Analysis of Maruti Suzuki

ANALYSIS OF MARUTI SUZUKI INDIA

ANALYSIS OF MARUTI SUZUKI INDIA

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ANALYSIS OF MARUTI SUZUKI INDIA

INTRODUCTION Maruti Suzuki India Limited (NSE: MARUTI, BSE: 532500) is a partial subsidiary of Suzuki Motor Corporation of Japan. It has been the leader of the Indian car market in the passenger car segment for over two decades accounting for over 45% of the market share. The company offers a wide range of cars across different segments. It offers 15 brands and over 150 variants - Maruti 800, people movers, Omni and Eeco, international brands Alto, Alto-K10, A-star, WagonR, Swift, Ritz and Estilo, off-roader Gypsy, SUV Grand Vitara, sedans SX4, Swift DZire and Kizashi. In an environment friendly initiative, in August 2010 Maruti Suzuki introduced factory fitted CNG option on 5 models across vehicle segments. These include Eeco, Alto, Estilo, Wagon R and Sx4. It was the first company in India to mass-produce and sell more than a million cars. It is largely credited for having brought in an automobile revolution to India. It is the market leader in India and on 17 September 2007, Maruti Udyog Limited was renamed Maruti Suzuki India Limited. The company's headquarters are located in New Delhi.

A BRIEF HISTORY In February 1981 Maruti Udyog Limited (MUL) was incorporated under the provisions of the Indian Companies Act, 1956. A license and Joint Venture Agreement was signed between Government of India and Suzuki Motor Company (now Suzuki Motor Corporation of Japan) in October 1982. It manufactured India's first affordable cars though the actual production commenced in 1983. On 14th December, 1983, first Maruti 800, India's iconic car rolled-off the assembly line at company's Gurgaon plant. Late Mrs. Indira Gandhi, the then Prime Minister of India, handed over keys for this car to the first Maruti customer. By 1992 SMC had acquired a majority stake in MUL (increases to 54.2%). In 1990's when the economy was liberalized and foreign investment allowed into India, the auto component companies, set up and nurtured by Maruti Suzuki, became the foundation for global car companies as well. These new players on the Indian automobile scene found an accomplished and experienced auto component industry, which encouraged further foreign direct investment into India. With the entry of foreign players into the automobile sector MUL was forced to become more competitive and aggressive in its marketing strategy in order to maintain its market share. What followed was a series of successful product launches and by 2003 it got listed on the BSE and NSE. In 2007 the Board of Directors of the company gave approval to change the name MUL to Maruti Suzuki India Limited. In 2008 M-800 crossed the 25 lakh mark and MSIL celebrated its Silver Jubilee. By 2009 MSIL‟s Capacity to manufacture expanded from 800,000 to a million units (Gurgaon plus Manesar plants) annually.

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ANALYSIS OF MARUTI SUZUKI INDIA

MARUTI SUZUKI: Year 2010 The highlights of the year 2010 are as follows:  MILE STONE YEAR: Roll-out of 10 millionth vehicle  4 OUT OF TOP-5 SELLING CARS IN INDIA (4/5): Alto, WagonR, Swift, Dzire  NO.1 IN CUSTOMER SATISFACTION: For 11 consecutive years in JD Power CSI Survey (at the service level)  NO.1 IN SALES SATISFACTION: In JD Power SSI Survey (at the dealer sales level)  TOTAL SALES: HIGHEST EVER SALES: 1,271,005 with a growth of 24.8%  INCOME: Highest ever total income: Rs. 375,224 million with a growth of 24.6%  NET PROFIT: Rs. 22,886 million, declined by 8.4%  NETWORK: Sales Outlets: 933, Cities: 668 and Service Outlets: 2,946, Cities: 1,395  CAPACITY EXPANSION: Additional capacity of 500,000 units p.a. at Manesar by 2012-13

SALES AND TAX FIGURES

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ANALYSIS OF MARUTI SUZUKI INDIA The net sales of the company have shown an increasing trend over the years with the highest ever sales being recorded in 2010 – a growth of 24.8% over the previous year. The profit however declined by 8.4% as compared to the previous year. This may be attributed to the recession in the worldwide economy.

