Ehsan Project

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A Summer Internship Project onMaruti Suzuki The undisputed

leader of Indian car market

A Report Submitted to Delhi business school, New DelhiAs a part fulfillment of

MBA + Post graduate programme (Industry Integrated) inEntrepreneurship and Business

University Punjab Technical University

Submitted to: Submitted by:Director Academics Saurabh SharmaDelhi business school Batch- (08-10)

New Delhi Roll No.-164Sem- II

Internal guide:Ms. Suman SuhagDelhi Business School

New Delhi


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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 AoutomobilesPvt. Ltd. for giving me the opportunity to work on this project. I amvery thankful to my project guide Mr. Lokesh Swarnkar(ASO) and

all the employees of Sanga Aoutomobiles Pvt. Ltd. who helped mein learning and understanding of automobile industry.

I am highly obliged to Mr. Dr.D.Pathak (Director), Delhi BusinessSchool for his guidance and cooperation. I am highly indebted toMs. Suman Suhag, my internal guide, who guided me in completionof this project.

I am deeply indebted to my parents and friends who have been asource of inspiration throughout my Summer Training Project.

Saurabh Sharma

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http://www.dbs.edu.in/http://www.dbs.edu.in/


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DECLARATION

I hereby declare that the project report entitled Maruti Suzuki Theundisputed leader of Indian car market is the produce of my sincereeffort. This summer internship project report is being submitted byme at Delhi Business School, New Delhi, for the partial fulfillmentof the course MBA+PGP in entrepreneurship and business (industryintegrated). This report has not been submitted to any other

educational institution for any other purpose.

Date:

Signature

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CONTENTS

Chapters Pg.No.

1. Executive Summary 5

2 Objective of the Project 7

3 Methodology 84. Introduction of Maruti 10

5. Indian four wheeler industry 17

6. Competitive forces 197. 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

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EXECUTIVE SUMMARY

Maruti Udyog Limited, the largest automotive manufacturer of India wasestablished in February 1981 though the production started only in 1983. Thecompany started as a 50-50 JV between Suzuki of Japan and Maruti. Thegovernment of India held 18.28% stake until recently. This holding stake wassold off to the financial institutions in May, 2007. Suzuki has graduallyincreased its holding percentage to 54.2. The first offering from Maruti, the800, was the bestseller for a long time till its sibling, the Alto, took over.Selling over 500000 cars annually in the domestic market, Maruti exportsclose to 30,000 units to several countries. Of late, the Indian giant was facing

stiff competition from various manufacturers and Maruti did well bylaunching the Swift which is a modern and exudes a lifestyle image. The trendcontinued with the SX4. The large portfolio takes care of the options availableto the customer.

Maruti Suzuki India Limited is Suzuki's largest and most valuable subsidiarywith 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, Maruti800, for less than INR 200,000 (US$ 5000) to the premium sedan Maruti SX4and luxury SUV, Maruti Grand Vitara. Maruti 800 was the first modellaunched by the company in 1983 followed by mini-van Maruti Omni in 1984.Both models were huge success in their respective categories because of theuse of high-end technology and good fuel efficiency. Maruti Gypsy, launchedin 1985, came into widespread use with the Indian Army and Indian PoliceService becoming its primary customers. The short-lived Maruti 1000 too

achieved moderate success until it was replaced by Maruti Esteem in 1994, tocounter increasing competition in the medium-sedan category.

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

In 2000, Maruti Alto was launched. The launch of Tata Indica and HyundaiSantro 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 inIndia. The Maruti models include Maruti Suzuki Grand Vitara, launched in2003, 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 butits time to change their strategy.Marutis cars are kwon for better fuel efficiency but the company shoulddevelop the engines which have the blend of power, pick up, and fuelefficiency.Marutis biggest competitor is Hyundai. Hyundais cars are not more fuelefficient. 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 carmarket.

To find out the key strategic initiatives, taken by Maruti Suzuki todefend 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 positioningof 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. The business of Maruti and the company through its researchers, wants toknow the brand image, demand for the cars and the potential in order todefend 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 thecompany and internet.

DATA COLLECTION

The researcher collected information through the official websites, magazinesand journals.

DEVELOPED THE RESEARCH FRAME:

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

NATURE OF STUDY

The project on which the researcher worked is descriptive and inferential innature.

DATA SOURCE:

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

INSTRUMENT USED

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

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9

Major players in the Indian automobiles

industry of Passenger Cars

Suzukis JV in India and the largest passenger car manufacturer in

The third largest passenger car manufacturer in India and one of theLargest exporter of vehicles. It has established India as one of itsmanufacturing bases in the world. It is planning to invest heavily to boostexports from India

Has vision of capturing 10 % share of theIndian passenger car market by 2010

One of the leading players in the Indian premium cars

One of the leading players in the Indian premium cars

One of the leading players in the Indian premium carssegment.

One of the largest players in the UV / MUVsegment

The 2nd lar est CV manufacturer in India

Other global players who are in India / have plans forIndia include -

Volvo, Daimler Chrysler, BMW and Nissan Motors

The largest player in the Indian industry. Plans to launch new and excitingproducts in the Indian markets, including the 100,000 car


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Maruti Udyog Limited An Introduction

Maruti Udyog Limited (MUL) was established in Feb 1981 through an Act ofParliament, to meet the growing demand of a personal mode of transportcaused by the lack of an efficient public transport system. It was establishedwith the objectives of - modernizing the Indian automobile industry,

producing fuel efficient vehicles to conserve scarce resources and producingindigenous utility cars for the growing needs of the Indian population. Alicense and a Joint Venture agreement were signed with the Suzuki MotorCompany of Japan in Oct 1983, by which Suzuki acquired 26% of the equity

and agreed to provide the latest technology as well as Japanese managementpractices. Suzuki was preferred for the joint venture because of its trackrecord in manufacturing and selling small cars all over the world. There wasan option in the agreement to raise Suzukis equity to 40%, which it exercisedin 1987. Five years later, in 1992, Suzuki further increased its equity to 50%turning Maruti into a non-government organization managed on the lines ofJapanese management practices.Maruti created history by going into production in a record 13 months. Marutiis 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 yearsince inception till 2000-01. In 2000-01, although Maruti generated operating

profits on an income of Rs 92.5 billion, high depreciation on new modellaunches resulted in a book loss

