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Old 16th September 2015, 11:21   #1
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Default Maruti aiming for double digit sales growth every year till 2020!

At the ongoing 2015 Frankfurt Motor Show where Maruti-Suzuki's all-new premium hatchback, the Baleno had it's global premiere, the company's Managing Director Kenichi Ayukawa announced that they are aiming for double-digit growth in sales every year until 2020, so as to realise Maruti-Suzuki's "Vision 2.0" - selling 2 million vehicles by the end of this decade.

He elaborated that Maruti-Suzuki's plans include getting the new factory in India fully operational by 2017, doubling the company's Indian network to 3,000 outlets by 2020, and procuring at least 10% of all sales from the company's premium NEXA outlets and another 10% from sales through exports.

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Ayukawa expects the Indian market to grow from an estimated three million vehicles to five - seven million in the coming decade. The company sold about 1.3 million vehicles in the fiscal year ended on March 31, 2015.

"As the largest car maker, our mission is to continue to offer affordable products as penetration in India is still very low, and also offer cars like Baleno for the upgraders. Our endeavour is to continue the double-digit growth ... for that new models are important," he said, while also stressing on the need for launching new products and refurbishing existing ones.

Presenting the Baleno, the Suzuki's global CEO, Toshihiro Suzuki, said the company is planning to expand global sales to 3.4 million units by the end of the decade from 2.87 million cars last fiscal year. For this, Europe will be an important strategic market for Suzuki.

The car will be launched in Europe next year, but will be exclusively produced in India. Apart from exporting to other parts of the world, the car will also be shipped to Suzuki's home market of Japan, marking a major milestone for its Indian subsidiary.

The model will also be a key driver for the success of NEXA outlets. The company expects to sell about two lakh units a year through these outlets in the next few years.

With almost 60 per cent of Suzuki's global production expected to come from India by the end of the decade, the Japanese car maker is allocating significant resources into India, even as the Indian entity is building its own R&D capability and is increasing marketing expenditure.
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Old 16th September 2015, 12:29   #2
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Default re: Maruti aiming for double digit sales growth every year till 2020!

In India, there is a huge majority of population which ride on two wheelers, have an aspiration to migrate to a car. The fact at present is that, majority of these first time car buyers, will first think of a Maruti Suzuki or a Hyundai at the most while choosing their cars, for their large service network, and inexpensive spares.
This is the reason for the huge sales for Alto, WagonR, Swift, and Dzire.
The idea of Nexa as a destination for the next upgrade, with premium products is also very good in my opinion, if they quickly introduce a number of premium products.
So, the expected 2 digit growth until 2020, is not far fetched.
However, there will be fierce competition, with Hyundai increasing its base in India, across the spectrum, and a number of new manufacturers trying to take away a pie out of B2, C1 and C2 space.

An idea, which Maruti can try in India - they can introduce an ultra-cute small car, probably taken from Japan, size comparable to Alto, but with heavier metals & all round safety, equipped nicely with all kind of gizmos, with a punchy 1.5L diesel engine, and position that product as their starting offering in Nexa. That will actually increase the footfalls to the showroom.
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Old 16th September 2015, 13:31   #3
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Default re: Maruti aiming for double digit sales growth every year till 2020!

The 'Vision' looks more like a declaration that Suzuki have almost given up hope in rest of the world markets and putting all their eggs in one basket, i.e India.

This is great for the Indian consumer who gets their complete attention, locally built models at competitive prices, more Indian jobs and investment etc... This is great news and should have happened earlier. India must be Suzuki's base for automotive R&D as well as production. The country has saved its otherwise struggling global operations and is the only major market where it is generating profit.

The operations in Hamamatsu at present look pointless especially in context of the car division. For a company that's been making cars since 1955 its success has remained patchy.

The first issue like I mentioned earlier is that Suzuki has not given any real plans as to how it is going to gain market share in rest of the world. The two largest markets in the world China and USA, former its a negligible player and in the latter its has closed operations after recurring losses. Its hanging on to a 1% market share in Europe for the past 5 years. Everywhere else Suzuki has presence but very little impact.

