KARAN MEHRISHI feels that Maruti Suzuki has to go beyond its small car portfolio and brand image to retain its dominance in India
There was a time, some 25 years ago, when Maruti
Suzuki was known for the radical 800. The model was sensational because it was miles ahead of Ambassador and Fiat. Today, the name of India’s largest car maker is associated with the sizzling SX4, and captivating compacts like the Swift and Alto. The image transition has gone in sync with new occupants in the company’s corner room. The same will happen in the future as CEO Jagdish Khattar retires the day you read this piece, and gives way to expat Shinzo Nakanishi.
Despite an overall market share of 47%, and an even higher 70% in the compact (small) car segment, Nakanishi’s job isn’t going to be an easy one. The Indian market is complex, and changes regularly. Competition is creeping in on Maruti, and exposing its strategic holes. However, given its economies of scale, access to technology and models from the Suzuki (of Japan) stable, and the ability to tackle competitors’ path-breaking models, Maruti may be set to retain its dominance in the Indian car mart.
B&E analyses the challenges that Maruti Suzuki is likely to encounter, and how it will deal with them. small is beautiful: Maruti is the undisputed king of small cars. But its throne is being rattled by entrenched players like Hyundai Motor and Tata Motors (with its proposed Rs.1 lakh car), and newcomers like Renault and Bajaj Auto. This is critical as an Indian auto manager, who participated in a survey by University of Michigan and an IBM’s division, said that if the Tatas “really come out with a $2,500 car, there will be, at a minimum, 10-15% shift from two-wheelers to four-wheelers.” The survey added that “other predictions are much greater – some say a million consumers will migrate.” However, Maruti’s managers feel that the concept of the Rs.1 lakh car may not have as many features, and is unlikely to take a concrete shape. The buzz is that the Tata car may be priced much higher at Rs.1.6 lakhs. Still, Suzuki is not taking it easy. It has already announced its plan to launch a new, unnamed small car by next year. At the same time, it wants to be ready for consumers who may opt for the higher-priced models. So, apart from Alto and Swift, it will launch the Splash.
It may not be a bad strategy. Experts indicate that sales of the higher-priced compacts will zoom further. Wrote Vivek Vaidya, a brand management consultant, “Volumes for tomorrow lie in upper B segment…. Affluent first-time customers are likely to find upper B segment attractive. The offerings in this segment combine the best of both worlds – maximum space inside the car and manoeuvrability of a small car. The success of (Tata) Indica and (Fiat) Palio suggests that this is the segment of future.”
There was a time, some 25 years ago, when Maruti
Suzuki was known for the radical 800. The model was sensational because it was miles ahead of Ambassador and Fiat. Today, the name of India’s largest car maker is associated with the sizzling SX4, and captivating compacts like the Swift and Alto. The image transition has gone in sync with new occupants in the company’s corner room. The same will happen in the future as CEO Jagdish Khattar retires the day you read this piece, and gives way to expat Shinzo Nakanishi.Despite an overall market share of 47%, and an even higher 70% in the compact (small) car segment, Nakanishi’s job isn’t going to be an easy one. The Indian market is complex, and changes regularly. Competition is creeping in on Maruti, and exposing its strategic holes. However, given its economies of scale, access to technology and models from the Suzuki (of Japan) stable, and the ability to tackle competitors’ path-breaking models, Maruti may be set to retain its dominance in the Indian car mart.
B&E analyses the challenges that Maruti Suzuki is likely to encounter, and how it will deal with them. small is beautiful: Maruti is the undisputed king of small cars. But its throne is being rattled by entrenched players like Hyundai Motor and Tata Motors (with its proposed Rs.1 lakh car), and newcomers like Renault and Bajaj Auto. This is critical as an Indian auto manager, who participated in a survey by University of Michigan and an IBM’s division, said that if the Tatas “really come out with a $2,500 car, there will be, at a minimum, 10-15% shift from two-wheelers to four-wheelers.” The survey added that “other predictions are much greater – some say a million consumers will migrate.” However, Maruti’s managers feel that the concept of the Rs.1 lakh car may not have as many features, and is unlikely to take a concrete shape. The buzz is that the Tata car may be priced much higher at Rs.1.6 lakhs. Still, Suzuki is not taking it easy. It has already announced its plan to launch a new, unnamed small car by next year. At the same time, it wants to be ready for consumers who may opt for the higher-priced models. So, apart from Alto and Swift, it will launch the Splash.
It may not be a bad strategy. Experts indicate that sales of the higher-priced compacts will zoom further. Wrote Vivek Vaidya, a brand management consultant, “Volumes for tomorrow lie in upper B segment…. Affluent first-time customers are likely to find upper B segment attractive. The offerings in this segment combine the best of both worlds – maximum space inside the car and manoeuvrability of a small car. The success of (Tata) Indica and (Fiat) Palio suggests that this is the segment of future.”
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