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Old 4th November 2009, 16:55   #1
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Default Is India driving Suzukiís growth Or We as Indians compromise when buying a Maruti?

Source TOI Nov 3rd Bangalore edition.
A Bright Spot Amid Japanese Majorís Falling Sales In Major Markets

"Itís the India booster to Suzukiís global sales and profits. As car companies struggle across the globe due to pullbacks of recession, Japanese car major Suzuki is reaping the benefits of its dominant position in India, its biggest market.
Sales numbers for the first half of 2009-10 show that the company, despite witnessing slump in almost every other market including home turf Japan, still hopes to remain in the pink of health with India offsetting all the global declines.
An upbeat Suzuki on Monday trebled its full-year global net income forecast to 15 billion Yen ($167 million), citing a weaker-than-expected Yen as well as cost cuts.
So how is India driving up the fortunes of the company? A look at the numbers released on the companyís website shows that while sales have been falling across markets for Suzuki, India remains the only bright spot, single handedly saving it from a near rout (see chart).
The recession resulted in a severe contraction in demand and sales volumes in Europe where numbers fell 50%. North America, though small in volumes for the mini car major, was also down 60%.
In the home market Japan also sales fell 13%. India remained the only major market to grow and saw first half sales moving up by as much as 24% at 4.7 lakh units against 3.8 lakh units in the corresponding period of the last year. This also pushed Asian regions sales growth by 3%.
The figures clearly demonstrate how India is powering the companyís fortunes globally. Sales and profits in India have been rising rapidly for Suzuki, that holds the majority 54% stake in Maruti Suzuki, the leader in the Indian market with a market share of over 50%. Maruti, despite effects a global slowdown, has managed to more or less remain unaffected.
The company has registered a healthy jump of 51% in the profit for the first half of this fiscal at Rs 1153.5 crore against Rs 762 crore in the same period last year.
This means a larger share of profits and income to Suzukiís global kitty from India.
Moreover, the success of new models in India has also contributed to Suzukiís growth. Models like Swift, Dzire, Ritz and A-Star ó that carry a high royalty outgo from Maruti to parent Suzuki ó have been the main drivers of growth in India. With new models selling more, royalty from Maruti to Suzuki is around 3.5% of net sales of the company, which again is a substantial amount.
Favourable currency is yet another reason the contribution from India to Suzukiís coffers could rise.
Suzuki has already revised its full-year forecast for the yen to 93 against the dollar from 90. A weaker yen increases earnings from sales in overseas markets including India."

Hi All,
I was going thru this snippet in TOI Bangalore edition yesterday (3rd Nov 2009). Then I saw those figures, then wondered why Maruti Suzuki sells so much in India when they fail miserably else where, even in Japan.

Or Is buying a Maruti Suzuki car just another compromise when it comes to us as Indians. For the money we pay do you think you are really getting your money's worth? As Indians are we not ready to get global quality standard cars yet, I am not talking of premium ones? Or will it change in the coming years? Why maruti has not seen much success in higher segments? Look at those North America numbers, thats really bad for a global car maker in such a huge automobile market. Even in India there was recession, but recession alone cann't justify those pathetic global numbers of Suzuki.

On a lighter note after few years Looks like Suzuki will shift their Head Quarters to India and only sell Hatchbacks in India.

Mods please merge to appropriate thread as you feel right.
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Old 4th November 2009, 17:08   #2
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Its all about suitability.
Key Maruti factors like cheap, VFM small cars, vast service network, cheap spares etc. might not be applicable everywhere. Some markets do not prefer small cars at all.

Go through this article in NY times, gives good insight why a small suzuki (wagonR in this case) might not be too suitable for USA, even though being impressive product.

Microcars - Suzuki Wagon R - Kei Cars - New York Times

We Indians are not making a compromise. Give us a product from any other company having same level of VFM, reliability and after sales, without being overpriced, we will surely go for it. Case in point - Hyundai.

Last edited by DCEite : 4th November 2009 at 17:12.
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Old 4th November 2009, 17:13   #3
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Look at the glass half full. We indians realized / discovered that suzuki's are VFMs products. Other could not do that.
Completely OT- The swift in the photo looking awesome.
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Old 4th November 2009, 17:23   #4
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A Swift can hardly be called a compromise, looking at what the competition offers at 5L. OTOH, w.r.t. safety features Maruti cars are usually a compromise.