SALES NETWORK AND EXPORTS FACTS

Maruti Suzuki India Ltd. has a vast sales network which increased to 933 sales outlets in 668 cities in the previous year. Exports of MSIL have also been showing an increasing trend as can be seen in the graphs above.

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MACRO ENVIRONMENT ANALYSIS POLITICAL ENVIRONMENT • Indian government auto policy aimed at promoting an integrated, phased and conducive growth of the Indian automotive industry. • Allowing automatic approval for foreign equity investment up to 100 per cent, with no minimum investment criteria. • Establish an international hub for manufacturing small, affordable passenger cars as well as tractors and two wheelers. • Ensure a balanced transition to open trade at minimal risk to the Indian economy and local industry. • Assist development of vehicles propelled by alternate energy sources. • Laying emphasis on R&D activities carried out by companies in India by giving a weighted tax deduction of up to 150 per cent for in-house research and R&D activities. • Plan to have a terminal life policy for CV along with incentives for replacement for such vehicles. • Promoting multi-modal transportation and the implementation of mass rapid transport systems.

ECONOMIC ENVIRONMENT • The Indian economy has grown at 8.5 per cent per annum. • The manufacturing sector has grown at 8–10 per cent per annum in the last few years. • More than 90 per cent of the CV purchase is on credit. • Finance availability to CV buyers has grown in scope during the last few years. • The increased enforcement of overloading restrictions has also contributed to an increase in the number of CVs plying on Indian roads. • Several Indian firms have partnered with global players. While some have formed joint ventures with equity participation, others have entered into technology tie-ups. • Establishment of India as a Manufacturing hub, for mini, compact cars, OEMs, and for auto components.

SOCIAL ENVIRONMENT • Growth in urbanization, 4th largest economy by PPP index. • Upward migration of household income levels. • Increase in PPP, led to the increase in market share of compact cars. • 85% of Cars are financed in India (15% in China). • Cars priced below USD 12000 accounts for nearly 80% of the market. • Vehicles priced between USD 7000 –12000 form the largest segment in the passenger car market. 5|Page

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ANALYSIS OF MARUTI SUZUKI INDIA • Indian customers are highly discerning, educated and well informed. They are price sensitive and put a lot of emphasis on value for money. • Preference for small and compact cars. They are socially acceptable, even amongst the welloff. • Preference for fuel efficient cars with low running costs. The Tata Indica has the lowest running cost at US 8.5 cents per mile.

TECHNOLOGICAL ENVIRONMENT • With the entry of global companies into the Indian market, advanced technologies, both in product and production processes have developed. • With the development or evolution of alternate fuels, hybrid cars have made entry into the market. • Few global companies have setup their R&D centres in India. • Major global players like Audi, BMW, Hyundai etc. have setup their manufacturing units in India. • Government initiatives regarding tax rebates have led to global players setting up their R&D centres in India. • Govt. initiatives in establishing NATRIP network across the country will further lead to enhancing R&D and technological advancements.

ECOLOGICAL ENVIRONMENT Automotive regulations in India Status of Indian regulation

no. of regulations

Fully / Partially aligned

43

In process of being aligned

32

Items /Regulations to be covered

39

Total

114

    

Physical infra structure such as roads and bridges affect the use of automobiles. If there is good availability of roads or the roads are smooth then it will affect the use of automobiles. Physical conditions like environmental situation affect the use of automobiles. If the environment is pleasant then it will lead to more use of vehicles. Technological solutions helps in integrating the supply chain, hence reduce losses and increase profitability. With the entry of global companies into the Indian market, advanced technologies, both in product and production process have developed. With the development or evolution of alternate fuels, hybrid cars have made entry into the market. 6|Page

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ANALYSIS OF MARUTI SUZUKI INDIA  

Few global companies have setup R&D center in India. Major global players like Audi, BMW, etc. Have setup their manufacturing units in India.

