Thursday, August 30, 2012

MARUTI SUZUKI LTD.: CHALLENGES

Maruti has been at the top of the list in the Indian automobile market since the 1980s, but with competition increasing in the small car segment, there are storm clouds on the horizon that the company can’t afford to ignore. What should the Indo-Japanese giant do next? by Pawan Chabra

In the month of July 2010, the company sold 100,857 units (domestic and exports), marking a y-o-y growth of 29% – a historic news for Maruti, as this was the second-highest monthly volume ever sold by the company. But this relief was not big enough to scare away its competitors. Maruti will still find it hard to continue living with its 50%-plus market share psychology. With Tata Nano gaining volumes month after month, analysts are of the view that Tata Motors will prove to be a bigger threat for Maruti than for Hyundai. Tata is all set to grab the second spot by displacing Hyundai as the second largest passenger car maker soon. In fact, the company has already done that in the month of June 2010 (though Hyundai reclaimed its second spot in July 2010). However, one needs to remember that Nano is making bigger waves by the passing day. Adds Srivastava, “A lot will depend on the strategy of the Tatas. Out of the total produced units of Nano, how many units will be retailed in India will determine its market share vis-a-vis its competitors in India.” And there are many more Goliaths in the making. Products like Toyota’s Etios, Honda’s proposed small car, Bajaj’s small car, Hyundai 800cc product, Volkswagen model below the Polo et al, are expected to hit the Indian market soon.

Maruti is currently at it to save its ‘numerical’ dream. The company has launched the new Alto with a K-Series engine and soon plans to launch CNG variants of its Eeco, Estilo, WagonR and SX4 models. But if truth be told, it has to focus more on absolute volumes than relative shares. Many-a-time, 10% proves bigger than 50%. Maruti has to work on the denominator and increase capacity soon. Additionally, identifying newer markets and product offerings that consumers desire is what will determine the numbers for the joint-venture. Rest is all well with Maruti.
 


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