various press
metal components manufactured in the previous stage are spot-welded
together to form the body shell. Various parts such as the floor panel, side
panel, doors and bonnet are sub assembled in this shop. Subsequently, the
assembled parts undergo final welding. The welded body is sent to the paint
shop through a conveyor.

Paint Shop: There are three paint shops, within one of which the final outer
body is fully painted by robots. In the paint shop, the body undergoes various
pre-treatment and electro deposition painting processes to provide a high
corrosion resistance to the body. The car body is given an intermediate or
primer coat before applying the storing 32 topcoat paint. The intermediate and
the final coat are applied by using automatic electrostatic spray-painting
machines (micro bells) and robots, followed by a baking process.

Assembly Shop: Maruti has highly flexible assembly lines, which can
simultaneously handle a large number of variants as well as adapt to sequence
changes. The painted bodies proceed for final assembly in three stages. The
first stage is the trim line wherein various components such as roof head
lining, windshield glass and interior trim components are fitted. Thereafter,
the car is transferred to an overhead conveyor, the chassis line, wherein
components such as the engine, gearbox and front and rear axles are
assembled on the underbody. The vehicle is then lowered to the final line on
its own wheels and here components and parts such as seats, the steering
wheel and the battery are fitted. The completely assembled vehicle finally
rolls out of the assembly lines to the final inspection stages.

Machine and engine shops: Assembling and testing of engines takes place at
engine shops and carry out precision machining of engine components in our
machine shops.

40
 Selling Process

POST SALES FOLLOW-UP

VEHICLE DELIVERY PROCESS

DEAL AND FINANCE

ATTEMPTED CLOSING

PRODUCT PRESENTATION

NEED ASSESMENT

OPENING

PREPARATION

Follow the 8 Steps in Maruti Standard Sales Process:

1. Preparation:
- High 5 of each product should be on your finger tips
- Practice demonstration skills at showroom
- Prepare your Sales Kit (brochure, Price list, Performa, etc)
- Look your best every day!!

2. Greeting:
- Greet people with smile on your face
- Have a photo visiting card
- Remember you have only one chance to make a lasting impression

3. Identify needs:
- Which vehicle are you using presently?
- How many kms do you cover on your vehicle each month?
- How many members are there in your family?
- What will be the purpose of your new car & who will use it?

41
- What are your expectations (like comfort, features, performance,
mileage, looks, etc) from this car?
- Any particular car you have seen or have in mind?
Adjacent is a schematic representation of the different phases a customer
goes through before buying a car. It is hence of great importance that you
as a car advisor for life recognize each of these phases, tap them effectively
and offer the best possible solution to a customer.

4. Should praise the dealership and sell himself to the customer.

5. Demonstration
- Use the six steps of demonstration
- Highlight the High 5 and talk about the benefits with passion

6. Test drive:
- Offer test drive to every customer
- If vehicle is not available get an appointment from the customer

7. Finance consideration and closing the deal:

- Use ABC of finance
- Choose financier based on customer profile
- Use document check list & follow up regularly for loan disbursement
- Use the customer order form
- Try to under commit and over deliver
- Dealings should be fair and transparent

8. Delivery:
- Be alert and active with the customers throughout the deal
- Make it memorable and delightful occasion for customer

42
 OPERATIONS

Using technology to give our customers more for less.

In recent years, the Company has accomplished significant improvements on

most operational parameters, such as Hours per Vehicle and Direct Pass Rate.
The use of electronic tools such as Digital Engineering in the areas of jigs and
die designs, manufacturing feasibility simulations, automatic line balancing,
and validating factories and material flow in virtual environment, have helped
make operations cost efficient.

The Company is expanding into a new generation technology of light-weight, fuel-efficient and clean K-
series gasoline engines.

The Company produced 777,017 cars during the year, and

achieved a production of 1 million in the 16 months ending March 2008. This
translates into the Company rolling out a car every 22 seconds during the two-
shift operation. The entire effort of Japanese best practices and Indian
innovation is to ensure that manufacturing at this scale is achieved with high
quality, productivity, safety and optimal cost.
In recent years, the Company has made significant
improvements on most operation parameters, including Hours per Vehicle
(measure of productivity) and Direct Pass Rate (measure of quality). It
continued to build on this and achieve incremental improvements during the
year.
Innovative methods were used to secure widespread employee
participation, especially in promoting all-round Safety.

43
 A new software based system, Multi- Level Production System
(MLPS), was introduced to build flexibility in operations. In-house
automation continued to be a key driver of productivity. As the Company
expanded manpower in line with new capacity, the technical training centre,
started last year, helped technicians and new joinees shorten their learning
curve.