LEGAL ENVIRONMENT      

Legal provision relating to environmental population by automobiles. Legal provisions relating to safety measures. Confirms the government‟s intention on harmonising the regulatory standards with the rest of the world. Indian government auto policy aimed at promoting an integrated, phased and conductive growth of the Indian automobile industry. Establish an international hub of manufacturing small, affordable passenger cars. Ensure a balanced transition to open trade at minimal risk to the Indian economy and local industry.

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CONSUMER BEHAVIOUR

For any company it is important to know about the needs and requirements of their customers. Hence studying about consumer behaviour is a must. It has been found that the most searched car brand in India is Maruti Suzuki and it sells more than half the cars sold in India. Maruti Suzuki also enjoys 70% repeat buyers which is in tune with its claim of being consumer friendly. Now the question that faces Maruti or for that matter any car manufacturer is what do the customers look for in a car?

There are several aspects that customers look at with varying degrees: 

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  

Price: People look for affordable price. They have their budget that they can spend on a car. For a middle class or lower middle class Indian price is a very important factor. Maruti has been successful in catering to this need of theirs Mileage: Consumers look at mileage. In the scenario of rising petrol prices mileage becomes an even more important characteristic. Fuel efficiency of a car is demanded by all categories of people. Brand recognition and association: Consumers like to be associated with an established brand. It gives them a sense of security. Durability and warranty: A car is not purchased very often. Customers look for durability. It is a product that lasts for years and sometimes even generations Appearance and style: Car is a status symbol for many customers. It‟s a form of portraying their class and current financial condition. These customers give a lot of importance on the appearance and style. Relatively young customers look more for style than old ones.

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ANALYSIS OF MARUTI SUZUKI INDIA 

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Reliability and trust: A brand should be associated with trust and reliability, only then will it be positioned in the minds of the people for a longer time and can succeed in the market. Availability: With the explosion of choices, products should be easily available otherwise prospective customers will shift to the competitors. Ease of availability can also bring competitors customers to our brand if they fail in this category. Resale value: People like to change cars after a certain number of years which depends on several parameters. New car purchase is often accompanied by exchange of old car. Hence a high resale value is what customers look for and Maruti provides this. Engine functionality: Maruti Suzuki SX4 and Swift have highest durability in terms of engine functionality.

We conducted a small survey in which there were 250 respondents (which was not very exhaustive) and had the following observations: We found that out of every 100 customers 53 opt for Maruti Suzuki between Maruti and Hyundai showing close competition between the two.

Brand Preference

Hyundai 47%

Maruti 53%

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ANALYSIS OF MARUTI SUZUKI INDIA Also people are switching to diesel cars because of high petrol prices. However petrol is still the more favoured fuel.

Fuel Preference

Diesel 46%

Petrol 54%

We also found out that among the various options, people give most importance to mileage followed by price while buying a car and the least to the ease of purchase as seen in the bar diagram below: Degree of Importance

3 2.5 2 1.5 1 0.5 0

*1 being the most important

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MARKETING MIX The basic elements of the marketing Mix of a company are the 4 P‟s (Product, Price, Place and Promotion). The 4 Ps of Marketing helps in determining the various marketing strategies adopted by the company.

PRODUCT Maruti Suzuki has divided its Product line into five segments as per the following table. Product Line

Products

A1 (Mini)

800

A2 (Compact/Hatch-back)

Alto, Zen ,Wagon –R, Swift, A-star ,Ritz

A3 (Mid-Size)

Esteem , Baleno, Dzire (Esteem & Baleno have phased out)

UTILITY VEHICLE

Vitara, Gypsy

MULTI PURPOSE VEHICLE

Omni, Versa

The Cars have also been divided into its various variants depending on the type of fuel used. Some cars have been rolled out for use with both Petrol and Diesel. With rising prices of petrol, there is a sharp demand for Diesel-run vehicles. Also, MSIL has two of its cars with LPG fitting too. These are vehicles that run on LPG. Examples are M800 and Wagon-R. Maruti Suzuki Swift comes in both petrol and diesel variants.