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COMPANY HISTORY AND BACKGROUND

The EvolutionMarutis history of evolution can be examined in four phases: two phasesduring 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 publicoffering (IPO).The first phase started when Maruti rolled out its first car inDecember 1983. During the initial years Maruti had 883 employees, a capitalof Rs. 607 mn and profit of Rs. 17 mn without any tax obligation. From such amodest start the company in just about a decade (beginning of second phase in1992) had turned itself into an automobile giant capturing about 80% of themarket 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 taxincreased from Rs 18.67 mn in 1984 to Rs. 6854.54 mn in 1998 but starteddeclining during 1997-2001.During the pre-liberalization period (1983-1992) a major source of Marutisstrength was the wholehearted willingness of the Government of India tosubscribe to Suzukis technology and the principles and practices of Japanesemanagement. Large number of Indian managers, supervisors and workerswere regularly sent to the Suzuki plants in Japan for training. Batches of

Japanese personnel came over to Maruti to train, supervise and manage.Marutis 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 employees future growth and

prosperity is totally dependent on the companys growth and prosperity (b)strict work discipline for individuals and the organization (c) constant effortsto increase the productivity of labor and capital (d) steady improvements inquality and reduction in costs (e) customer orientation (f) long-term objectivesand policies with the confidence to realize the goals (g) respect of law, ethicsand human beings. The path to success translated into practices thatMarutis culture approximated from the Japanese management practices.Maruti adopted the norm of wearing a uniform of the same color and qualityof the fabric for all its employees thus giving an identity. All the employeesate in the same canteen. They commuted in the same buses without anydiscrimination in seating arrangements. Employees reported early in shifts so

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that there were no time loss in-between shifts. Attendance approximatedaround 94-95%. The plant had an open office system and practiced on-the-jobtraining, quality circles, kaizen activities, teamwork and job- rotation. Near-total transparency was introduced in the decision making process. There werelaid-down norms, principles and procedures for group decision making. These

practices were unheard of in other Indian organizations but they worked wellin Maruti. During the pre- liberalization period the focus was solely on

production. Employees were handsomely rewarded with increasing bonus asMaruti produced more and sold more in a sellers market commanding analmost monopoly situation.

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Company Profile

Maruti Suzuki is one of India's leading automobile manufacturers and themarket leader in the car segment, both in terms of volume of vehicles sold andrevenue earned. Until recently, 18.28% of the company was owned by theIndian government, and 54.2% by Suzuki of Japan. The Indian governmentheld an initial public offering of 25% of the company in June 2003. As ofMay10, 2007, Govt. of India sold its complete share to Indian financialinstitutions. With this, Govt. of India no longer has stake in Maruti Udyog.

Maruti Udyog Limited (MUL) was established in February 1981, though theactual production commenced in 1983 with the Maruti 800, based on theSuzuki Altokei carwhich at the time was the only modern car available in

India, its' only competitors- the Hindustan Ambassadorand Premier Padminiwere 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 variousseveral other countries, depending upon export orders. Cars similar to Marutis(but not manufactured by Maruti Udyog) are sold by Suzuki andmanufactured in Pakistan and otherSouth Asian countries.

The company annually exports more than 50,000 cars and has an extremelylarge 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 recentlythe term "Maruti", in popular Indian culture, was associated to the Maruti 800model.

Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation ofJapan, has been the leader of the Indian car market for over two decades.

Its manufacturing facilities are located at two facilities Gurgaon and Manesarsouth of New Delhi. Marutis Gurgaon facility has an installed capacity of350,000 units per annum.

The Manesar facilities, launched in February 2007 comprise a vehicleassembly plant with a capacity of 100,000 units per year and a Diesel Engine

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http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Suzukihttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Initial_public_offeringhttp://en.wikipedia.org/wiki/May_10http://en.wikipedia.org/wiki/May_10http://en.wikipedia.org/wiki/2007http://en.wikipedia.org/wiki/Suzuki_Altohttp://en.wikipedia.org/wiki/Kei_carhttp://en.wikipedia.org/wiki/Hindustan_Ambassadorhttp://en.wikipedia.org/wiki/Premier_Padminihttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/South_Asiahttp://en.wikipedia.org/wiki/Maruti_800http://en.wikipedia.org/wiki/Maruti_Altohttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Suzukihttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Initial_public_offeringhttp://en.wikipedia.org/wiki/May_10http://en.wikipedia.org/wiki/May_10http://en.wikipedia.org/wiki/2007http://en.wikipedia.org/wiki/Suzuki_Altohttp://en.wikipedia.org/wiki/Kei_carhttp://en.wikipedia.org/wiki/Hindustan_Ambassadorhttp://en.wikipedia.org/wiki/Premier_Padminihttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/South_Asiahttp://en.wikipedia.org/wiki/Maruti_800http://en.wikipedia.org/wiki/Maruti_Alto


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

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

During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 wereexported. In all, over six million Maruti cars are on Indian roads since the firstcar 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 isimported from Japan as a completely built unit (CBU), remaining all modelsare manufactured in Maruti Suzuki's Gurgaon Plant.

Suzuki Motor Corporation, the parent company, is a global leader in mini andcompact cars for three decades. Suzukis technical superiority lies in its abilityto pack power and performance into a compact, lightweight engine that isclean and fuel efficient.

Maruti is clearly an employer of choice for automotive engineers and youngmanagers from across the country. Nearly 75,000 people are employeddirectly by Maruti and its partners.

The company vouches for customer satisfaction. For its sincere efforts it hasbeen rated (by customers)first in customer satisfaction among all car makersin 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 minorpartner to make a people's car for middle class India. Over the years, the

product range has widened, ownership has changed hands and the customerhas evolved. What remains unchanged, then and now, is Marutis mission tomotorise India.

