Product Lifecycle Analysis – Maruti Suzuki India

The Product Lifecycle Concept is well known for a long time both in studies of general economy and management. As per the concept; every product launched has a predictable lifecycle and it goes through 4 stages –  introduction, growth, maturity and decline. Each of these stages corresponds with a different amount of sales. While marketers attempt to capture high revenues at all of the stages, they alter their sales techniques noticeably throughout the product life cycle. Some economists believe that somehow sales of a new product can be predicted – right from the moment of its entry to its withdrawal from the market. The prediction is basis the stage the model/product is in.

We will assess if the PLC (Product Lifecycle Concept) makes sense in the Indian Automobile Industry and will showcase the Lifecycle Analysis of the models sold by various OEMs in India. Will start with the nation’s largest car maker – Maruti Suzuki.

We shall first state the specific reasons to undergo this analysis:

  • Every New Model launched by the Car Makers involve a lot of investment. The price tag to develop a new vehicle starts around $1 billion. According to John Wolkonowicz, Senior Auto Analyst for North America at IHS Global, “It can be as much as $6 billion if it’s an all-new car on all-new platform with an all-new engine and an all-new transmission and nothing carrying over from the old model.” (Source)
  • Considering the huge investment; the model has to sell a specific number of units in the mentioned timeline to make profits for the carmaker. An early death for a model shall convert into heavy irreparable losses. It is crucial that a model/platform sells minimum units to work profitable to the OEM.
  • An OEM having models with longer PLCs acts as a strategic advantage as the respective OEM not only makes more money out of it; but would be building customer base as well.
  • The Product Lifecycle also defines on how fast the OEM will need to work either to upgrade the model or bring the next model in the pipeline. Agility of the carmaker will make all the difference here. OEMs who can assess the market condition well in advance and are able to upgrade/launch a new model will have higher chances to gain market share.

Do note the mentioned points before going through the analysis:

  • We have considered the age of the brand/marque. Ex: Swift as a model would have gone through multiple facelifts / platform changes. However; the overall age of the marque is considered here.
  • Versa / Eeco has been combined in the analysis here as Eeco was nothing but a stripped down version of the Versa.

Lets see the Lifecycle of Maruti Suzuki’s Models – 

  • Maruti Suzuki has introduced almost 26 models in the Indian Market since 1983.
  • Out of these 26 models; 12 models has seen the end of its lifecycle and has either exited the Indian market or discontinued globally.
  • As on date; 14 models are in sale in the sub-continent and with this Maruti Suzuki commands >50% market share. (Source)

The Discontinued Maruti Suzuki models list and their age –  

  • Omni & Gypsy served Maruti Suzuki in India for almost 35 years! Both the models were discontinued owing to tighter emission and safety norms. With near to 35 years of sales in the Indian market, Maruti Omni probably shall be the second longest production car in India, next only to Hindustan Ambassador! In today’s world; who can imagine producing a car for over 30 years in any market? (and that too with minimal updates / changes).
  • Maruti 800 was actually the first offering from Maruti Suzuki India and is widely regarded as the most influential automobile in India – About  2.66 million Maruti 800s were sold in India during its lifetime!
  • Another cult hatch – Zen survived for over 20 years in India. Zen was Maruti India’s first world car and was exported to Europe as early as 1994. Besides being exported to Europe from 1994 to 2004, it has also been exported to several other countries. The Zen also quickly became a hit with the Indian Racing Scene with highly modified versions of the 993 cc G10B engine topping 100+ Bhp.
  • Esteem was Maruti’s attempt to cater the executive sedan segment and could sell for almost 10 years here.

List of Maruti Suzuki models currently on sale in India – 

  • Wagon R has an enviable performance in the Indian market. The model has sold 24,14,328 units in the past 20+ years in India! The model still doesn’t show sign of ageing and has sold 1,56,724 units in the last Financial Year (FY20). Which analyst/economist can guess on which stage of product lifecycle Wagon R is in?
  • Another blockbuster model from Maruti’s stable – Alto has been in the Indian market for over 19 years! Still Alto commands the title as one of the best selling models in India. The model has sold 39,78,285 units and is definitely the best selling hatchback in India’s history. The model was also India’s highest selling car for FY20 with sale of 1,90,814 units. We don’t know how to categorize it in the product lifecycle.

Maruti has found stellar success in India and the life of its models has always been much higher than its peers. No wonder Maruti models command the best resale value in India and still its so called aged models has high demand.  Though Maruti had its fair share of not so successful models (Esteem/SX4/A-star); Majority of Maruti’s models have been bestsellers in its segment and are still seeing demand irrespective of the age. Maruti has also been aggressive in bringing out relevant updates on its models to renew the demand over time. This has ensured that Maruti Suzuki makes enough profits even though the models are priced extremely aggressively and the ticket price is smaller too.

Hope you found the article interesting and we shall bring the analysis of other OEM models too in coming days.

Interesting Facts Series – Toyota

Do read our earlier post on the series here – BMW

We will be covering interesting facts of the world’s largest automobile manufacturer ‘Toyota’ in this post.

1. Toyota Motor Corporation started in 1937 as a division of Toyoda Automatic Loom Works. While the Toyota Group is now best known for its cars, they are still in the textile business as well.

2. The founder of Toyota Motor Corporation actually spells his name T-O-Y-O-D-A. Kiichiro Toyoda, to be exact. The spelling of the company name was changed to Toyota because when it is written in Katakana (a Japanese script) it only takes 8 strokes to write, and 8 is a lucky number in East Asian culture.

3. Kiichiro Toyoda, son of the founder of Toyoda Automatic Loom Works, got ideas for the first Toyota cars from the United States. He traveled to the US in 1929 to investigate automobile production because Japan needed to start producing domestic vehicles due to their war with China. Early Toyota’s bear a striking resemblance to the Dodge Power Wagon and Chevrolet.

4. Even though Toyota started in Japan, the company has created more than 5 Lakh jobs in the United States alone!

5. The Korean War in a way saved Toyota. While the company was on the verge of bankruptcy, and produced only 300 trucks in June of 1950. In the first initial months of the Korean War, the US ordered more than 5,000 vehicles from Toyota, and the company was revived!

6. Toyota first ventured into America in 1957.

7. In the year 2019, Toyota was ranked as the second largest car manufacturer in the world, just marginally short of the Volkswagen Group. (Source)

8. Toyota is the world’s leading manufacturer of hybrid vehicles, and there are more than 15 million Toyota hybrids on the road right now! (Source)

9. Toyota invested over $22.3 billion dollars in research and development worldwide. Close to Apple & Google.

10. In the US; Eighty percent of Toyotas sold 20 years ago are still on the road today!

11. A Toyota is best known for its long-term durability, quality & reliability. 

12. Eighty percent of cars sold in Africa are Toyota’s.

13. Fastest Selling Car – Since 1966, Toyota has been manufacturing and selling Corolla every 37 seconds on average. As of 2013, the rate has gone much faster at every 27 seconds on average. The sales have hit an unprecedented 40 million, which is mind-boggling.

14. It is the Leading ‘Green’ Brand. Toyota was the first auto manufacturer to sell a hydrogen fuel-cell vehicle commercially!

Source: Wikipedia, Toyota of Orange and Daves Ultimate Automotive