PRICE The prices of the cars of MSIL have generally been set to target the Lower middle-class and middle class families in India. Their pricing strategy is based on their continuing vision of “Putting India on Four Wheels”. Their prices are so designed as to enable people to upgrade from 2-wheelers to 4-wheelers and already 4-wheeler owners to upgrade to a better 4-wheeler offered by the company. In 2007, though the company changed its Price strategy as it was being labelled as Low-Price small-car manufacturer. They launched plans of a new Car in the Premium Car segment (Kizashi) to remove this label attached to the company‟s reputation.

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ANALYSIS OF MARUTI SUZUKI INDIA The following chart shows the various Products and their Price ranges of the Cars of MSIL in India.

PLACE This is one part of the marketing mix where MSIL has an advantage over all of its competitors due to their presence in the country for the longest time as compared to its rivals. They enjoy a well-distributed and an extensive network of Car-sale outlets, Exclusive Showrooms, authorised service stations, True-value Outlets. MSIL has two state-of-the-art Manufacturing facilities setup in Gurgaon and Manesar to the south of Delhi. The combined capacity for the two plants is 1.2 million vehicles on an annual basis. Some numbers to show the extensive network for MSIL are:     

Showrooms & Car Sale Outlets – 933 covering 668 cities Authorized service stations – 1845 covering 1395 cities Dealership Outlets – 1101 True-Value Outlets – 353 covering 208 cities Express Service Stations on Highways - 30

The True-Value Outlets were started with a view to retain the customers under exchange programs enabling the customers to upgrade their existing car models. Later these outlets were converted to be a different vertical business unit of MSIL to capture the market for Preowned cars in India based on the high resale value of MSIL cars giving up to 70% returns on re-sale.

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PROMOTION The company has for most of its years of operation targeted the Indian middle class families as their main consumers. That‟s why their Promotional strategy has always been to create an emotional Connect with the audience. MSIL has used various media of promotion 

 

TV – There have been a lot of advertisements through this media as most of the target audience connects to MSIL through its emotional TV commercials where the company touches everyone irrespective of their Demographics, Age, Occupations, etc. There is always an added advantage when you connect to the audience through audio-visual media as it is supposed to leave an ever-lasting impact on the consumers. Print Media – The Company has also used Newspaper, Magazines to promote its products to the consumers. Radio – The Company also uses radia as an important media for advertising its product line. It sponsors certain shows on air, events for all radio users, etc.

Apart from this, MSIL has also partnered with certain TV shows like “India‟s Got Talent” and also it provides Sponsorships to certain famous events to make its presence felt. The company is also involved in certain CSR activities mostly around its manufacturing units to make the people grow with the company. This all helps in creating a visibility & goodwill for the company for the non-existing customers and hence, increasing the sales. There are Strategic Alliances that MSIL has entered into with many Banks, Insurance firms to provide its customers with Financing and Insurance products for making the process of purchase of a car easier for them. MSIL also provides its customers with a “AUTO-Card”. This is a loyalty program introduced by the company to retain the customers and to increase the company‟s Brand Loyalty. Under this program, every new customer gets initial Brownie points equal to 100 points on purchase of a car. Afterwards, on every purchase of Rs. 100 for any Maruti Suzuki product (includes car-service too), customers earn 3 points. Moreover, they can earn 3000 points when they upgrade from one MSIL car to another new MSIL car. On referrals they can earn up to 1000 points if the referral gets converted into a Sale. MSIL also has a unique program called “DIL SE” for its NRI customers to facilitate them to gift a MSIL car to their relatives back home in India. The Company also conducts Mega-Camps where they provide AC & pollution checks, complimentary Car-wash to its customers to improve customer relations. MSIL also has an extensive CRM program to manage its relationships with customers. Apart from all this, the company also has various seasonal Campaigns to target the audience like festival times to capture the celebrations‟ mood of people and convert it into sales. Festivals like Navratras, Diwali, etc. are times when you would see such Discounts of 30-40K per car on offer.