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Marutis 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 latterdecided 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 - theMaruti 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 vibrantcolures when India's passenger car population comprised mainly Ambassadorsand Fiats in black and white, M800 gave Indians the first taste of globalquality and reliability.In late1980s, Suzuki increased its equity stake in MUL from 26% to 40% andfurther to 50% in 1992, converting Maruti into a non-government company.In the years that followed, MUL consolidated its position with a line of Indianclassics, such as the eight-seat Omni, the rough-terrain Gypsy, and, in October1990, a 3-box Maruti 1000. MUL took the lead in the green drive bylaunching its CNG-run Omni and Maruti 800 in 1999.

MUL redefined the premium compact segment with the launch of the Zen inOctober 1993. It was the company's first 'world car, selling across multiplemarkets. A year later, the Zen had won several awards, including 'No. 1 car inEurope' (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 premiummid-segment while WagonR was positioned as a multi-activity vehicle.In1999, to improve customer satisfaction, it even established a chain of modelworkshops and soon after, set up Customer call centers in the metros.

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

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

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INDIAN FOUR WHEELER INDUSTRY

Evolution

The Indian automobile industry developed within the broader context ofimport substitution during the 1950s. The distinctive feature of the automobileindustry in India was that in line with the overall policy of State interventionin the economy, vehicle production was closely regulated by an industriallicensing system till the early 1980s that controlled output, models and prices.The cars were built mostly by two companies, Premier Automobiles Limitedand HM. However, the Indian market got transformed after 1983 followingthe relaxation of the licensing policy and the entry of MUL into the carmarket. In 1991, car imports were insignificant, while component importswere equivalent to 20% of the domestic production, largely because of the

continuing import of parts by MUL. The liberalization of the Indianautomotive industry that began in the early 1990s was directed at dismantlingthe system of controls over investment and production, rather than at

promoting foreign trade. Multinational companies were allowed to invest inthe assembly sector for the first time, and carproduction was no longerconstrained by the licensing system. However, QRs on built-up vehiclesremained and foreign assemblers were obliged to meet local contentrequirements even as export targets were agreed with the Government tomaintain 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 andPeugeot had started assembly operations in India. They were followed byHonda, HMIL, and Mitsubishi.

Current Scenario

Major Players

Bajaj Tempo Limited, DaimlerChrysler India Private Limited, Fiat IndiaAutomotive Private Limited, Ford India Limited, General Motors IndiaLimited, Hindustan Motors Limited, Honda Siel Cars India Limited, HyundaiMotor India Limited, Mahindra & Mahindra Limited, Maruti Udyog Limited,Skoda Auto India Limited, Tata Motors Limited, Toyota Kirloskar MotorsLimited.

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Current scenario in Passenger Car Category

The dominant basis of competition in the Indian passenger car industry haschanged from price to price-value, especially in the passenger car segment.While the Indian market remains price sensitive, the stranglehold of Economymodels has been slackening, giving way to higher-priced products that bettermeet customer needs. Additionally, a dominant trend in the Indian passengercar segment is the increasing fragmentation of the market into sub-segments,reflecting the increasing sophistication of the Indian consumer. With thelaunch of new models from FY2000 onwards, the market for MUVs has beenredefined in India, especially at the upper-end. Currently, the higher-endMUVs, commonly known as Sports Utility Vehicles (SUVs), occupy a niche

in the urban market, having successfully shaken off the tag of commercialvehicles attached to all MUVs till recently. Domestic car manufacturers arenow venturing into areas such as car financing, leasing and fleet management,and used-car reconditioning/sales, to complement their mainstay-business ofselling 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 ofbreak-even volumes. This is related to the quantum of investments made bythe players in capacity creation and the selling price of the car. The amount ofinvestment in capacities by passenger car manufacturers in turn depends onthe production

Threat from the new players: Increasing

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

2-Financial strength assumes importance as high are required for buildingcapacity 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 sizesegments).

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 achieveconsistency in quality.

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Market strength of consumers: Increasing

1-Increased awareness among consumers has increased expectations. Thus theability 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 ofmanufacturers.

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 upintegrated manufacturing facilities may require higher capital investmentsthan establishing assembly facilities for semi knocked down kits or completeknocked 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 thedomestic car manufacturers have improved, it is still low for quite a few carmanufacturers in India. India is also likely to increasingly serve as thesourcing base for global automotive companies, and automotive exports are

likely to gain increasing importance over the medium term. However, thegrowth rates are likely to vary across segments. Although the Mini segment isexpected 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 andMid-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 thelaunch of new models at competitive prices.

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AVAILABLE CAR MODELS

Available Car ModelsStarting Price

(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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http://www.carwale.com/research/cars/maruti_suzuki/800/http://www.carwale.com/research/cars/maruti_suzuki/omni/http://www.carwale.com/research/cars/maruti_suzuki/alto/http://www.carwale.com/research/cars/maruti_suzuki/zen_estilo/http://www.carwale.com/research/cars/maruti_suzuki/wagon_r/http://www.carwale.com/research/cars/maruti_suzuki/wagon_r/http://www.carwale.com/research/cars/maruti_suzuki/wagon_r_duo/http://www.carwale.com/research/cars/maruti_suzuki/wagon_r_duo/http://www.carwale.com/research/cars/maruti_suzuki/a_star/http://www.carwale.com/research/cars/maruti_suzuki/a_star/http://www.carwale.com/research/cars/maruti_suzuki/wagon_r_duo/http://www.carwale.com/research/cars/maruti_suzuki/wagon_r/http://www.carwale.com/research/cars/maruti_suzuki/zen_estilo/http://www.carwale.com/research/cars/maruti_suzuki/alto/http://www.carwale.com/research/cars/maruti_suzuki/omni/http://www.carwale.com/research/cars/maruti_suzuki/800/http://www.carwale.com/research/cars/maruti_suzuki/800/http://www.carwale.com/research/cars/maruti_suzuki/omni/http://www.carwale.com/research/cars/maruti_suzuki/alto/http://www.carwale.com/research/cars/maruti_suzuki/zen_estilo/http://www.carwale.com/research/cars/maruti_suzuki/wagon_r/http://www.carwale.com/research/cars/maruti_suzuki/wagon_r_duo/http://www.carwale.com/research/cars/maruti_suzuki/a_star/


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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

