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Old 1st May 2015, 11:56   #1
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Default Forbes: The reboot of Maruti

Interesting story from Forbes on how Maruti was in trouble five years ago, with slipping marketshare, changing consumer preferences and labour unrest, and how it rebooted to become more flexible and adaptable, increase localization, adopt new technologies faster (like AMT).

As I recall though, the labour unrest was not because the workforce felt insufficiently engaged, but because of exploitative worker conditions that sounded more like Chaplin's "Modern Times" than anything else. The article doesn't go into details of whether this has changed; it only says the company began to "involve [the workers] more deeply in seeking suggestions."
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Old 1st May 2015, 12:31   #2
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Default Re: Forbes: The reboot of Maruti

Equally interesting story in "Business Today" about the rise of Hyundai and how it has turned out to be a worthy competitor to Maruti. Apparently, it been 20 years that they have been in India.

Time flies, I still remember having to make a choice between Daewoo Matiz and Santro. I should say I was swayed by the Matiz ad featuring its great A/C - being the ages that we were in.
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Old 1st May 2015, 13:05   #3
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Default Re: Forbes: The reboot of Maruti

Quote:
Originally Posted by Raikkonen View Post
Equally interesting story in "Business Today" about the rise of Hyundai
Link please? (I googled and found several stories, not sure which you have in mind)
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Old 1st May 2015, 13:18   #4
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Default Re: Forbes: The reboot of Maruti

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Originally Posted by rsidd View Post
Link please? (I googled and found several stories, not sure which you have in mind)
It is in the print edition of March 29, 2015. It is titled "Chasing Maruti".

http://www.magzter.com/preview/161/90815 preview here.
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Old 1st May 2015, 13:41   #5
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Default Re: Forbes: The reboot of Maruti

Quote:
Originally Posted by rsidd View Post
Interesting story from Forbes on how Maruti was in trouble five years ago, with slipping marketshare, changing consumer preferences and labour unrest, and how it rebooted to become more flexible and adaptable, increase localization, adopt new technologies faster (like AMT).

As I recall though, the labour unrest was not because the workforce felt insufficiently engaged, but because of exploitative worker conditions that sounded more like Chaplin's "Modern Times" than anything else. The article doesn't go into details of whether this has changed; it only says the company began to "involve [the workers] more deeply in seeking suggestions."
Thank you rsidd for the link.

Its clearly some sort of paid article to make it seem like maruti has done something revolutionary. I dont think most people will buy any of this PR gibberish.

LESSON NO. 1: GO LOCAL TO ADAPT QUICKLY
Honestly?! Maruti is trying to justify the fact that despite making cars in India for 30 years in their biggest market, it was only in 2011 they thought of complete localisation?! They need to look at Hyundai and learn how quickly the Koreans increased localisation YoY and went on to make India one of their largest export bases.

Then the diesel engines. Suzuki has been making cars for 60 years. None of the other japanese car makers have the struggles with making their own diesel engine like Suzuki. Maruti knew the lust for diesels in the country and the demand for an overpriced TuD5 engined diesel Zen was proof of it all those years ago. Why didnt they develop their own diesel back then?! Even domestic manufacturers like Tata and Hyundai have a better grip on diesel technology than a company as old as Suzuki.

LESSON NO. 2: INVEST IN TECHNOLOGY

More bullcrap!

Quote:
“Technology and new product development will be key differentiators in the Indian auto market,” concedes C. V. Raman, executive director, engineering.

“For the first ten years of its existence there was no competition. There was neither the motivation nor the pressure to be agile. In those days it was also difficult to bring technology into India on account of foreign exchange issues,” admits Bhargava.

These developments saw Hyundai’s Santro (launched in 1998) grab a large chunk of Maruti’s market share by introducing technologies such as power steering and multipoint fuel injection. In mid-1999 Maruti suffered the ignominy of not being able to sell a single car in New Delhi (India’s largest car market) as its models were not Euro II compliant.
Wow, technologies like power steering must have taken the world by surprise. And thank God for pollution, cause if Maruti had their way with the Indian Government we would have still been stuck with carburettors!

Quote:
Maruti’s first successful innovation was the introduction of its auto gearshift technology earlier this year. It offered the convenience of automatic transmission but at a lower cost and without compromising on fuel efficiency. (Suzuki began working with its Italian supplier, Magneti Marelli, to develop this technology.)
Maruti tried their hand at an auto gearbox 2 decades ago! They simply gave up rather than persist with it. Also why does Magneti Marelli need Suzukis help to make an auto box?

