Monday, August 13, 2012

Living its millionth life, king size!

Maruti Suzuki is well on its way to hit one million unit sales in this fiscal. But how does the market leader plan to prepare itself for the rougher road ahead?

It was back in 2004 that during a cross-functional team meeting at Maruti Suzuki, the officials derived a slogan for 2010 - ‘Ten Ten Ten’, wherein the first ten stood for 2010, the second referred to the targeted 10 lakh unit sales in the 2009-10 fiscal and the third referred to the 10% operating margin which the company would like to maintain in the process. “Few in the meeting were still not in favour; thinking we had gone crazy, but many supported the goal and designed the way forward,” recalls Shashank Srivastava, CGM – Marketing, Maruti Suzuki India.

While the arrival of the first Ten was inevitable, the third one looked hugely daunting; as the company was striving hard to maintain its margins under the intense competition in which the industry is operating. But the company has proved more than equal to the challenge as it rapidly continued to expand and strengthen its market position. However, the second Ten was what was bothering Maruti the most. It is indeed ironic that at the start of the financial year of 2009, Maruti Suzuki had clocked total sales of over seven lakh units and no one thought that the company is going to cross one million by any chance and hence will not be able to transform its ‘Ten Ten Ten’ slogan into reality. And here we are today – Maruti Suzuki’s total sales are now standing at 9,23,242 units (7,06,498 units in the corresponding period a year ago!) by the end of February 2010. And going by the calculations made by the company, Maruti Suzuki should cross the one million mark on March 23 (co-incidentally on the same date that Tata Motors launched its much-hyped Nano a year ago). Maruti’s MD Shinzo Nakanishi said at the 10th Auto Expo in the capital, “For the first time in 26 years, we hope to sell one million vehicles in one year. The one million sales mark is a landmark, not just for Maruti Suzuki. It is an important threshold for the Indian passenger vehicle industry. But we are finding solutions to reach the next million in ways that are sustainable and mutually beneficial.” Even Osamu Suzuki, Chairman, Suzuki Motor Corporation has expressed his contentment on such a huge achievement. So much so that Suzuki is also expected to take part in a special ceremony on March 23 in the capital.

The Indian journey of Maruti Udyog Limited started with the first unit of the Maruti 800 being delivered by the then Indian Prime Minister Indira Gandhi; and since then, there’s been no looking back for this automaker in the country. Apart from the changes in the shareholding patterns, which transformed a public sector unit into a subsidiary of the Indian automaker (Maruti Udyog Limited to Maruti Suzuki India), the company has even transformed its small-car maker image over the years gone by and will soon be stepping into the Honda and Toyota’s playfield with the launch of Kizashi well slated to take place by the end of the calendar year. “Maruti not only provided India with efficient wheels but also brought a work culture not only in the automobile industry but also the Industry as general. They brought in a culture in the industry where not only the workers and other staff was treated as equal but the big bosses and owners were also made to mix with the staff and workers,” exclaims auto expert Tutu Dhawan. The company attributes the credit of its one-million unit sales tag to the aggressive growth that the industry is enjoying and increasing exports. Now with one million in reach, the company is gearing up to march for the next one million. Notably, Business & Economy did a cover story last year on ‘Who Will reach the Two million mark first?’ in the Auto Special issue dated 29/10/2009 wherein Maruti Suzuki was obviously the front runner in the unit sales war in the Indian automotive market followed by players like Tata Motors (taking cue from Nano) and Hyundai Motors India (with mind-boggling export figures). But the way forward isn’t that smooth for the company as the competitors are increasingly eyeing its bread-and-butter hatchback segment to enhance their own prospects in the Indian market.

Be it Honda, Toyota, Volkswagen, Ford or General Motors, the automakers have decided to jump into Maruti’s playfield with the launch of their respective small cars. With Chevrolet Spark and Beat already running on the roads, accompanied by Volkswagen Polo and Ford Figo, other automakers are also scaling up their pace to transform their small car dreams into reality.

On the contrary, Maruti Suzuki has decided to move into segments that were still out of its reach in the Indian market. Be it the rising exports figures or the launch of new products, the efforts are clearly going in the direction of making the Indian subsidiary of the Japanese automaker more competent in the Indian market. Notably, Maruti Suzuki accounts for 80% of Suzuki’s profits and the Indian arm even out tipped the unit production figure of the parent company. With a three-year export contract with Nissan and its products reaching destinations like Europe, Sri Lanka, China and other countries; the company has scaled up its exports to 70,023 units for the 2008-09 fiscal from a mere 12,233 units in 2001-02. In fact, the Made-in-India car (made from scratch including conceptualisation, design and R&D in the country) from Maruti’s stable is expected to be out in the next 18-24 months; clearly depicting the transformation in the R&D ability of India in the sector. 

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