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http://www.carwale.com/research/cars/maruti_suzuki/versa/http://www.carwale.com/research/cars/maruti_suzuki/ritz/http://www.carwale.com/research/cars/maruti_suzuki/swift/http://www.carwale.com/research/cars/maruti_suzuki/swift/http://www.carwale.com/research/cars/maruti_suzuki/swift_dzire/http://www.carwale.com/research/cars/maruti_suzuki/swift_dzire/http://www.carwale.com/research/cars/maruti_suzuki/gypsy/http://www.carwale.com/research/cars/maruti_suzuki/sx4/http://www.carwale.com/research/cars/maruti_suzuki/grand_vitara/http://www.carwale.com/research/cars/maruti_suzuki/grand_vitara/http://www.carwale.com/research/cars/maruti_suzuki/sx4/http://www.carwale.com/research/cars/maruti_suzuki/gypsy/http://www.carwale.com/research/cars/maruti_suzuki/swift_dzire/http://www.carwale.com/research/cars/maruti_suzuki/swift/http://www.carwale.com/research/cars/maruti_suzuki/ritz/http://www.carwale.com/research/cars/maruti_suzuki/versa/http://www.carwale.com/research/cars/maruti_suzuki/versa/http://www.carwale.com/research/cars/maruti_suzuki/ritz/http://www.carwale.com/research/cars/maruti_suzuki/swift/http://www.carwale.com/research/cars/maruti_suzuki/swift_dzire/http://www.carwale.com/research/cars/maruti_suzuki/gypsy/http://www.carwale.com/research/cars/maruti_suzuki/sx4/http://www.carwale.com/research/cars/maruti_suzuki/grand_vitara/


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COMPETITOR ANALYSIS

HYUNDAI MOTOR INDIA LIMITED

Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary ofHyundai Motor Company, South Korea and is the second largest and thefastest growing car manufacturer in India . HMIL presently markets over 25variants of passenger cars in six segments. The Santro in the B segment, andGetz in the B+ segment.

HYUNDAI SANTRO

We are mainly going to concentrate on the various marketing and positioningstrategies of Hyundai Santro as against that of Maruti Zen and Alto andHyundai Getz as against Maruti Swift.

POSITIONING OF SANTRO

The old positioning of the Santro was that pf a family car, this positioningstrategy was changed in around 2002 and Santro was repositioned as to that ofa smart car for young people. The target age group for the car had nowshifted 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 engineupgradation, new power steering, automatic transmission, etc, to keep theexcitement around it alive in the highly competitive small car market. Therepositioning 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 familycar to a sunshine car denoting a fresh new attitude and a changing yourlife positioning.As the average age of a car owner has declined from around30-35 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

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

HYUNDAIS PRICING STRATEGY

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

The company has introduced the XK and XL variants at a lower tag of Rs3,26,999 and Rs .3,45,999 respectively.The new price variants are likely togive Marutis existing B-segment models, Zen and WagonR a run for theirmoney. Hyundai has also launched a new non-AC variant of the Santro at Rs2.79 lakh, a tad higher than what the existing non-Ac Santro costs. The nextoffensive is due from Maruti. With the Santros new price positioning, Zenand 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 with1.1 litre engine with eRLX Active Intelligence technology, the new variantsalso 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 vehiclesin 1954 with a 15-year collaboration agreement with Daimler Benz ofGermany.

TATA INDICA Tata motors flagship brand.

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The company's passenger car range comprises the hatchback Indica, theIndigo sedan and the Marina, its station wagon variant, in petrol and dieselversions. The Tata Indica, India's first indigenously designed andmanufactured car, was launched by Tata Motors in 1999 as part of its ongoingeffort towards giving India transport solutions that were designed for Indianconditions. Currently, the company's passenger cars and multi-utility vehicleshave a 16-per cent market share.

POSITIONING OF INDICA

Tata has positioned Indica as `more car per car'. The new car offers morespace, 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 hasbeen understood in India.True to its "More car per car" positioning, the IndicaCNG offers all the core benefits of the Indica combined with the advantage ofCNG. One of the most popular advertisements on television currently, is theone where the guy portrayed as the loveable liar, gets socked every time helies ; 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 ofgiving the Indica V2 brand a touch of youthfulness.

TATAS PRICING STRATEGY

After the price war was being triggered off by Hyundai being the firstcompany to introduce what came to be known as, pricing based on customer'svalue perceptions, all others followed suit. Telcos Indica came in the range ofRs 2.56 lakh to Rs 3.88 lakh with 4 models. The price-points in the car marketwere replaced by price-bands. The width of a price-band was a function of thesize of the segment being targeted besides the intensity of competition. Thethumb rule being 'the higher the intensity, the wider the price-band.'

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MARKET SHARE OF MARUTI SUZUKI IN INDIAN

PASSENGER VEHICLE INDUSTRY

TOTAL SALES OF MARUTI SUZUKI

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SEGMENTATION

Segment Description-Length Model

A1 Mini up to 3400mm Maruti 800

A2 Compact 3401 to4000mm

WagonR, Alto, PalioStile, Zen Estilo, Swift,i10, Spark, Vista, A-Star, Xing, Getz Prime,Aveo U-VA, Fabia, i20

A3 Mid size 4001 to 4500mm

Dzire, Verna, Accent,Ikon, City,Ambassador, Fusion,Indigo, Fiesta, Aveo,SX4, Logan

A4 Executive 4501 to 4700mm

Octavia, Jetta, C Class,Audi A4, Corolla,Optra, Laura, Civic,Linea

A5 Premium-4701 to 5000mm Camry, Sonata,Accord, Mondeo, E

Class, Audi A6, SkodaSuperb, Nissan Teana

A6 Luxury 5001 above S Class, Audi 8

C Van Type Omni, Versa, Acemagic, 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

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MARUTI SUZUKI NETWORK HIGHLIGHTS

MSIL has over 2800 service centers, Approximately 7 times itsnearest competitor.

MSILS used car showrooms alone, exceed the new car showrooms ofHyundai & Tata Motors.