LESSON NO. 3: UPDATE PRODUCTS REGULARLY

Quote:
There is a reason for the stuttering product launches: Most of Maruti’s research and development takes place in Japan. The facility caters to multiple markets such as Indonesia, Japan and the U.S., which means higher lead time.
Suzuki is out of the US market, nobody wants a Suzuki car there. Its sales are negligible in any of the worlds major car markets. India is by a large margin Suzuki's biggest market for a long time now.

Quote:
Rapid changes in the Indian market of late, however, have forced a change in thinking at Maruti and Suzuki. The company is setting up a full-fledged R&D center at Rohtak, Haryana, including a state-of-the-art test track at a cost of $430 million.
Finally someone in Hamamatsu realised Indians are smart enough to design cars on their own after all this while.

Either this article is paid promotion or surprisingly the journalism standards at Forbes is really poor.

Suzuki was smart to partner with the Indian government in a project that was funded mostly by peoples money. Then they had almost 2 decades to perfect their business with next to no competition to create a stature that very few can really compete with. No doubt they make cars that consumers want to buy, but nothing they ever did in this country was revolutionary. Even today Suzuki eyes India as a cash cow. The Japs should open their eyes and stop treating this country simply as a market and view India on equal footing with Japan. India must become Suzuki's largest export base and also a well established R&D infrastructure that is good enough to serve world markets. Its long overdue now.

Rant over, Peace!
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Old 1st May 2015, 14:54   #6
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Default Re: Forbes: The reboot of Maruti

Its a pretty standard article with only the positive covered and as Shortbread says, one sided.

While Maruti is a great company and has managed to hold its own against competition, I feel the article could have had a lot more depth in terms of strengths/weaknesses backed by data rather than quotes from leadership, past and present.
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Old 4th May 2015, 11:38   #7
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Default Re: Forbes: The reboot of Maruti

Agree with Shortbread. While the article does have some factual information, most of it looks like it was written by Maruti's PR personnel. The author should have instead provided a balanced view, highlighting strengths as well as weaknesses.

What Maruti does well: Frequent model launches, product range is just what India wants, awesome sales & marketing push, stellar after-sales network, leading the way with AMTs.

What it does terribly: Technology! Heck, the company has still not built its own diesel engine. Maruti also missed the 'compact SUV' boat. It's been 3 years since the Duster arrived & showed this segment's potential. A big guy like Maruti can't afford to miss market trends like this.

They don't have big engines either. The 1.4L petrol is too small for the Ciaz.

Maruti imports parts only to keep Suzuki (Japan) happy. I can't think of any other reason why a company selling 1 lakh cars each month can't completely localise. That's bad for the country (forex, lesser jobs, lower investment) & shareholders (higher costs).

Remember the recent fiasco where Suzuki wanted to produce cars in Gujarat and sell them to Maruti for distribution? What a lame idea - related link (Maruti-Suzuki to source cars from Suzuki's Gujarat Plant).
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Old 4th May 2015, 11:47   #8
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Default Re: Forbes: The reboot of Maruti

Maruti should skip 1.6 ltr diesels and straightaway come to 2.0 turbocharged petrols and 2.0 turbo diesels. Even if you consider fuel economy in real-life conditions the 2.0 turbo diesels deliver great avg's in India. Even more than 1.3 mjd and 1.6 JTD,MJD,TDi diesels. Also they can lug heavier loads better and compete directly against Toyota and VW.

It seems Maruti engineering R&D is not upto task for developing gearbox and engines for next gen.
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Old 4th May 2015, 12:55   #9
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Default Re: Forbes: The reboot of Maruti

Ho-hum article. Does not provide any details about any path breaking initiatives Maruti took to protect its turf or to further innovation.

To my mind: if one looks at Maruti's chequered history in the land of Bharat, there seems to be 4 significant inflexion points, created by 4 products:

1) The original 800 which put the nation on wheels and helped in mass motorisation to a very large extent

2) The Zen. Created the 1-litre hatchback segment. Also drove home the point that econo-boxes can also be fun to drive.

3) The original SWIFT. Created the "premium hatch" , segment along with radical styling. Helped in raising Maruti's image from a maker of humdrum automobiles to stylish, good to drive cars. The Swift created a "desire" (pun-intended), in young people to "own" the car.