The second issue is its model portfolio. In India with a 15 year head start, dominant dealer network and a growing large volume small car market where it is price competitive, Suzuki thrives. But everywhere else the business model is very brittle. Suzuki's model range relies heavily on small cars with smaller margins and profits pinned on volumes, which they do not have anywhere else in the world. Their every attempt at going upmarket has failed SX4, Kizashi and even the once popular Vitara is dying a slow death. I assure you while the Baleno looks exciting in India especially at the right price it will have no dent in rest of the world markets.

But in the short to medium term things are sunny for the former Japanese but now very much Indian player. With commodity prices falling the Indian economy will remain strong and a continuously growing middle class ensures Suzuki gets a steady flow of new consumers. The Indian product line up looks promising as well. Suzuki must be praying things always stay this way.

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Old 16th September 2015, 16:36   #4
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Default Re: Maruti aiming for double digit sales growth every year till 2020!

Despite being the biggest, Maruti is showing no signs of slowing down. They're as aggressive as they come. I have no doubt in my mind that Maruti will achieve (at least in the short to medium term) the targets they set on themselves.

Can just imagine other car manufacturers going after reading this. It's like Michael Schumacher announcing that he's going to be 2 seconds / lap quicker in the next race. This, after already being 3 seconds a lap faster than the rest of the field!
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Old 16th September 2015, 19:55   #5
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Default Re: Maruti aiming for double digit sales growth every year till 2020!

Toshihiro Suzuki, President, Suzuki Motor Corporation, speaking at the 2015 Frankfurt Auto Show, announced to the Indian press that Maruti-Suzuki will be getting 15 new models in the next 5 years (out of the parent company's proposed 20 new models) so that the Japanese major's Indian arm can contribute majorly to the company's NXT 100 vision by 2020.

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He also elaborated on the development of production in India for the world, hinted on no possible future collaborations with auto makers, and also spoke on the safety aspect in Maruti-Suzuki cars and Indian roads.

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The Indian operation and it's importance is growing more than ever before. I will draw a parallel: Maruti Suzuki is a driving force with the turbo to achieve this target.

Maruti Suzuki for us is an engine which will exceed the performance of a boosterjet engine. I am forgetting the specific number, (but) except the kei cars (small cars for the Japanese market), all the models will be made available to India - probably 15 new models.

We plan to introduce a turbocharged engine. We will be introducing models which will be powered by these engines.

My personal view is, more than collaborating with an automaker, it makes more sense to collaborate with an auto component maker.

More than the cheap vehicle, we would like to go ahead with vehicles which will have value for money. So, whether it is a small car or a big car, we would like to make vehicles which offer value for money.

The Indian market is growing in terms of size. How customers are viewing the vehicle, their expectations - in line with this change, we would like to gradually migrate into manufacturing of bigger vehicles.

It has been 50 years (since) SMC started developing vehicles. In India, we have started this work 5-10 years back. We will be working in this direction. From this angle, I want Maruti Suzuki to take responsibility to make vehicles for Suzuki as an overall group.

I am not completely aware of the roadmap of Maruti Suzuki's plan for installing or enhancing safety equipment, as when do we start putting airbags as a standard fitment. However, in addition to fitting the airbags, we have to also see that the infrastructure is improved. Even if you put the airbag and other safety equipment, that will not avoid accidents.

Whenever I go to India - once or twice (every) few months - I see sometimes animals on the roads and pedestrians on the highway.
Unless these conditions are taken care of, no matter how good airbags you add ... (safety) will be a challenge.
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Last edited by RavenAvi : 16th September 2015 at 19:57.
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Old 17th September 2015, 09:02   #6
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Default Re: Maruti aiming for double digit sales growth every year till 2020!

Excellent! This is great for the market.

We are seeing an even greater aggression from Maruti these days. The number of new launches that MSIL has lined up in the near future is truly commendable.

If the marker leader can work on improving the build quality and safety rating of their cars across segments here in India, I guess that will complete the picture.