Source Maruti Dec 2008

Network Comparison

Basis MSIL Hyundai Tata Motors

Service Centers 2636 208 365

Dealer Network 439 201 218

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

No. of Sales Dealerships

True Value Showrooms

No. of Sales Executive

Maruti Authorized Service Station

Dealer Workshops

Total No. of Service Stations

No. of Towns with Service Centers

No. of extension counters; cities

No. of MGP Distributors

439 outlets in 243 cities

300

14685

1934

702

2636

1253

183 & 164

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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 competitionfrom local players like Telco, Hindustan Motors, Mahindra & Mahindra andforeign players like Daewoo, PAL, Toyota, Ford, Mitsubishi, GM, the wholeauto industry structure in India has changed in the last seven years andresulted in the declining profits and market share for Maruti. At the same time

the Indian government permitted foreign car producers to invest in theautomobile sector and hold majority stakes.

In the wake of its diminishing profits and loss of market share, Marutiinitiated strategic responses to cope with Indias liberalization process and

began to redesign itself to face competition in the Indian market. Consultancyfirms such as AT Kearney & McKinsey, together with an internationallyreputed OD consultant, Dr.Athreya, have been consulted on modes of strategyand 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 themarket. In its redesign plan, Maruti, launches a new model every year, reduce

production costs by achieving 85-90% indigenization for new models, revampmarketing by increasing the dealer network from 150 to 300 and focus on bulkinstitutional sales, bring down number of vendors and introduce competitive

bidding. Together with the redesign plan, there has been a shift in businessfocus of Maruti. When Maruti commanded the largest market share, businessfocus was to sell what we produce. The earlier focus of the wholeorganization was "production, production and production" but now the focushas shifted to "marketing and customer focus". This can be observed from thechanges in mission statement of the organization:

1984: "Fuel efficient vehicle with latest technology".

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

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1997: "Creating customer delight and shareholders wealth".

Focus on customer care has become a key element for Maruti. IncreasingMaruti service stations with the scope of one Maruti service station every 25km on a highway. To increase its market share, Maruti launched new carmodels, concentrated on marketing and institutional sales. Institutional sales,which currently contributes to 7-8% of Marutis total sales. Cost reduction andincreasing operating efficiency were another redesign variable. Cost reductionis being achieved by reaching an indigenization level of 85-90 percent for allthe models. This would save foreign currency and also stabilize prices thatfluctuate with exchange rates. However, change in the mindset was not as fastas required by the market. Maruti planned to reduce costs, increase

productivity, quality and upgrade its technology (Euro I&II, MPFI). Inaddition, it followed a high volume production of about 400,000 vehicles /

year, which entailed a smooth relationship between the workers and themanagers.

Post 1999, the market structure changed drastically. Just before this change,Maruti had wasted two crucial years (1996-1998) due to governmentalinterventions and negotiation with Suzuki of Japan about the break-up of theshare 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. Khatterwas appointed as the new Joint MD. Khatter was a believer in consensusdecision making and participative style of management.As a result of the

internal turmoil and the changes in the external environment, Maruti faced adepleting 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 throughtheir parent company Suzuki they learned a lot.The organizational learning ofMaruti was moderately successful, the cost was relatively inexpensive asMaruti had its strong Japanese practices to fall back upon. With the programof organizational redesign, rationalization of cost and enhanced productivity,

Maruti bounced back to competition with 50.8% market share and 40% rise inprofit for the FY2002-2003.

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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. Marutigets 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 upgradation in his car. Their sole motive of having so many product offering isto be in the consideration set of every passenger car customer in India. Here ishow 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 makinghuge investments in the form of MDS, N2N, Maruti Insurance and MarutiFinance. These help them in making the customer experience hassle free andhelps building customer satisfaction.

Various Services Offered By Maruti

1. Authorized Service Stations

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

Service is a major revenue generator of the company. Most of theservice stations are managed on franchise basis, where Maruti trainsthe local staff. Other automobile companies have not been able to

match this benchmark set by Maruti. The Express Service stations helpmany stranded vehicles on the highways by sending across their repairman to the vehicle

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2. Maruti Insurance

Launched in 2002 Maruti provides vehicle insurance to its customers

with the help of the National Insurance Company, Bajaj Allianz, NewIndia Assurance and Royal Sundaram. The service was set up thecompany with the inception of two subsidiaries Maruti InsuranceDistributors Services Pvt. Ltd and Maruti Insurance Brokers Pvt.Limited

This service started as a benefit or value addition to customers andwas able to ramp up easily. By December 2005 they were able to sellmore than two million insurance policies since its inception.

Benefits of Maruti Insurance (USP)

Near cash-less accident repairsAll Maruti dealers and a select group of Maruti Authorized Service Stations(MASSs) will provide the customer with near cash-less repairs in their claimsettlement. This means that the customer would not have to pay to the dealerfor the repair charges to the extent it is payable by Insurance Co. Customerwill just pay for the compulsory excess (fixed as per tariff according to thecubic capacity (cc) of the car) and applicable depreciation, which varies

depending on the age of the vehicle and the type of the replaced parts. Therates 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 theInsurance Company.

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3. Maruti Finance

To promote its bottom line growth, Maruti launched Maruti Finance inJanuary 2002. Prior to the start of this service Maruti had started two jointventures Citicorp Maruti and Maruti Countrywide with Citi Group and GECountrywide respectively to assist its client in securing loan. Maruti tied upwith ABN Amro Bank, HDFC Bank, ICICI Limited, Kotak Mahindra,Standard Chartered Bank, and Sundaram to start this venture including itsstrategic partners in car finance. Again the company entered into a strategic

partnership with SBI in March 2003 Since March 2003, Maruti has sold over12,000 vehicles through SBI-Maruti Finance. SBI-Maruti Finance is currentlyavailable in 166 cities across India.

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

Jagdish Khattar, Managing director of Maruti Udyog Limited in a pressconference 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 awholly 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 holdsthe remaining 26%. GE Capital, HDFC and Maruti Udyog Limited cametogether in 1995 to form Maruti Countrywide.Maruti claims that its finance

program offers most competitive interest rates to its customers, which arelower by 0.25% to 0.5% from the market rates.

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4. Maruti True Value

Maruti True service offered by Maruti Udyog to its customers. It is amarket place for used Maruti Vehicles. One can buy, sell or exchangeused Maruti vehicles with the help of this service in India.

Planning to sell your car?