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SEGMENTING, TARGETING AND POSITIONINNG

SEGMENTING Based on the economic strata the Indian automobile consumer segment is divided in 5 categories:     

Economy (priced less than 3 lakhs) Mid –range (priced between 3-5 lakhs) Luxury (priced between 5-10 lakhs) Premium (price ranges from 10-20 lakhs) Super-premium (priced above 20 lakhs)

The economic segment caters to the need of the rural and the semi urban population,whereas the mid range segment takes care to the needs of all the 3 i.e rural ,semi-urban and urban population. The luxury segment takes care of the semi-urban and the urban population and as there are no cars of maruti in the super-premium segment so the needs of the affluent class is not fulfilled.

TARGETING Maruti is segmented also on the basis of income groups present in the country i.e. the people having an income of 3 lakhs per annum consider cars of economy range which are Maruti 800,Alto and the Maruti Omni. People having falling in the income range of 3-5 lakhs per annum consider the mid range segment of the maruti cars which include A-Star,Swift and Versa. The people with an income more than 5 lakhs per annum mainly considers car in the luxury and premium segment of maruti cars such as SX4,Ritz, Kazashi and the Grand Vitara. Maruti faces stiff competition from Chevrolet Beat,Tatas Indica, Fiat‟s Punto and Hyundai‟s I10 in the automobile sector. Maruti provides all the basic features which are required ina car by the customers so it is clearly the market leader in the Indian automobile sector. As the number of yes against the Maruti cars is the highest as compared to rest of the cars it undoubtedly becomes the market leader.

POSITIONING There are various taglines associated with different maruti cars which signifies the uniqueness of each car on it‟s own, like the tagline for alto-Let‟s Go In An Alto, for swiftYou Are The Fuel and Men Are Back for SX4. These taglines completely associates all these cars. By reading the tagline one gets inspired and becomes eager to drive the car which the whole country is driving.

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REPOSITIONING Since the demand of the Indian customer has risen and also a stiff competition faced by Maruti in the car segment has forced Maruti to reposition some of it‟s product and also to discontinue some products which were even making profits. Omni has been given a major facelift in terms of interiors and exteriors two months back. A new variant called Omni Cargo was launched in the market for the people who wanted a car to travel and also take care of thecargo carried by them. Baleno was launched in 1999 at 7.2 lacs. In 2003 they launched a lower variant as Baleno LXi at 5.46 lacs. This was to reduce the price and attract the customers. Wagon-R was perceived as dull boxy car when it was launched. Then further modifications were made in engine to increase performance and a facelift in the form of sporty looking grills on the roof. Now it‟s of the most successful models in Maruti. The production of ZEN was stopped as the demand for a product which involved recent technology was required. Hence the new Zen Estillo was launched into the market. The most important result of the research of Maruti Suzuki was the innovation of the KSeries engines. The Company‟s next generation, K-series engines employ a plethora of stateof-the art technologies to deliver on all these fronts. These engines were said to Leaner, meaner and Thinner than the rest of the engines used by the other companies. These engines were more fuel efficient and swifter than the engines which Maruti Suzuki earlier used. Technologies deployed by the Maruti was as sophisticated as fine atomization to achieve fuel droplet diameter in microns for optimised combustion and was as practical as using engineering polymers instead of metal in certain engine parts for weight reduction.

PHASING OUT OF CERTAIN MODELS: Maruti Suzuki‟s first sedan Esteem (formerly called Maruti 1000) was phased out slowly due to availability of other cars with better features at the same price from its competitor‟s stable. It was soon replaced by Swift Dzire to gain back the lost market share. The production of Baleno would be stopped from next month to make way for a new model as part of the company‟s strategy to bring new models to the market.

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MICRO ENVIRONMENT ANALYSIS

PORTER’S FIVE FORCES MODEL Michael Porter identified 5 forces that determined the long run attractiveness of a business. We would analyze Porter‟s five forces in context of the Maruti Suzuki.