EXPANSION INTO NEW TECHNOLOGIES AT GURGAON

The Company is expanding into a new generation technology of light-weight,

fuel-efficient and clean K-series gasoline engines. The Company has put up a
state-of-the-art engine plant employing highly automated, energy efficient &
environment friendly equipment for low pressure and high pressure
Aluminium die casting to produce parts of the new series engines.

EXPANSION OF CAPACITY AT MANESAR

At present, the plant rolls out World Strategic Models such as

Swift (diesel & petrol), SX4 and DZire (diesel & petrol). These models have
seen buoyant market demand.
In addition, the fifth World Strategic Model derived from
Concept A-Star would also roll out from the Manesar facility later this year.
The next fiscal year is also critical as the Company targets to export 200,000
units by 2010.
In view of these developments, the plant's capacity was
enhanced from an initial 100,000 units per annum to 170,000 units per annum
during the year 2007-08. The Company is committed to achieve a capacity of
300,000 units per annum by October this year.

CAPABILITY BUILDING

This year, the Company actively deployed the latest tools like Digital
Engineering in the areas of jigs and die design; manufacturing feasibility
simulations, automatic line balancing and validating factories and material
flow in a virtual environment.

44
PROCUREMENT

About three fourth of the car, by value, is outsourced. Any

improvement in the car in terms of technology and design, quality or cost has
to essentially include the Company's vendors and their support.
In the year 2007-08, the Company signed two joint venture
agreements with global component manufacturers for cost reduction through
localisation of components for Maruti Suzuki cars. The first was with Magneti
Marelli, aimed at the production of electronic control units (ECU) for diesel
engines and the second with Futaba Industrial Company, Japan for production
of exhaust system parts.
The Company is setting up a Suppliers Park in Manesar, close to
its car plant on an area of 100 acres for Just-In-Time supplies. Both the above
joint ventures are located in this Suppliers Park.
An informal Suppliers' Club has been formed by the Company's
vendors and it gives a good forum for building personal relationships,
understanding key issues and exchanging best practices at the CEO level. The
Company organized a visit of the members to Japan for some plant visits and
the Tokyo Motor Show

FUTURE AGENDA

In the early eighties, the Company made significant efforts in

trying to develop a component industry from ground zero. Over the next two
decades, about 110 foreign technology collaborations were facilitated and
Maruti Suzuki engineers worked closely with the vendors' engineers to enable
to deliver cars which are both high quality and cost competitive. Now, the
relationship has matured and most direct vendors or Tier 1 vendors are
competent enough to work on their improvement, but there is major scope for
modernization of some sections of Tier 2 vendors. The Company has
identified this as an opportunity for further quality, up gradation and cost
reduction.
The second focus area for component cost reduction is raw
material yield improvement across all manufacturing processes, like sheet
metal, castings, forgings and machining. Every component is studied in detail
and innovative ideas are tried, to reduce the input material weight for the same
component output. The total cost of raw material as a percentage of net sales
ranges from 15% to 20%.

45
 BUSINESS PERFORMANCE
The Company held on to its share in the entire passenger vehicle market at
46% and was able to increase it marginally from 51% to 51.4% in passenger
cars. The Company's share in the A2 segment (compact cars) remained above
58%. In the A3 segment, the Company's share increased to 21.9 percent, from
15.1 percent in the previous year.

DOMESTIC MARKET

The Company launched three new models during the year,

including premium sedan SX4, a luxury Sports Utility Vehicle Grand Vitara
and an entry level sedan Swift DZire (in both petrol and diesel versions). With
this, the Company has launched seven models in three years. During the year,
the Company discontinued production of Esteem, its entry sedan launched in
1994, which enjoyed a huge customer following for its combination of
unmatched performance and low cost of ownership.
Both the SX4 and Swift DZire have been received well from
the start, and have contributed to the Company regaining the leadership
position in the A3 segment (sedans). In turn, this has catalysed efforts to
expand the Company's image from being a leader in small cars to a
manufacturer offering the full range of models to customers.
The Grand Vitara, imported in small numbers as a
Completely Built Unit from Japan, further showcases the Company's ability to
offer a complete portfolio of products.
The year witnessed two new model launches by competitors
in the A2 segment, which accounts for the bulk of the Company's business.
There was a new competitor model in the A3 segment as well. Besides, there
were several new variants by competitors. While the new offerings have taken
some share away from the existing ones, they have helped expand the market
overall.