Youve reached the right place. Only Maruti True Value guarantees that youget 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.Whats more, we will make sure that there are no post-sales hassles orobligations 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 thats not enough,we will also ensure that you get your payment fast, without commissions andwithout hassles.

5. Maruti Genuine Accessories

Many of the auto component companies other than Maruti Udyog started tooffer components and accessories that were compatible. This caused a seriousthreat 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, seatcovers and other car care products. These products are sold through dealeroutlets and authorized service stations throughout India

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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

Preparation

Opening Need assessment

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 theMaruti Driving School in Delhi. Later the services were extended to othercities of India as well. These schools are modelled on international standards,where learners go through classroom and practical sessions. Manyinternational practices like road behaviour and attitudes are also taught inthese schools. Before driving actual vehicles participants are trained onsimulators.[25]

"We are very concerned about mounting deaths on Indian roads. These can be

brought down if government, industry and the voluntary sector work togetherin an integrated manner. But we felt that Maruti should first do something inthis regard and hence this initiative of Maruti Driving Schools."

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

Bangalore

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MGA can be used tomake the product moreAttractive and Desirable

to the customer
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7.N2N Fleet Management

N2N is the short form of End to End Fleet Management and provideslease and fleet management solution to corporates. Its impressive list of clientswho 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 serviceinclude 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 fromShowroom / Retail Sales

Fleet Sales Has gained all-the-more importance in recent timessince large Corporates, Such as in the IT sector have started

providing their employees with Company Cars and Cabs.

Services Offered in Maruti N2N1. Fleet Acquisition:

Fleet Policy for Maruti-action

Recommending a fleet composition suiting companysbudget, range of cars & requirements.

Fleet Financing

Attractive Financial & Operating leasing schemes. Vehiclesare delivered at door-step after registration, Insurance, fitmentof MGA chosen and through inspection.

2. Fleet Operation

Vehicle Servicing

Complete Management of services as per PeriodicMaintenance Schedule and running repairs includingcomponents not covered under warranty.

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Emergency Assistance

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

pick-up & drop service for stranded customers in case ofaccident & 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 thevehicle for servicing, corporate driving training & safety

programs.

4. Insurance Management

Complete accident management services from attending thevehicle at site to processing from Insurance Company.

5. Fleet Resale

Assistance in selling existing fleet in transparent & hassle free mannerthrough Maruti True Value.

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

1. To acquires and takes over from GoI the right, title, and interest in relationto the undertakings of Maruti Ltd. As Provided for in the appropriateenactment of GoI together with the liabilities of GoI so far as they are Relatedto 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, solutionsenamels and all things capable of being used for, in, or in connection withmanufacture, maintenance, and working of motors and other things or in theconstruction of any track or surface adapted for the use thereof.

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

4.To carry on in the business of iron founders, mechanical engineers, andmanufacturers of machinery, tool makers, brass founders, metal workers,

boiler makers, mill rights, machinists, iron and steel converters, smiths, woodworkers, builders, electroplaters, chromium platers, lacquerers, enamellers,

painters, metallurgists, electrical engineers, and printers and to carry on anybranch of manufacturing and engineering business.

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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 thepress shop, steel coils are cut to the required size and panels are prepared bypressing them between various die sets such as doors, roofs and bonnet. Ananti-rust coat is applied at this stage.

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Weld Shop: There are three welding shops with 122 six-axis robots and 25in-house manufactured two-to-four axis robots. In this shop, various pressmetal components manufactured in the previous stage are spot-weldedtogether to form the body shell. Various parts such as the floor panel, side

panel, doors and bonnet are sub assembled in this shop. Subsequently, theassembled parts undergo final welding. The welded body is sent to the paintshop through a conveyor.

Paint Shop: There are three paint shops, within one of which the final outerbody is fully painted by robots. In the paint shop, the body undergoes variouspre-treatment and electro deposition painting processes to provide a highcorrosion 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-paintingmachines (micro bells) and robots, followed by a baking process.

Assembly Shop: Maruti has highly flexible assembly lines, which cansimultaneously handle a large number of variants as well as adapt to sequencechanges. The painted bodies proceed for final assembly in three stages. Thefirst stage is the trim line wherein various components such as roof headlining, windshield glass and interior trim components are fitted. Thereafter,the car is transferred to an overhead conveyor, the chassis line, whereincomponents such as the engine, gearbox and front and rear axles areassembled on the underbody. The vehicle is then lowered to the final line onits own wheels and here components and parts such as seats, the steeringwheel and the battery are fitted. The completely assembled vehicle finallyrolls out of the assembly lines to the final inspection stages.

Machine and engine shops: Assembling and testing of engines takes place atengine shops and carry out precision machining of engine components in ourmachine shops.

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Selling Process

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?

OPENING

NEED ASSESMENT

PRODUCT PRESENTATION

ATTEMPTED CLOSING

DEAL AND FINANCE

VEHICLE DELIVERY PROCESS

POST SALES FOLLOW-UP

PREPARATION

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- 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 youas a car advisor for life recognize each of these phases, tap them effectivelyand 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

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OPERATIONS

Using technology to give our customers more for less.

In recent years, the Company has accomplished significant improvements onmost 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 anddie designs, manufacturing feasibility simulations, automatic line balancing,and validating factories and material flow in virtual environment, have helpedmake 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, andachieved a production of 1 million in the 16 months ending March 2008. Thistranslates into the Company rolling out a car every 22 seconds during the two-shift operation. The entire effort of Japanese best practices and Indianinnovation is to ensure that manufacturing at this scale is achieved with highquality, productivity, safety and optimal cost.

In recent years, the Company has made significantimprovements on most operation parameters, including Hours per Vehicle(measure of productivity) and Direct Pass Rate (measure of quality). Itcontinued to build on this and achieve incremental improvements during theyear.

Innovative methods were used to secure widespread employeeparticipation, especially in promoting all-round Safety.

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

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 astate-of-the-art engine plant employing highly automated, energy efficient &

environment friendly equipment for low pressure and high pressureAluminium 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 asSwift (diesel & petrol), SX4 and DZire (diesel & petrol). These models haveseen buoyant market demand.

In addition, the fifth World Strategic Model derived fromConcept 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 200,000units by 2010.