I feel Maruti no longer needs to undercut others in pricing to succeed. Show value to Indian customers along with reliability and they will lap the products up. The product need not be cheap to sell, and it signs of a matured market. MSIL should invest that money wisely by giving more value to customer through build and better engineering.
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Old 17th September 2015, 09:57   #7
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Default Re: Maruti aiming for double digit sales growth every year till 2020!

I am going to go against a raging flow and say that in my opinion Maurti's slide will begin from this phase onwards (as it begins to focus on higher segments) and the market begins to move even more decisively to higher segments.
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Old 17th September 2015, 10:17   #8
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Default Re: Maruti aiming for double digit sales growth every year till 2020!

I feel Maruti is day dreaming. Their service is expensive (so what if it's wide, there are many local service centres that cater to multi-brand cars).

Competition (not just Hyundai, others too) is just a few right moves away from catching on & IMHO it's Maruti's over-confidence to officially put out such massive numbers.

Having observed the car industry from the external as well as internal view points, IMO Maruti will only be a significantly large player ( & for sure at that ), but not as big as projected.

I'll take a chance to go to the extent of saying that in 2020, I'll refer back to this thread & grin at myself thinking - *I told them so*.

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Old 17th September 2015, 12:19   #9
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Default Re: Maruti aiming for double digit sales growth every year till 2020!

OT: With a few parallel threads on the crash ratings being discusses, I believe someone from the press should have asked if these 15 models will be crash tested and will it be as safe as the ones launched in the more stringent markets?

Would have been interesting response from Suzuki.
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Old 17th September 2015, 12:52   #10
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Default Re: Maruti aiming for double digit sales growth every year till 2020!

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Originally Posted by GrammarNazi View Post
I feel Maruti is day dreaming. Their service is expensive (so what if it's wide, there are many local service centres that cater to multi-brand cars).

Competition (not just Hyundai, others too) is just a few right moves away from catching on & IMHO it's Maruti's over-confidence to officially put out such massive numbers.

Having observed the car industry from the external as well as internal view points, IMO Maruti will only be a significantly large player ( & for sure at that ), but not as big as projected.

I'll take a chance to go to the extent of saying that in 2020, I'll refer back to this thread & grin at myself thinking - *I told them so*.

Warm Regards
I hope you are right as that will only mean a win win situation for us end users.

However, I am waiting for those few right moves for more than 15 years. As of now, Maruti's day dreaming must be becoming a nightmare for others.
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Old 17th September 2015, 13:37   #11
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Default Re: Maruti aiming for double digit sales growth every year till 2020!

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Originally Posted by GrammarNazi View Post
I feel Maruti is day dreaming. Their service is expensive (so what if it's wide, there are many local service centres that cater to multi-brand cars).

Competition (not just Hyundai, others too) is just a few right moves away from catching on & IMHO it's Maruti's over-confidence to officially put out such massive numbers.

Having observed the car industry from the external as well as internal view points, IMO Maruti will only be a significantly large player ( & for sure at that ), but not as big as projected.

I'll take a chance to go to the extent of saying that in 2020, I'll refer back to this thread & grin at myself thinking - *I told them so*.

Warm Regards
I agree partially, that their services are becoming costlier, and in some cases it is more expensive than the competition, for example: Swift or Wagon R versus a Toyota Liva.

However the good thing about the Maruti ASS is that they are fairly reasonable even now, and they are very process driven. I have never needed to escalate things to their head honchos, if you escalate to the helplines, or through the website, it usually shows immediate results, errant dealers are immediately pulled up, and they make it up to the customer.

Cannot say the same for Tata, M&M, Skoda, VW, where you complain repeatedly and then you have to write to the MD, tweet it to their personal accounts, find someone who knows someone, just to correct a blatant error or a manufacturing defect or cheating from their dealers.

So, all in all, Maruti Suzuki gives a customer peace of mind that they will be treated fairly and the charges will not be exorbitant. I think a lot of Indian customers appreciate that and they have that deep connect with the Maruti brand.

Apart from that, the sheer lineup that Maruti has in its portfolio, means that there is something for everyone.