46
The passenger vehicle industry has three categories
 Passenger Cars
 Utility Vehicles (UV)
 Multi Purpose Vehicles (MPV)
The share of each industry segment and share of the Company in each
segment are shown in the chart above.
The Company held on to its share in the entire passenger
vehicle market at 46% and was able to increase it marginally from 51% to
51.4% in passenger cars. The Company's share in the A2 segment (compact
cars) remained above 58%. In the A3 segment, the Company's share increased
to 21.9 percent, from 15.1 percent in the previous year.
The Company's success in the market can be attributed,
broadly, to the new product design philosophy emerging from Suzuki Motor
Corporation, a disciplined approach to cost that enables more features at less
price, and market initiatives.
The new design philosophy at Suzuki Motor
Corporation, witnessed first in the Swift, is bold, aggressive and distinctly
European. This philosophy is reflected in the Group's other World Strategic
Models, such as SX4, Grand Vitara, A-Star and Splash. The success of the
Company's new models is an
indication that this new design philosophy has been well accepted by Indian
customers.
In addition, the Company's new models have consistently
offered more features than comparable competitor offerings, and are very
competitively priced. This has been made possible by a disciplined target cost
approach towards new models, followed within the Company and at our
suppliers.
In recent years, the Company has also undertaken a series
of market initiatives, notably the expansion of the sales network, offering the
entire range of car-related services in a convenient and transparent manner
and implementing standards to improve customer service.
The success of the Company's new models, such as Swift and
SX4, has strengthened the profitability of dealerships. In addition, car-related
products and services like insurance, finance, extended warranty, spares and
accessories have further boosted the bottom-line of the network. Further, with
a car population of nearly 6.5 million Maruti Suzuki cars, service maintenance
and repairs make a healthy contribution to profitability of dealerships. These
factors are encouraging channel partners to reinvest in sales outlets,
workshops and increasing their sales force.

47
 A major driver of sales performance is the pre-owned car
business, or True Value, which facilitates new car sales through exchange and
trade-ins and also contributes to dealer profitability. A total of 84,323 new
cars were sold in exchange, accounting for 12 percent of total new car sales.
There is some data, collected by independent market research
groups, to suggest that car ownership periods are declining in the Indian
market. With customers inclined to replace cars faster, exchange will be a key
tool in driving sale of new cars. This trend will also boost the pre-owned car
market overall, as more and better cars become available.
The Company has in place robust systems to aid dealers in
monitoring and improving performance. These include Balanced Score Card,
Customer Satisfaction Surveys and Dealer Profitability models. With the
rollout of the Dealer Management System, an IT-based national network,
dealer's management can access a wealth of data to enable them to monitor
diverse facets of their operations including customer satisfaction indices.

Exports
Maruti Exports Limited is the subsidiary of Maruti Udyog Limited with its
major focus on exports and it does not operate in the domestic Indian market.
The first commercial consignment of 480 cars was sent to Hungary. By
sending a consignment of 571 cars to the same country Maruti crossed the
benchmark of 300,000 cars. Since its inception export was one of the aspects
government was keen to encourage. Every political party expected Maruti to
earn foreign currency.

Angola, Benin, Djibouti, Ethiopia, Europe, Kenya, Morocco, Sri

Lanka, Uganda, Chile, Guatemala, Costa Rica and El Salvador are some of the
markets served by Maruti Exports Maruti Suzuki has helped India emerge as
the fourth largest exporter of automobiles in Asia. Shown here is Maruti
Gypsy in Malta.

The Company sold 53,024 units during 2007-08. This is the

highest ever export volume in a year for the Company, and marked a growth
of 35 percent over the previous year. The Company's contribution towards
total exports by the industry increased to 25% from 20% last year. Cumulative
exports made by the Company crossed the milestone of 500,000 vehicles.
Using A-Star, a Euro V compliant model in the “A” segment, the Company

48
plans to re-launch itself in the European markets which it had left two years
earlier for want of a suitable model. The Company is targeting a yearly
volume of 100,000 in Europe and other parts of the world. This model is
likely to be launched overseas in the last quarter of 2008-09. The Company
has decided that while focussing on volume growth, it will enhance efforts to
improve profitability from export operations. Exports will enable the
Company to be at the frontier of technology, quality and manufacturing
excellence.

SPARE PARTS AND ACCESSORIES

The Company draws competitive advantage from the fact that its
car parts are priced competitively and are affordable. In recent years, the focus
has been to improve access and availability by setting up a national network
of spare parts distributors. In the Accessories business, enterprising dealers
have used Maruti Genuine Accessories to create customized versions of the
Company's existing models. In many cases, these special edition cars have
enhanced sales, improved margins and enable the Company to address
younger customer profiles. Although at a nascent stage, these dealer initiatives
signify the potential offered by this business.
During the year, the Company achieved a new milestone: a gross turnover of
Rs 10 billion in the spares and accessories business. This marked a growth of
19 percent over the previous year. The business is supported by a robust back
end operation, which employs technology and competence in logistics to
deliver on time to customers across the country.