In view of these developments, the plant's capacity wasenhanced from an initial 100,000 units per annum to 170,000 units per annumduring the year 2007-08. The Company is committed to achieve a capacity of300,000 units per annum by October this year.

CAPABILITY BUILDING

This year, the Company actively deployed the latest tools like DigitalEngineering in the areas of jigs and die design; manufacturing feasibilitysimulations, automatic line balancing and validating factories and materialflow in a virtual environment.

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PROCUREMENT

About three fourth of the car, by value, is outsourced. Anyimprovement in the car in terms of technology and design, quality or cost hasto essentially include the Company's vendors and their support.

In the year 2007-08, the Company signed two joint ventureagreements with global component manufacturers for cost reduction throughlocalisation of components for Maruti Suzuki cars. The first was with MagnetiMarelli, aimed at the production of electronic control units (ECU) for dieselengines and the second with Futaba Industrial Company, Japan for productionof exhaust system parts.

The Company is setting up a Suppliers Park in Manesar, close toits 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'svendors and it gives a good forum for building personal relationships,understanding key issues and exchanging best practices at the CEO level. TheCompany organized a visit of the members to Japan for some plant visits andthe Tokyo Motor Show

FUTURE AGENDA

In the early eighties, the Company made significant efforts intrying to develop a component industry from ground zero. Over the next two

decades, about 110 foreign technology collaborations were facilitated andMaruti Suzuki engineers worked closely with the vendors' engineers to enableto deliver cars which are both high quality and cost competitive. Now, therelationship has matured and most direct vendors or Tier 1 vendors arecompetent enough to work on their improvement, but there is major scope formodernization of some sections of Tier 2 vendors. The Company hasidentified this as an opportunity for further quality, up gradation and costreduction.

The second focus area for component cost reduction is raw

material yield improvement across all manufacturing processes, like sheetmetal, castings, forgings and machining. Every component is studied in detailand innovative ideas are tried, to reduce the input material weight for the samecomponent output. The total cost of raw material as a percentage of net salesranges from 15% to 20%.

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BUSINESS PERFORMANCE

The Company held on to its share in the entire passenger vehicle market at46% and was able to increase it marginally from 51% to 51.4% in passengercars. The Company's share in the A2 segment (compact cars) remained above58%. In the A3 segment, the Company's share increased to 21.9 percent, from15.1 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 Vitaraand an entry level sedan Swift DZire (in both petrol and diesel versions). Withthis, the Company has launched seven models in three years. During the year,the Company discontinued production of Esteem, its entry sedan launched in1994, which enjoyed a huge customer following for its combination ofunmatched performance and low cost of ownership.

Both the SX4 and Swift DZire have been received well fromthe start, and have contributed to the Company regaining the leadership

position in the A3 segment (sedans). In turn, this has catalysed efforts toexpand the Company's image from being a leader in small cars to amanufacturer offering the full range of models to customers.

The Grand Vitara, imported in small numbers as aCompletely Built Unit from Japan, further showcases the Company's ability tooffer a complete portfolio of products.

The year witnessed two new model launches by competitorsin 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, therewere several new variants by competitors. While the new offerings have taken

some share away from the existing ones, they have helped expand the marketoverall.

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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 eachsegment 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% to51.4% in passenger cars. The Company's share in the A2 segment (compactcars) remained above 58%. In the A3 segment, the Company's share increasedto 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 MotorCorporation, 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 distinctlyEuropean. This philosophy is reflected in the Group's other World StrategicModels, such as SX4, Grand Vitara, A-Star and Splash. The success of theCompany's new models is anindication that this new design philosophy has been well accepted by Indiancustomers.

In addition, the Company's new models have consistently

offered more features than comparable competitor offerings, and are verycompetitively priced. This has been made possible by a disciplined target costapproach towards new models, followed within the Company and at oursuppliers.

In recent years, the Company has also undertaken a seriesof market initiatives, notably the expansion of the sales network, offering theentire range of car-related services in a convenient and transparent mannerand implementing standards to improve customer service.

The success of the Company's new models, such as Swift andSX4, has strengthened the profitability of dealerships. In addition, car-related

products and services like insurance, finance, extended warranty, spares andaccessories have further boosted the bottom-line of the network. Further, witha car population of nearly 6.5 million Maruti Suzuki cars, service maintenanceand repairs make a healthy contribution to profitability of dealerships. Thesefactors are encouraging channel partners to reinvest in sales outlets,workshops and increasing their sales force.

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A major driver of sales performance is the pre-owned carbusiness, or True Value, which facilitates new car sales through exchange andtrade-ins and also contributes to dealer profitability. A total of 84,323 newcars were sold in exchange, accounting for 12 percent of total new car sales.

There is some data, collected by independent market researchgroups, to suggest that car ownership periods are declining in the Indianmarket. With customers inclined to replace cars faster, exchange will be a keytool in driving sale of new cars. This trend will also boost the pre-owned carmarket overall, as more and better cars become available.

The Company has in place robust systems to aid dealers inmonitoring and improving performance. These include Balanced Score Card,Customer Satisfaction Surveys and Dealer Profitability models. With therollout 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 itsmajor focus on exports and it does not operate in the domestic Indian market.The first commercial consignment of 480 cars was sent to Hungary. Bysending 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 aspectsgovernment was keen to encourage. Every political party expected Maruti toearn foreign currency.

Angola, Benin, Djibouti, Ethiopia, Europe, Kenya, Morocco, SriLanka, Uganda, Chile, Guatemala, Costa Rica and El Salvador are some of themarkets served by Maruti Exports Maruti Suzuki has helped India emerge asthe fourth largest exporter of automobiles in Asia. Shown here is MarutiGypsy in Malta.

The Company sold 53,024 units during 2007-08. This is thehighest ever export volume in a year for the Company, and marked a growthof 35 percent over the previous year. The Company's contribution towardstotal exports by the industry increased to 25% from 20% last year. Cumulativeexports 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

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plans to re-launch itself in the European markets which it had left two yearsearlier for want of a suitable model. The Company is targeting a yearlyvolume of 100,000 in Europe and other parts of the world. This model islikely to be launched overseas in the last quarter of 2008-09. The Companyhas decided that while focussing on volume growth, it will enhance efforts toimprove profitability from export operations. Exports will enable theCompany to be at the frontier of technology, quality and manufacturingexcellence.