Threat of New Entrants: Increasing Although most of the major global players are present in the Indian market; few more are expected to enter due to the welcoming government policies and expected retaliation.

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ANALYSIS OF MARUTI SUZUKI INDIA Threat of Substitutes: Low to Medium Maruti Suzuki faces serious threat from consumer shifting to hybrid or electric cars. Currently, the electric car market in India is dominated by sole player Reva Electric Car Company. However brands like Tata Motors , Chevrolet and Nissan are also planning to launch their electric car this year. Bargaining power of Supplier: Low Automakers are the key to the supply chain of the automotive industry. Maruti Suzuki has manufacturing units where engines are manufactured and parts supplied by first tier tier suppliers and second tier suppliers are assembled. There are a large number of automobile component suppliers whose switching costs are very high. Thus reducing the bargaining power of the suppliers. Bargaining power of buyers: Increasing Today, consumers are considered kings in the automobile market. There is an increasing awareness among them and they are given a humongous number of choices. Buyers get incentives in the form of cost discounts and better after sales services. This further increases the bargaining power of the buyers. Competitive Rivalry: High Competition in certain segments is very high e.g., small and mid car segment. Brands like Hyundai, Chevrolet, Tata and Skoda have given huge competition to Maruti Suzuki. In the recent past Volkswagon, Honda, Ford have also given competition to the premium car segment.

THREE GENERIC STRATEGIES To cope up with the 5 competitive forces –there are Three Generic Strategies Maruti Suzuki has applied:

Cost Leadership

Differentiation Focus

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ANALYSIS OF MARUTI SUZUKI INDIA 1. To achieve cost leadership – To realize economies of scale upfront capital investment in state-of-the-art equipment plant is required. Maruti Suzuki has set up two such state of art manufacturing facilities in India  Gurgaon facility(300 acres) housing the „K‟ Engine Plant  Manesar facility(600 acres) 2. Differentiation- creating something that is perceived industry wide as unique. Differentiation can take many formsBrand Name- Maruti Suzuki Technology- The highly fuel efficient, technologically advanced K series engines have been very well appreciated by the customers for their performance Service- Best Service/highest no. of service centers Dealer network- Highest Quality- Value for performance 3. Focus is the moderator of the other two strategies: Cost Focus--- Maruti also tried to offer a low price product to a small and specialised group of buyers. This helped MUL to cut down prices just hours before TATA introduced Indica.  Differentiation Focus---Maruti also has a niche of premium products available at a premium price. Maruti kizashi and Maruti Vitara provides the possibility to charge a premium price for superior quality.

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SWOT ANALYSIS

Strengths •

Brand Image

•

Brand loyalty

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Reliable and cheap.

•

Established brand in Indian market.

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Great service and nationwide penetration.

•

Products for many segments of market

Weakness •

Lack of experience with foreign market

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Comparatively new to diesel cars

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Heavy import tariffs on fully built imported models

•

Not diversified

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ANALYSIS OF MARUTI SUZUKI INDIA Opportunities •

Increased purchasing power of the Indian middle class

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Government subsidies

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Tax Benefits

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Prospective buyers from two wheeler segment

Threats •

Cheaper technology from Chinese Manufacturers

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External changes (government, politics, taxes, etc)

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Lower cost competitors or imports

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Price wars

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Increase in fuel prices

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Competition from second hand cars

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BCG MATRIX

The BCG model is a well-known portfolio management tool used in product life cycle theory. BCG matrix is often used to prioritize which products within company product mix get more funding and attention.

The Stars is the scenario where there is the optimum situation of high growth and high share, this method requires an increased investment due to the continuous growth. Maruti Zen and Swift are in this scenario. The Cash Cow cycle deals with low growth and high share. This scenario requires a low investment, but the growth is very slow. Wagon R and Alto are in this scenario. The Dogs method is the situation where the growth is low and the market share is low, this is one of the worst situations. In this situation if the products are not delivering the cash then it is best to liquidate. Omni and Versa belong to this segment. The last part of the cycle is the Question mark which is high market growth but low shares. In this situation there is a high demand but low returns. It is best to try and increase market share or get it to deliver cash. SX4 and A star belong to this scenario. 21 | P a g e

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PRODUCT LIFE CYCLE

Introduction Stage •

For cars like Alto K10 and Kizashi market share is slight but marketing costs are high.