49
 MSIL's abridged profit and loss account
For 2007-08 (Rs. million)
Parameters 2007-08 2006-07

1 Gross Sales 209,493 171,442

Vehicles 197,990 161,367

Spares, dies, moulds 11,503 10,075

2 Excise duty 30,890 25,520

3 Net sales (1-2) 178,603 145,922

4 Income from services 759 617

5 Total operating income 179,362 146,539

6 Other income 8,876 5,984

7 Total income 188,238 152,523

8 Consumption of raw
materials &
136,468 110,494
components, stores & traded
goods

9 Employee costs 3,562 2,884

10 Manufacturing,
administrative and other 11,298 8,258
costs

11 Selling and distribution

5,602 4,999
expenses

12 Financial expenses 596 376

13 Depreciation 5,682 2,714

14 Total expenditure 163,208 129,725

15 PBT (7-14) 25,030 22,798

16 Current tax 7,509 6,089

17 Deferred tax 26 897

50
 18 Fringe benefit tax 98 67

20 15,620
17,308
PAT (15-16-17-18-19)

CUSTOMER DELIGHT

In recent years, there are clear trends that customer expectations from a car
have evolved considerably. Car customers now seek contemporary styling,
international quality and latest features that enhance their safety and
convenience, while expecting performance and fuel efficiency, like their
parents did before them.

Keeping our promises by getting closer to our customers.

During the year, the Company took forward several initiatives

to retain its top position in the area of customer satisfaction. These initiatives
ranged from product design and quality to network expansion, and included
new service programmes to meet latent needs of customers.
In recent years, there are clear trends that customer
expectations from a car have evolved considerably. Car customers now seek
contemporary styling, international quality and latest features that enhance
their safety and convenience, while expecting performance and fuel
efficiency, like their parents did before them.
These changing preferences are reflected in the sales data for
existing segments in the car market: models and variants that promise only
economy and low acquisition cost are increasingly losing out to models and
variants that are rich in features, style and safety. This trend holds true across
segments, including among entry level cars.
The Company's product plan is designed for these changing
customer expectations. World Strategic Models like Swift and SX4, which
offer bold European design and high end features are targeted specifically at
these customers.
In the field, the products were supported by rapidly expanding
networks. The Company has diverse networks for new cars, spares, service,
pre-owned cars and so on, and all of them were in expansion mode last year to
enable the Company to get closer to the customer.
In particular, the Company encouraged dealers to recruit Resident
Sales Executives, dynamic youngsters from rural areas who would network

51
with local communities and operate from there, rather than report daily to a
sales showroom in an urban location.
Going forward, the Company sees its network as a source
of competitive advantage. Rising real estate prices and restrictions on land use
in many cities are together hampering the setting up of new car showrooms
and workshops, especially in prime locations.
The Company ranked first in the Customer Satisfaction for
the 8 successive years in the annual survey by J D Power Asia Pacific. It was
the only player above industry average, despite the much higher number of
customers it has to serve.
Certain unique initiatives by the Company, such as the facility
at service workshops to pick up and drop cars of women customers, came in
for appreciation. J D Power's Survey found that customers who received such
service were notably more delighted.
The Company dealers and authorized service stations serviced
more than 10 million cars in the year.
At the back end, the Company took measures to improve
productivity of workshops so that customers can get their cars serviced faster.
This also improves dealer profitability, generating more revenues from the
same fixed assets. The Express Service started by some dealer’s offers to
complete a standard service for a customer's car in two hours.
Another innovation was Maruti Mobile Support - a special
version of Versa that has been suitably modified to function as a service
station. It is able to cover areas where a service station is not viable or where
customers want service at their doorstep. At present, 120 Maruti Mobile
Service vans are plying in more than 80 cities.
The Company used technology to meet customer needs and
even delight them. Following feedback that the Company's cars were more
prone to theft owing to their resale value, the Company worked on an anti-
theft immobilizer or i-CATS system for all its new cars.
The Company has also ensured that the entire fleet of trucks,
carrying new cars from the factory to dealerships, is GPRS-enabled. This
allows dealerships to give customers a more accurate picture of when their car
is likely to be delivered, and to some extent addresses a major source of
dissatisfaction among customers.
The Company's efforts to satisfy all car-related needs -- from
learning to drive a car at Maruti Driving Schools to car insurance, extended
warranty and eventually exchanging the existing car for a new one --- under
one roof at dealerships also enhance customer satisfaction.