The weak areas that Maruti suffers from is the lack of safety features, flimsy build, poor quality of plastics, switches etc, but I think that they are working on making up with the Nexa range.

Just wish that they would take the lead in making crash test results public, rather than using their clout to suppress automobile safety laws in India.
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Old 17th September 2015, 13:47   #12
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... The weak areas that Maruti suffers from is the lack of safety features, flimsy build, poor quality of plastics, switches etc, ...
Lol! One would think being a car manufacturer, these are the exact things that should be right for a brand to click. Everything else is just secondary. There are brands which fare a lot better in these 'primary' things than MS but don't even come close to it in terms of sales.

MS knows the pulse of this nation better than anyone else and doesn't give a twig extra than what's required.

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Old 17th September 2015, 16:34   #13
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Default Re: Maruti aiming for double digit sales growth every year till 2020!

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Originally Posted by GrammarNazi View Post
I'll take a chance to go to the extent of saying that in 2020, I'll refer back to this thread & grin at myself thinking - *I told them so*.
I think you underestimate Maruti. For the last 10 years, people have been talking of Maruti's decline. Even after all the global biggies came & launched their mass market products in India....well, Maruti actually INCREASED its market share.

Can you give us specific reasons why you think Maruti's share will decline? The way that I see it, they're pushing all the right buttons.

Neither has Maruti shown a major weakness and neither has the competition shown a major strength / advantage.

- In the last 5 years, they've launched more products than anyone else (along with Hyundai).

- Their brand value is only increasing. Customer trust in them has only gone up.

- Their dealership network continues to widen. Ditto with the service network.

- Maruti owners are generally a happy lot in the area of reliability and after-sales. Maruti's 'can't go wrong' reputation is stronger than ever.

- They're bringing out new technologies in the mass market (e.g. AMT, SHVS).

- The Dzire beats all the newer compact sedans, the Ertiga owns the Mobilio, the Alto is undeterred by the Eons & Gos of the world etc. etc.

So, what exactly makes you say that Maruti will become weaker in the next 5 years?
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Old 17th September 2015, 16:45   #14
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Default Re: Maruti aiming for double digit sales growth every year till 2020!

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I think you underestimate Maruti. For the last 10 years, people have been talking of Maruti's decline. Even after all the global biggies came & launched their mass market products in India....well, Maruti actually INCREASED its market share.
+1.

A look at the Monthly Sales threads confirms this one single fact - once they crossed 1 lakh units in a month sometime last year, the 1 lakh units per month has become a given with them from then on. It's as if they are not content with touching those 1-lakh-per-month numbers only - they are striving continuously for more, and their sales are increasing! This, when their factories are already running at full capacity and they might run out of capacity by next fiscal year!

Consider this as well - the nearest competitor, second-placed Hyundai India, has only just now broken into the 40,000 units per month in monthly sales!

When the competition has grown in numbers and become fiercer across segments, Maruti has responded by matching their aggressiveness with it's own, upgrading the quality of it's products, adding more contemporary features to it's cars, bringing out affordable mass-market technologies such as the AMT, mild-hybrid diesels (Ciaz SHVS is out and others are set to follow), a premium hatchback called Baleno is in the pipeline, and 15 more to follow in the next 5 years.

A sign of a true market leader - in times of facing stiff competition, they are upping their own game and have become more relentless. Moreover, they show no signs of stopping anytime soon.

Indeed, their approach to this increasingly competitive market is very commendable and laudable. I am quite sure they will achieve their plans for the next 5 years, if they keep this competitive spirit going. Good luck to them.

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Old 17th September 2015, 20:15   #15
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Default Re: Maruti aiming for double digit sales growth every year till 2020!

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I think you underestimate Maruti...
Maruti's creativity in marketing their offerings as to what a typical Indian consumer "values" is surely unparalleled. Almost genius IMO.

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For the last 10 years, people have been talking of Maruti's decline.
Markets are dynamic, before, industry churn took 5 - 7 to 10 years, nowadays (from what I've observed) it can happen in ~3-4 years.

