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Old 17th July 2016, 19:52   #1
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Default Maruti-Suzuki: Outpacing the industry

India's numero uno carmaker company, Maruti-Suzuki India Limited, has plenty of reasons to celebrate in recent times, the biggest of which is - it has finally managed to crack the Rs 6-10 lakh higher-margin segment.

With new launches which are seeing consistent sales and demand, the company is now a proud leader in almost all the segments it is vying within the sub-Rs 10 lakh range - be it mini, compact, super-compact, mid-sized sedan or the entry-level UV - with as many as five of it's market leading brands now commanding sizeable waiting periods.

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As for the company's own performance over the years, it has managed to sustain a steady upward growth in numbers in the past 4 fiscals. From having a stake of 38.3% market share in 2011-12, the homegrown auto giant ended 2015-16 with a healthy percentage of 46.8%, an overall rise of 8.5%!

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More notably, all of this was achieved during times when the auto industry went through a difficult period as customer response remained largely muted and flat.

Apart from increasing it's footprint across segments which are seeing the biggest growth in recent times, Maruti-Suzuki has also been equipping it's cars with updated, contemporary features and newer technologies such as the AMT and the SHVS system to take on the competition which has increasingly grown fiercer over the years, while not compromising on quality.

Newest products such as the Baleno and the S-Cross, sold through the Nexa channel, have changed the perception of the customers who equated the car company with cheaper, plasticky models.

As for market demand for it's offerings, it's newest challenger in the UV space, the Vitara Brezza, sees a long 8-month waiting period, while it's premium hatchback offering, the Baleno, commands an eight to nine month waiting period. Even old warhorses such as the Swift and the DZire command 4-month waiting periods, while the demand for the Ciaz (now equipped with a mild diesel hybrid option) is on the rise, as it has dethroned the mighty Honda City from the top position in the mid-size sedan segment.

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As the competition grew, so did the company. Today, the compact segment is the most fiercely contested one which contributes to over 40% of the overall passenger vehicle sales, with 12 automakers vying for the proverbial pie with 37 different models. But with the Ertiga, the Baleno and the Brezza, Maruti-Suzuki has grabbed the biggest chunk of this pie.

Even the mid-size sedan segment in which Maruti-Suzuki didn't have a presence until the Ciaz came about, it now commands a healthy 36% share.

Of course, a new, ultra-modern and fully equipped R&D center in Rohtak with a staff of 1,200 played an important role in the recent new launches, such as the Vitara Brezza which was wholly conceptualised, engineered and developed in India itself.

Then there's the vast 1,800-dealer network spread across 1,450 cities across the country, and the new 125 Nexa outlets which are contributing about 10% of the overall Maruti-Suzuki sales. These numbers are expected to only increase, as MSIL (company abbreviation) has set itself a target of increasing the total number of Nexa outlets to 250 by this fiscal-end, and which would contribute at least 15% of the overall annual sales.

New segments, newer technologies, dynamic products at an unbeatable price tag - you name it, India's number 1 automaker has it. Whoever said that competition doesn't bring out the best in the market leader better eat their words, because the market leader is showing no signs of relenting anytime soon as it goes from strength to strength in it's quest to keep the number 1 tag firmly held in it's iron-clad fists.

VG Ramakrishnan, a former managing director of Frost & Sullivan:

Quote:
"Credit goes to Maruti. But it says a lot about the competition, too. From product to price, sales reach to after-sales experience, Maruti has excelled in its entire package of offering. Take for example Baleno, its fit and finish and the features it packs. You would never say it is a Maruti product."
Hormazd Sorabjee, editor, Autocar India:

Quote:
"Maruti's biggest achievement is that it has managed to crack the higher-margin Rs 6-10 lakh segment with its new launches (which it had consistently failed at in the past). Brezza ticks all the right boxes. It is pulling customers from everywhere - hatchbacks, compact sedans, sedans, SUVs."
Deepesh Rathore, director, EMMAAA, an automobile consultancy firm:

Quote:
"Often, Maruti has not been the first one to get in. But whenever it does, it does a great job of grabbing market share."
Mohit Arora, executive director, JD Power:

Quote:
"Maruti's average transaction price has moved up. Customers in that segment have much higher expectations on quality and refinement."
Suzuki Corporation Global CEO Toshihiro Suzuki:

Quote:
"We have been selling compact cars. Now we are aiming at (Indian) customers who buy vehicles that are slightly bigger than compacts. We would like to expand here (in the bigger segment)."
ET

Last edited by RavenAvi : 17th July 2016 at 20:16.
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Old 17th July 2016, 20:56   #2
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Default re: Maruti-Suzuki: Outpacing the industry

All well and good. Now only if they decide to be the no. 1 in offering the safest cars in the market.