52
FUTURE PROMISE

The Company is taking its interpretation of connect with the

customer into a new paradigm. After investing in manufacturing facilities, the
Company is now ready to invest in marketing infrastructure. It has identified
some mega projects to build the foundation of this new initiative:
 Car display showrooms or brand canters in prominent urban locations,
where customers can see the entire range of models, experience
technology and so on.
 Car stockyards are an effort to ensure that customers are able to get
their choice of model, variant and colour, in time.
 Spares stockyards in select canters across the country to meet customer
requirements faster.

53
 Limitations of Maruti Suzuki
Maruti has some limitations to expand its business and its market share in this
tough competition. Several car makers in the country have slashed car prices
following the announcement of the budget. The budget has reduced the excise
duty on cars with engine capacities exceeding 2000cc by Rs 5,000 per unit but
government did not reduce the excise duty 0n the small cars. So there is no
benefit for Maruti Suzuki.

The Suzuki Grand Vitara was one of those cars which failed to kicked-off in
India. What it seriously wanted was a diesel engine, but due to cost
limitations, Maruti Suzuki was left helpless and so was the Vitara. However,
in places like Australia, things are different. The 2009 variant of the popular
SUV has just been unveiled, and the Australians love it so much that Suzuki
didn’t have or require to change anything majorly

Increase in the prices of steel and other raw materials, rise in the interest rates
for Auto loans will remain major factors for the automotive companies in the
forth coming quarters. The company is focusing on increasing the production
of Swift and DZire. The company recently revised the prices of its cars by Rs.
1000-18000. The highest increase is on Swift and DZire. The company’s new
launch Maruti 800 Duo is having a moderate demand in the market. The
company has to face a lot of challenges in the upcoming quarters. It is
expected that the company will do well in view of its diverse product portfolio
having strong demand in the market, overcoming barriers and delivering
positive results

Maruti has carefully chosen to maintain a marked thrust to exports while

continuing to maintain its grip in domestic where volumes have a bearing on
the prices at which one can sell.

54
 Findings

It is true that Maruti Suzuki is the undisputed leader of the Indian passenger
car industry with more than 50% market share. Maruti Suzuki has the better
brand image than its competitors. Maruti’s cars are known for better fuel
efficiency. Maruti is the name that India trusts.

The intention of the MUL was to produce people’s car at the time of its
creation and now the company is success in its intention.

Maruti has the more models than its competitors. It has the 15 car models But
the threats from the competitors is increasing. Rivalry within the industry is
high and market strength of suppliers is becoming low. Market strength of
consumer is increasing due to tough competition.

Main competitor of Maruti Suzuki is Hyundai with Santro as against that of

Maruti Zen, Alto and Wagon R. Hyundai Getz as against Maruti Swift,
Accent against Swift Dzire and Hyundai Verna against Maruti SX4.

Maruti has the best after sales services with the largest service station
network. Maruti is continuously ranked no.1 for customer satisfaction.

Maruti also provides various services as Maruti insurance, Maruti True value,
Maruti finance, Maruti genuine accessories, Maruti driving school etc.

55
 Conclusion

Maruti Suzuki is India’s leader of car market with more than 50% market
share. Now competition is very tough in Indian passenger car market. There is
a big challenge for Maruti to defend its market share. Now Maruti is changing
its strategies to defend its market share.

To defend its market share Maruti develop new k series engine which gives
better fuel efficiency and power.

Maruti has plus point with it that it has the more service centers than its
competitors. Maruti is ranked no.1 in customer satisfaction by J D POWER.
There is main challenge for Maruti is Hyundai.

Maruti cars are known for better fuel efficiency, low maintenance, cheaper
parts, better resale value and better engine performance. Maruti Swift and
Swift Dzire is the revolutionary model in petrol as well as in diesel. Maruti is
unable to meet demand of these cars. People have to wait for some time to get
these models. Maruti need to increase the production of these cars.

56
 Appendix/Annexure

1. Which Vehicle are you using presently?

2. How many kilometers do you cover on average in a day on

your vehicle?

3. How many members are there in your family?

4. What will be the use of your new car and who will use it?

5. What are you looking for (like comfort, features,

performance, mileage, looks etc) from your car?

6. Any particular car you have seen or have in mind?

7. Have you ever drive any Maruti car? If yes, what was your
experience?

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 Bibliography
For the accumulation and collection of the desired data and
information, I have visited many websites that are as follows

www.marutisuzuki.com

en.wikipedia.org

www.surfindia.com

www.hoovers.com

www.carazoo.com

www.carwale.com

Maruti Induction Book.

Brouchures of various Maruti Cars.

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