Tell me really, aren't we a tiny bit more informed than the lay-person about how the other companies must be planning to react ? Not just do we closely follow scoops, but our reach also makes our voices heard with auto-makers.

Quote:
Even after all the global biggies came & launched their mass market products in India....well, Maruti actually INCREASED its market share.
Agreed, Maruti built a brilliantly managed company and grew its brand with the resources it'd been given. But those specific resources are now ageing & the value that can be derived out of them is reaching a saturating point.

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- In the last 5 years, they've launched more products than anyone else (along with Hyundai).
Yes, they impressively maximised the leverage that could be derived out of the the brand that was built.

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Can you give us specific reasons why you think Maruti's share will decline? The way that I see it, they're pushing all the right buttons....
In order to take on the market competition after the next 3-4 years, they'll need to take things to the next level : Expand the dynamics of the design language, in-house (cost purposes) & ground-up development of a powerful + efficient (since "efficiency" is synonymous to their brand) new-generation engine, supported by a superior gearbox.

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Neither has Maruti shown a major weakness and neither has the competition shown a major strength / advantage.
Citing the Diesel Celerio debacle would be an easy argument, but IMO they have only developed a tiny bit on their offerings. The Ciaz, although a brilliant offering in terms of "market perception", has its value limitations.

A transition from i20 to Elite i20 saw an exponential jump in value at similar price levels (or slight increases), (or even Manza to Zest for that matter) whereas Ciaz is priced significantly higher & prices almost touch D-segment levels.

So, with this serious limitation, I don't think they can add any more higher priced products & find almost no scope of high paced growth as they've projected.

The new products which will be placed significantly higher (~14-18L) than Brand Ciaz, must find takers who see value when compared to competition. And at that level, competition isn't going to keep quiet.

Just look at how the TUV300 is priced almost ~35% lower than the S-Cross. maybe it has design limitations (subjective), but its here on time & challenging the value of S-Cross.

Quote:
- Their brand value is only increasing. Customer trust in them has only gone up.
But at higher levels their typical customers change. From customers who've the likes of Tata / GM among their options, the counter argument to choose Maruti was easy.

Its a long shot of Maruti trying to cater to consumers who've had very reliable options in Japanese & Korean brands (brands that have rather impressive service network that have already been catering to the premium segment).

Quote:
- Their dealership network continues to widen. Ditto with the service network.

- Maruti owners are generally a happy lot in the area of reliability and after-sales. Maruti's 'can't go wrong' reputation is stronger than ever.
As much as their tight control over the wide service network is impressive, IMO its over-rated. Not just large multi-brand service centers, but even smaller workshops can change the occasional tie-rod or even suspension without much hassle, at a lower cost than M.A.S.S.

Couple those occasional changes with the regular maintenance of changing oils, filters etc. and the cost difference is significant enough for people to choose others.

The "can't go wrong with Maruti" has its limitations to the present segments they cater. Even in the latest report we're seeing a comparative decline in Maruti's sales despite the addition of a healthy number of S-Cross units moving.

Quote:
- They're bringing out new technologies in the mass market (e.g. AMT, SHVS).

- The Dzire beats all the newer compact sedans, the Ertiga owns the Mobilio, the Alto is undeterred by the Eons & Gos of the world etc. etc.
They have numbers thanks to their brand, which'll make it viable from them to customise features to provide high value, and those can come for the company over a long term with a reduced rate of return / profit margins in an extremely stable manner.

They have built a brilliantly managed company to make it a possible path, but^2 they should have the motivation (long term investor $$) to do that.

Quote:
So, what exactly makes you say that Maruti will become weaker in the next 5 years?
To put it more precisely, I'm not saying Maruti is going to decline massively (like to 40% of current levels), I just believe that it has reached its potential and may drop to 70-80% in the next 2-3years.

All this may be dismissed as abstract stretches of imagination, but I would go so far as to assume that this possibly is partly the reason Mayank Pareek has moved on.

(Apologies if there is an error in drafting this reply, had barely 20-25mins before the Puja.)

Happy Ganesh Chaturthi

Last edited by GrammarNazi : 17th September 2015 at 20:29.
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