Growth Stage •

Swift Dezire, Zen Estillo and SX4 are characterized by rapid growth in sales and profit.

Maturity Stage •

In case of Alto, Wagon R and Swift competition is intense and any significant move is likely to be copied by competitors.

Decline Stage •

Market for Baleno and Esteem is shrinking, thus reducing the overall profit.

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ANALYSIS OF COMPETITION:

The diagram below shows the six different types of defence strategies that can be used by the defending market leader against its attackers.

Since Maruti Suzuki India Ltd. has been the market leader of the passenger car segment in the India for the past two and a half decades (as can be seen in the pie chart below) it is very important for it to defend its position against the attacks from various other players.

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ANALYSIS OF MARUTI SUZUKI INDIA So, to protect its market share Maruti has used the following defence strategies:  Only market leader should consider playing defensive 

To defend itself from TATA Nano, Maruti launched Maruti Cervo having the standard features including power steering and AC, good quality, and attractive interiors.

 The best defensive strategy is the courage to attack yourself with new innovation 

To deal with fuel price hike, Maruti Suzuki launched a new LPG variant of its flagship model M800, priced between Rs 2.05 lakh and Rs 2.26 lakh



With its new R&D centre at Rohtak getting ready , MSI plans to roll out a global car, powered by 800 cc engine and to be positioned alongside the company‟s bestseller „Alto‟, by 2017

 Strong competitive moves should always be blocked 

Maruti had specifically developed 14 vehicles to be used during CWG including 10 Maruti SX4 and 4 electric Eeco variants.

On the other hand, the competitors of Maruti have used the following strategies to attack MSIL‟s position:  Find a weakness in the leaders strength and attack at that point •

TATA Motors the 2nd largest car manufacturing company in India, seeing Maruti not in the 1 lakh price zone launched the world‟s cheapest car TATA Nano.

•

Hyundai Motors India introduced Next Gen i10- all new version of its i10 giving Indian consumers a choice of two petrol engines and a mileage of 20.3 km per litre.

 Flanking Attack : First to occupy a segment •

Nissan launched Micra with push button start option in India.

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VALUE PROPOSITION

Offering one shop stop: In one shop stop you get many thing at one place, this is a growing trend among the automobile industry: Maruti Finance: In a market where more than 80% of cars are financed, Maruti has strategically entered into this and has successfully created a revenue stream for Maruti. This has been found to be a major driver in converting a Maruti car sale in certain cases. Finance is one of the major decision drivers in car purchase. Maruti has tied up with 8 finance companies to form a consortium. This consortium comprises Citicorp Maruti, Maruti Countrywide, ICICI Bank, HDFC Bank, Kotak Mahindra, Sundaram Finance, Bank of Punjab and IndusInd Bank Ltd.( erstwhile-Ashok Leyland Finance). Maruti Insurance: Insurance being a major concern of car owners. Maruti has brought all car

insurance needs under one roof. Maruti has tied up with National Insurance Company, Bajaj Allianz, New India Assurance and Royal Sundaram to bring this service for its customers. From identifying the most suitable car coverage to virtually hassle-free claim assistance it's your dealer who takes care of everything. Maruti Insurance is a hassle-free way for customers to have their cars repaired and claims processed at any Maruti dealer workshop in India. Customize the vechiles: customize the wheel and the colour of the car. Maruti Driving School (MDS): Maruti has established this with the goal to capture the market where there is inhibition in buying cars due to inability to drive the car. This brings that customer to Maruti showroom and Maruti ends up creating a customer.