SPARE PARTS AND ACCESSORIES

The Company draws competitive advantage from the fact that itscar parts are priced competitively and are affordable. In recent years, the focushas been to improve access and availability by setting up a national networkof spare parts distributors. In the Accessories business, enterprising dealershave used Maruti Genuine Accessories to create customized versions of theCompany's existing models. In many cases, these special edition cars haveenhanced sales, improved margins and enable the Company to addressyounger customer profiles. Although at a nascent stage, these dealer initiativessignify the potential offered by this business.During the year, the Company achieved a new milestone: a gross turnover ofRs 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 backend operation, which employs technology and competence in logistics todeliver on time to customers across the country.

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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 rawmaterials &

components, stores & tradedgoods

136,468 110,494

9 Employee costs 3,562 2,884

10 Manufacturing,administrative and other

costs11,298 8,258

11 Selling and distributionexpenses

5,602 4,999

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

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18 Fringe benefit tax 98 67

20PAT (15-16-17-18-19)

17,30815,620

CUSTOMER DELIGHT

In recent years, there are clear trends that customer expectations from a carhave evolved considerably. Car customers now seek contemporary styling,international quality and latest features that enhance their safety andconvenience, 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 initiativesto retain its top position in the area of customer satisfaction. These initiativesranged from product design and quality to network expansion, and includednew service programmes to meet latent needs of customers.

In recent years, there are clear trends that customerexpectations from a car have evolved considerably. Car customers now seekcontemporary styling, international quality and latest features that enhance

their safety and convenience, while expecting performance and fuelefficiency, 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 onlyeconomy and low acquisition cost are increasingly losing out to models andvariants that are rich in features, style and safety. This trend holds true acrosssegments, including among entry level cars.

The Company's product plan is designed for these changingcustomer expectations. World Strategic Models like Swift and SX4, whichoffer 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 toenable the Company to get closer to the customer.

In particular, the Company encouraged dealers to recruit ResidentSales Executives, dynamic youngsters from rural areas who would network

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with local communities and operate from there, rather than report daily to asales showroom in an urban location.

Going forward, the Company sees its network as a sourceof competitive advantage. Rising real estate prices and restrictions on land usein many cities are together hampering the setting up of new car showroomsand workshops, especially in prime locations.

The Company ranked first in the Customer Satisfaction forthe 8 successive years in the annual survey by J D Power Asia Pacific. It wasthe only player above industry average, despite the much higher number ofcustomers it has to serve.

Certain unique initiatives by the Company, such as the facilityat service workshops to pick up and drop cars of women customers, came infor appreciation. J D Power's Survey found that customers who received suchservice were notably more delighted.

The Company dealers and authorized service stations servicedmore than 10 million cars in the year.

At the back end, the Company took measures to improveproductivity of workshops so that customers can get their cars serviced faster.This also improves dealer profitability, generating more revenues from thesame fixed assets. The Express Service started by some dealers offers tocomplete a standard service for a customer's car in two hours.

Another innovation was Maruti Mobile Support - a specialversion of Versa that has been suitably modified to function as a servicestation. It is able to cover areas where a service station is not viable or wherecustomers want service at their doorstep. At present, 120 Maruti MobileService vans are plying in more than 80 cities.

The Company used technology to meet customer needs andeven 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. Thisallows 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 ofdissatisfaction among customers.

The Company's efforts to satisfy all car-related needs -- fromlearning to drive a car at Maruti Driving Schools to car insurance, extendedwarranty and eventually exchanging the existing car for a new one --- underone roof at dealerships also enhance customer satisfaction.

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FUTURE PROMISE

The Company is taking its interpretation of connect with thecustomer into a new paradigm. After investing in manufacturing facilities, theCompany is now ready to invest in marketing infrastructure. It has identifiedsome 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, experiencetechnology and so on.

Car stockyards are an effort to ensure that customers are able to gettheir choice of model, variant and colour, in time.

Spares stockyards in select canters across the country to meet customerrequirements faster.

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Limitations of Maruti Suzuki

Maruti has some limitations to expand its business and its market share in thistough competition. Several car makers in the country have slashed car pricesfollowing the announcement of the budget. The budget has reduced the exciseduty on cars with engine capacities exceeding 2000cc by Rs 5,000 per unit butgovernment 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 inIndia. What it seriously wanted was a diesel engine, but due to costlimitations, Maruti Suzuki was left helpless and so was the Vitara. However,in places like Australia, things are different. The 2009 variant of the popularSUV has just been unveiled, and the Australians love it so much that Suzukididnt have or require to change anything majorly

Increase in the prices of steel and other raw materials, rise in the interest ratesfor Auto loans will remain major factors for the automotive companies in theforth coming quarters. The company is focusing on increasing the productionof 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 companys newlaunch Maruti 800 Duo is having a moderate demand in the market. Thecompany has to face a lot of challenges in the upcoming quarters. It isexpected that the company will do well in view of its diverse product portfoliohaving strong demand in the market, overcoming barriers and delivering

positive results

Maruti has carefully chosen to maintain a marked thrust to exports whilecontinuing to maintain its grip in domestic where volumes have a bearing onthe prices at which one can sell.

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Findings

It is true that Maruti Suzuki is the undisputed leader of the Indian passengercar industry with more than 50% market share. Maruti Suzuki has the better

brand image than its competitors. Marutis cars are known for better fuelefficiency. Maruti is the name that India trusts.

The intention of the MUL was to produce peoples car at the time of itscreation and now the company is success in its intention.

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

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

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Conclusion

Maruti Suzuki is Indias leader of car market with more than 50% marketshare. Now competition is very tough in Indian passenger car market. There isa big challenge for Maruti to defend its market share. Now Maruti is changingits strategies to defend its market share.

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

Maruti has plus point with it that it has the more service centers than itscompetitors. 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, cheaperparts, better resale value and better engine performance. Maruti Swift andSwift Dzire is the revolutionary model in petrol as well as in diesel. Maruti isunable 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.

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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 andinformation, 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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