If they do, then everyone will HAVE to follow in their footsteps.
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Old 17th July 2016, 22:18   #3
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Default re: Maruti-Suzuki: Outpacing the industry

Strangely, the only parallel I can think of is Life Insurance Corporation of India - it still has 70% marketshare even after all these years of the sector opening up to private companies.

I guess TRUST is involved in continued success of both LIC & Maruti. You simply cannot go wrong with either (is the market belief).

Last edited by smartcat : 17th July 2016 at 22:31.
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Old 18th July 2016, 19:43   #4
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Default Re: Maruti-Suzuki: Outpacing the industry

Has Maruti really cracked 6 - 10 lac range? I don't think so.

Well given the inflation level, prices of cars have increased tremendously. Honda City sometime late 2000's costing 7 lac has moved all the way till Rs. 14 lac on road.

When Maruti cracks 15-20 lac segment that's when they can blow bugles. Products like Grand Vitara and Kizashi have been a failure cause customer will never be ready to pay high price for a Maruti Suzuki brand, or can they change that? That will be a true measure.

Anything having a Maruti Suzuki badge under 10 lac price will sell like hot cakes even though product may have shortcomings.
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Old 18th July 2016, 21:41   #5
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Default Re: Maruti-Suzuki: Outpacing the industry

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Originally Posted by el lobo 6061 View Post
Has Maruti really cracked 6 - 10 lac range? I don't think so.
.
At least now it has, with Ertiga, Ciaz, Brezza and Baleno selling like hotcakes. Taking your inflation theory into consideration the Ciaz and Brezza are enough to justify this since the long term leader City and a one time seller Verna are taken on with ease by the Ciaz. Same with the Brezza too with the Ecosport numbers falling.
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Old 18th July 2016, 23:28   #6
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Default Re: Maruti-Suzuki: Outpacing the industry

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Originally Posted by el lobo 6061 View Post
Has Maruti really cracked 6 - 10 lac range? I don't think so.

Well given the inflation level, prices of cars have increased tremendously. Honda City sometime late 2000's costing 7 lac has moved all the way till Rs. 14 lac on road.
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Originally Posted by audioholic View Post
At least now it has, with Ertiga, Ciaz, Brezza and Baleno selling like hotcakes. Taking your inflation theory into consideration the Ciaz and Brezza are enough to justify this since the long term leader City and a one time seller Verna are taken on with ease by the Ciaz. Same with the Brezza too with the Ecosport numbers falling.

IMO, though we cannot say that Maruti - Suzuki has cracked the premium segment, they have surely made some progress (and a noticeable one) in that direction.

I do not think that they are (or they were) unable to make and sell good refined premium cars. They must have decided to stay with volumes. As the middle class and upper middle class population grew, the demand for more refined cars grew. So, now they are trying to enter into those segments too.

If their strategy is to be with volumes, we shall not expect them to make and sell cars worth Rs. 15-20 lakhs or north of that.
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Old 19th July 2016, 13:16   #7
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Default Re: Maruti-Suzuki: Outpacing the industry

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Originally Posted by el lobo 6061 View Post
customer will never be ready to pay high price for a Maruti Suzuki brand
I think the XUV500 has sufficiently demonstrated that the customer will pay 15 - 20 lakhs for a competent car, even if it's backed by a 'non premium' brand. Mahindra is perhaps the opposite of premium . Even the Creta proves that you can successfully sell 3 lakh hatchbacks & 15 lakh SUVs from the same brand / showroom.

Maruti has failed in the 20 lakh segment because of product & price, not brand. Their premium cars have all been priced miserably, thanks to CBU importing & low commitment. Other than price, they didn't even have diesels (which drove a majority of sales at one point).
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Old 19th July 2016, 17:37   #8
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Default Re: Maruti-Suzuki: Outpacing the industry

Once you reach scale, everything else falls in place. Since MS have such huge sales, the dealers don't have to rob customers to keep themselves profitable. This IS the biggest reason for MS to maintain a healthy lead - After sales service.