Pricing strategy: Maruti is the price dictator in Indian automobile industry. It‟s the low cost provider of car. The lowest car on road is from Maruti stable i.e. Maruti 800. Maruti achieves this through continuous improvements in operational efficiency and productivity. The company has set itself (and its vendors) the target of a 50% improvement in productivity and a 30% reduction in costs in three years. The ability to keep lowering the prices sets Maruti apart from other players in the league. Maruti spread the overheads over a larger base. The impressive sales and profits were the result of major efforts within the company. Maruti also increased focus on supplier management. Maruti consolidated its vendor base. This has provided its supplier with higher volumes and higher efficiencies. Maruti does that by working with supplier, assuring them that for every drop in price, volumes will go up. Maruti is now encouraging its vendors to develop R&D capability for specialized components. Based upon such activities, product competitiveness in the market will further increase.

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ANALYSIS OF MARUTI SUZUKI INDIA Maruti also made strides in applying IT to manufacturing. A new Vehicle Tracking System improved efficiency on the shop floor and enhanced quality control. The e Nagare system, adopted from Suzuki Motor Corporation, smoothened Maruti‟s Just In Time operations.

IMPORTANCE OF VEHICLE MAINTENANCE SERVICES MARKET In the old days, the company's operations could be boiled down to a simple three-box flowchart. Components came from the 'vendors' to the 'factory' where they were assembled and then sent out to the 'dealers'. In this scheme, you know where the company's revenues come from. The new scheme is more complicated. It revolves around the total lifetime value of a car. Work on this began in 1999, when a MUL team, wondering about new revenue streams, traveled across the world. Says R.S. Kalsi, general manager (new business), MUL: "While car companies were moving from products to services, trying to capture more of the total lifetime value of a car, MUL was just making and selling cars." If a buyer spends Rs 100 on a car during its entire life, one-third of that is spent on its purchase. Another third went into fuel. And the final third went into maintenance. Earlier, Maruti was getting only the first onethird of the overall stream. As the Indian market matured, customers began to change cars faster. Says Kalsi: "So the question was, if a car is going to see three users in, say, a life span of 10 years, how can I make sure that it comes back to me each time it changes hands ? So Maruti has changed gears to take a big share of this final one-third spent on maintenance. Maintenance market has a huge market potential. Even after having fifty lakh vehicles on road Maruti is only catering to approximately 20000 vehicles through its service station daily.

Turn Around Strategy: To fight the inflation which is the prime reason for the decrease of car sale…Maruti came up with a plan that it will give a discount of rs40,000 if the customer brings a old car and wishes to buy a new car. When their indian market share of Maruti declined due to competition then they expanded their distribution channel by giving importance to export in 2007 to European country was 53000 where as in 2010 it was more than 2lakh. As the foreign player gives Maruti a heavy competition in its domestic market so as the Maruti started giving them in their market.

Customer centric approach: Maintaining the hand on the small segment and low price cars they are now moving in larger segment by launching sx4. Launching cars with alternate fuel segments like LPG powered wagonR and swift diesel.

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ANALYSIS OF MARUTI SUZUKI INDIA

THE ROAD AHEAD

Maruti Suzuki has been the most successful brand in India and it strives to continue to maintain that position. It is planning to launch 15 to 20 products in the next five years. It will still focus on low cost products with around 70% to 80% models being small cars. Suzuki is planning to combine its R&D unit with India which will give India a big role to play in development of products. It is going to invest approximately 1500 crores on development of products.

Current Economic Scenario Currently, high interest rates and steep petrol prices have marred the growth story of the car industry in August 2011 which has reduced the volume sold of all the major carmakers in India. Maruti Suzuki‟s sales were down by 17% and it is expecting “small single digit” sales growth this fiscal year (2011-2012). But it still sold the maximum number of cars 77086 compared to other competitors, the next being Hyundai which sold just 26677. Maruti Suzuki still has the maximum market share in the India market. The current economic condition is affecting everyone and hence Maruti‟s decline is not as big a concern for its brand image. But all carmakers will have to find a way out from the existing condition in the economy.

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