Maruti’s Domination Plan

India is the biggest market for Suzuki Motor Corporation (more Suzuki cars are sold in India compared to Japan!). Indian operations remain very crucial to Suzuki’s global growth plan and the company has made some strategic changes that has sustained the dominance of the Japanese carmaker. Maruti’s plan is very simple – target and achieve 50% Market Share in the Indian Passenger Vehicle space. After the sudden entry of global biggies (say VW, Nissan, Renault, etc) it was assumed that Suzuki will have tough times and maintaining the Market Share will be the biggest challenge. However, Maruti stood the test of time and has put in awe the way several actions were taken to protect its turf. Let’s see the latest performance for reference:

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Maruti garnered a Market Share of 46.3% in August’16 and sold nearly 3 times more than the second best OEM (Hyundai)! The reasons for such dominance was:

  • Premium Positioning – NEXA helped Maruti elevate itself as a premium brand and successfully launch Baleno which later emerged as one of the best sellers in premium hatch category. The separate dealership network and focused marketing will enable Maruti launch much premium models in its portfolio.
  • Clever Technology – SHVS (Smart Hybrid Vehicle by Suzuki) / Mild Hybrid is no revolutionary technology. Rather something similar was incorporated by M&M years back in Scorpio (as Micro-Hybrid). But, the use of SHVS allowed Maruti gain tax sops and claim higher mileage as well. SHVS proved to have a dual advantage for the automaker – reduce the price of the models in which it was used and also prove itself as the best fuel efficient model. Ex: Ciaz Diesel’s mileage was 23.92 kmpl and was lower than that of segment leader City Diesel (26 kmpl). With SHVS, the mileage of Ciaz Diesel moved up to 28.09 kmpl!
  • AMT – Automated Manual Transmission went viral in past 15 months (with launch of Celerio AMT) and the acceptance was so high that it was later launched in Wagon-R, Dzire, Alto as well. The adverse traffic conditions in all major cities acted as a catalyst in the change and the intelligently priced AMT worked wonders for Suzuki.
  • Model-wise Focus – Maruti would be the only manufacturer which will have a segment-leading model in almost all segments! Currently Maruti does not have a product only in 2 segments (D-segment Sedan & Premium SUV). Maruti ensures that it studies the Consumer Sentiment very well and launch an offering that’ll be a runaway success! Lets see how well it has bifurcated its presence in various segments –

1 Also see the Top 10 selling cars of August 2016:

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6 out of Top 10 selling cars are from Maruti Suzuki! Obviously it is by design and not default.

  • Taxi Focus – Way before Mahindra’s & Tata’s could ink a deal with the Ola’s & Uber’s – Maruti identified a business opportunity and customized its offerings to suit the needs of the end consumer. A taxi-specific model was introduced in Dzire as Dzire Tour way back in 2012! Currently, Tour contributes to >20% of overall Dzire sales. Owing to the success of Tour concept in Dzire, similar variant was also launched in Ritz as well. Also note that CNG variants of Eeco, Dzire, Omni etc were also launched to tap the segment in Delhi-NCR regions.
  • Focused Market Approach – The Top 11 cities contribute to over 40% of Maruti’s sales. Hence every additional car sold in these cities help Maruti strengthen their presence overall. Market/City wise strategy helps them address the local needs much faster and enhance their sale. Look at how things have shaped up this year in the Top cities for Maruti –
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Source: TOI
  • Service & Spares Availability – It still remains one of the most important factor for the customer’s decision making process. Ease of availability of a Service Centre and low maintenance promise has helped Maruti gain confidence of the Indian Buyer.
  • Economy of Scale – Maruti’s two manufacturing facilities (Gurgaon & Manesar) have a joint production capacity of 14,50,000 units/annum! Such scale has allowed Maruti to negotiate prices with vendors and as a result price its models extremely competitively. It also allows the OEM to dynamically increase the production of the models as per the demand (say Baleno & Brezza).

While we are confident that Maruti will soon have a strong product in D-segment and SUV – we put a word of caution that Maruti needs to bounce back on Customer Satisfaction levels. The cases of poor customer experience in Nexa showrooms and the recent SSI scores are a matter of concern and needs to be addressed on priority. Indian Market is extremely dynamic and only the best will lead (not only survive)!

2016 J.D. Power India Sales Satisfaction Index –

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8 thoughts to “Maruti’s Domination Plan”

  1. I really appreciate that you added the ‘Taxi Focus’ point. The taxi market once ruled by Tata has been overcomed by Maruti now.
    Tata needs to Focus on this market again as reposition its products to align.with Fleet market as well.
    Automobile companies think that it will have a major impact on their private sales. But they should learn from how Dezire positioned its Tour model to enter the market. The old desire with every cost reduction was introdUced for Fleet and the facelift desire was available for private segment only.

    1. Yes Sanjay! Taxi as a segment has grown significantly in past few years and is contributing tremendously to OEM volumes. Though the segment was majorly catered by Tata previously (Indica & Indigo); Maruti identified the opportunity well in advance and had dedicated focus to the segment (with ‘Tour’ set of models). The strategy has paid off well!

    1. Yes Ketan. Maruti has acknowledged the challenge in terms of the recent success achieved by Renault & Nissan (with Kwid & Redi-GO). Maruti is already in the plans of making a SUV inspired entry level hatch – Also their Ignis will have similar cues (design & practicality).

  2. Well comprehended. However, I feel the economy of scale is one of the key factors helping Suzuki in India. Scale gives the elasticity to play with the price and they are able to achieve this with the help of strong and local partners.

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