From another viewpoint, if anyday, suddenly all MS cars disappear from India, the streets would be a lot less crowded and cars remaining would be better looking at least

(I hope NGT does not read this post and get an idea )

Last edited by Nav-i-gator : 19th July 2016 at 17:41.
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Old 19th July 2016, 18:24   #9
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Default Re: Maruti-Suzuki: Outpacing the industry

There are a lot of things which went in favour of Maruti - They had the 1st mover advantage in the country and had a clean run for a decade (I may stand corrected here) before Hyundai set shop.
Maruti has in all these years managed to do one thing where I feel almost all other manufacturers havent succeeded - Opening up showrooms & sevice centre in the remotest & unexpected of the places. I have seen a Maruti showroom where even a 2 wheeler showroom is no where to be seen. Also these aren't small showrooms with 1-2 cars, they have the entire line-up. This will no doubt build the brand value and in a country which believes in touch & feel is a really big factor playing in their favour.

Now whether they have succeeded in the so called Premium Segment is open to interpretation. The biggest question to answer has the Premium Segment also moved to a higher price bracket. In my opinion it definitely has.

A few years back one would cringe plonking 10L on a hatchback (even 7L was too much even for a H or Skoda badge). Today the success if cars like i20, Jazz, Polo GT-Tsi shows that the markets have matured to a very small extent.

Maruti has also been smart enough of being in the eye's of the public by launching so called Special/ Limited Editions time & again. I dont remember any other manufacturer having so many such editions. All this has ensured that they succeeded.

However I still will award their success to one factor - DISTRIBUTION!
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Old 19th July 2016, 20:17   #10
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Default Re: Maruti-Suzuki: Outpacing the industry

Thanks for the information. But is this an advertorial? Just checking if it is then please at least mention it somewhere.
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Old 20th July 2016, 08:13   #11
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Default Re: Maruti-Suzuki: Outpacing the industry

Quote:
Originally Posted by smartcat View Post
I guess TRUST is involved in continued success of both LIC & Maruti. You simply cannot go wrong with either (is the market belief).
Indeed TRUST is the most important driving force for Maruti's success. Ask any 1st time car buyer in India and maruti comes by default. Now hyundai is slowly making inroads in that space atleast in tier 1 & 2 cities. Unlike western countries 'a car' is much more than just a mode of commute for us. It has an aspirational value in our country and for quite a few its a BIG investment(like real estate/flats). So everyone prefers putting their hard earned money in a reliable brand even if the quality of product isnt as exceptional as the sales figure. And maruti has successfully cracked that part with deep reach into remotest of places backed by exceptional A.S.S
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Old 20th July 2016, 08:45   #12
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Default Re: Maruti-Suzuki: Outpacing the industry

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Originally Posted by mxh View Post
Thanks for the information. But is this an advertorial? Just checking if it is then please at least mention it somewhere.
I guess you missed it? Source to the ET article already mentioned in the opening post itself.

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Originally Posted by RavenAvi View Post
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Old 20th July 2016, 10:06   #13
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Default Re: Maruti-Suzuki: Outpacing the industry

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Originally Posted by mxh View Post
But is this an advertorial? Just checking if it is then please at least mention it somewhere.
Please note that Team-BHP has NEVER published an advertorial, and never ever will. Over my dead body.
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Old 20th July 2016, 10:24   #14
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Default Re: Maruti-Suzuki: Outpacing the industry

What has worked for Maruti is its ability in retaining customers. They provide an ownership experience of such peace of mind, that whenever one of their customer looks to upgrade, they simply can't write of Maruti easily. Adding to that, given that their new age products are of pretty good quality and well priced too like Ciaz, Brezza, S-Cross, Baleno it is simply very tough for someone upgrading from a Wagon R to cross all these cars from their list. The competition which in almost all cases is priced at least 50k more, and offering questionable service experience, makes it even more compelling.

With the Gujarat plant opening up in the next 6 months, new model launches like Ignis, Swift, Dzire and facelifts planned for S-Cross, Wagon R, Celerio in the next year, expect better value product, and more sales.
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Old 26th July 2016, 15:12   #15
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Default Maruti beats Q1 PAT estimates!

Maruti beats Q1 PAT estimates, up 24.9% Year on Year growth. Maruti on Tuesday beat Street estimates on June quarter profit after tax at Rs 1,486 crore against Rs 1190 crore in the year-ago period, showing a jump of 24.9 per cent.

Details on http://economictimes.indiatimes.com/...w/53395764.cms
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