4) CELERIO AMT. Convenience of clutch-less shifting brought to the mass market below 5lakh rupees without affecting fuel bills.
Caught the attention of young, urban car consumers of India who wanted a stress - free runabout but were hesitating to fork out big money towards Maruti's competitors either because they were too expensive or not very fuel efficient.

But the fact still remains is that the core area of Maruti still remains untouched. That is the ALTO class of vehicles.

Tata had a brilliant concept which did not take off due to a multitude of reasons discussed many a times within this forum.

Hyundai's EON was priced out of the A-segment "sweet spot" and was never much of a threat, although in terms of product quality it was perceptually better than an Alto.

Chevrolet could have done a very good job. Only it didn't. GM just could not position itself in the mind-space of aspiring first time car buyer or the second-car-in-the-family-buyer segment. The Spark though a competent vehicle was killed by its maker.

So who can? Datsun : doubtful. Going by the public perception it is still a fringe player.

Renault ? Don't know, difficult to predict, but if one closely tracks the performance of the French automotive company, it seems they have been pretty successful with their "own" products, not the cross branded one's.

What is being bandied about in the media, it seems that the new Renault small car will be a pretty stylish, competent vehicle, equal if not better to the market leader.
Also bear in mind that the Gauls, i.e. companies like Renault, Peugeot, Citroen are pretty good at making stylish, well kitted out small hatchbacks that are good to look at and good to drive as well. Globally.

It will be interesting to watch the A-segment space. My feeling is that in the coming years, the A-segment will slowly move up and settle somewhere in the 3.6-4lakh rupee bracket.

The future A-segment will cater to first time buyers, in fact the percentage of first time users will reduce, as the "FTU's" - with higher aspiration levels, will tend to gravitate towards the B-segment.
The A-segment in future will cater more to the "second-car-in-the-family" segment, to buyers who are already owners of an existing vehicle.
Because of their prevailing vehicle ownership experience, this new segment will start demanding higher value for money & newer features in their "A-segment" hatch. They will be more mature in evaluating their vehicle, on all parameters and FE will not be the sole criteria in choosing an A-segment model.

Does Maruti have such a model in their A-segment now? Think not.

And he who gets there first , will make the first chink in Maruti's impregnable A-segment armour. It need not be big in volume terms, but even if there is a minor, but consistent, market share percentage drop in the "ALTO" segment for Maruti, the psychological effect of it will be tremendous on Maruti's management.

Let's see who does that! We at T-Bhp would be watching!
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Old 4th May 2015, 15:26   #10
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Default Re: Forbes: The reboot of Maruti

Don't think the article has any more slant towards Maruti than any other similarly written article centering around a particular organization. Articles such as these do tend to eulogize and there is no reason to launch an attack on a company which is still leading its competitors by a yawning gap!

One agrees that Maruti hasn't done much by way of innovation, but it needs to be remembered that the bread and butter of this industry lies at the entry level segment, where margins are wafer thin and the parameters in the minds of a prospective buyers are quite different from what an evolved consumer would look at. Kudos to Maruti for introducing the AMT, as a consumer I would not lose my nights sleep over the fact that its another entity which manufactures it. Ditto for MJD engines in Swift, Ritz et al. Besides, even a powerhouse like Honda, which is head and shoulders above Suzuki globally, has only recently been able to introduce its diesel offerings in India

I would severely pull down Maruti on the following count: safety. For starters, it has the worst brakes among all manufacturers and I know for sure that my next car wont be a Maruti. Has it taken the Indian consumer for granted - yes to a certain extent and this is where I feel the next challenge lies for the company as the market evolves and the consumers become more aware of factors beyond fuel efficiency.

The article should have dwelt on the one key differentiator which really sets aside Maruti from the rest and that is customer service. I wish Maruti could outsource its sales and service experience to a Fiat/VW etc. I probably would have moves onto one of their offerings by now!
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Old 4th May 2015, 16:00   #11
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Default Re: Forbes: The reboot of Maruti

On the AMT note, I cannot fathom why Maruti stopped selling the M800AT (I had one briefly, recorded in TBhp). Though it was 2 speed only, it was a hoot to drive. They could have created a Auto revolution in India from 90s only. Too bad they didnt choose that path. They chose not to push the AT mentality into their customer mindset. Suddenly someone creates a tech called AMT and they make it sound as if they invented it. Same with the DDiS tech, pity people think Maruti invented that engine and technology!
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