And what's the harm if India drives Suzuki's growth? Sure, they skimp on safety features and build quality, but at the lowest segment of the market, a majority of the buyers have not matured to the level of understanding how important these safety features are, or simply don't care. For such, the lower end products fit the bill perfectly.

Finally, the thread title needn't have that "or" between the two statements. Both are true, and non-mutually-exclusive.
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Old 4th November 2009, 17:36   #5
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Quote:
Originally Posted by DCEite View Post
Its all about suitability.
Key Maruti factors like cheap, VFM small cars, vast service network, cheap spares etc. might not be applicable everywhere. Some markets do not prefer small cars at all.

Go through this article in NY times, gives good insight why a small suzuki (wagonR in this case) might not be too suitable for USA, even though being impressive product.

Microcars - Suzuki Wagon R - Kei Cars - New York Times

We Indians are not making a compromise. Give us a product from any other company having same level of VFM, reliability and after sales, without being overpriced, we will surely go for it. Case in point - Hyundai.
No one is talking about small cars here, obviously small car like WagonR wont see buyers in america. But they do have bigger/midsize sedans SX4's for that market as well but still why can't they sell there. I am sure Suzuki will price those cars right so that they don't loose on being VFM in those markets.

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Originally Posted by Ajay_J View Post
Look at the glass half full. We indians realized / discovered that suzuki's are VFMs products. Other could not do that.
Now dont tell me only India is looking for VFM and not rest of the world. You should look at American car market where there is a literal price war going on always. My point is if suzuki is a VFM brand why its not popular all over the world even in third world countires. How do you explain Japan their own home turf?

Last edited by samsan02 : 4th November 2009 at 17:41. Reason: typo error
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Old 4th November 2009, 17:40   #6
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IMO Suzuki doesn't compromise on Indian market, they offer what is required for the market at a resonable price and provide the best A** possible for their cars. An Alto for example provides everything what the masses want at a very low price it has comparable features to the santro (except for the engine part) and is anyday better on the road compared to the santro.Hyundai's i10 (a replacement of the santro worldwide) competes against the Swift in India which is a much bigger and better car.A M800 is any day a better buy than the Tata nano, for 50k more it provides a proper boot and a car which you can confidently take to the highways.

The increase in sales for small cars worldwide shown in the chart occurred during the recession phase and as now the situation is back to normalcy all are going back to the gas guzzlers.

Last edited by harishnair : 4th November 2009 at 17:47.
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Old 4th November 2009, 17:55   #7
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We drive Suzuki's growth but we don't really compromise. Look at Marutis that have failed like the GV. Or to an extent, the old Baleno. Or the A-Star (there's even a thread on this)! We buy what we want and it so happens that Maruti gets it right most of the time in India.
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Old 4th November 2009, 17:59   #8
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Quote:
Originally Posted by samsan02 View Post
No one is talking about small cars here, obviously small car like WagonR wont see buyers in america. But they do have bigger/midsize sedans SX4's for that market as well but still why can't they sell there. I am sure Suzuki will price those cars right so that they don't loose on being VFM in those markets.
Small cars form a big chunk of Suzuki's portfolio. You cannot neglect this fact.

Why are you worried about Suzuki not selling well in the US. Talk about what you get here in India, and what the competition *here* has to offer.

See, the point is, the markets are substantially different. By your logic, i can argue that Chevrolet was the largest selling car manufacturer in US, but in India, its presence is negligible. Does that mean people of US are making a compromise?

Don't compare apples to oranges. Markets are different, and so are product portfolios. That is why Suzuki does well in India and not so well in the US. As long as the Indian buyer is happy with his Maruti, whats the problem ?
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Old 4th November 2009, 18:04   #9
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DZire is a classic example of how important India is for Suzuki, and how much of a driving force Maruti is in the Maruti-Suzuki collaboration- no other geography has such a contraption created out of the Swift.

That said, Suzuki's biggest strength in India apart from their VFM products is their top notch customer service- anyone who has been pampered by a Maruti Suzuki dealership will feel let down when moving to other brands.
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Old 4th November 2009, 18:16   #10
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Quote:
Originally Posted by flyingspur View Post
A Swift can hardly be called a compromise, looking at what the competition offers at 5L. OTOH, w.r.t. safety features Maruti cars are usually a compromise.

And what's the harm if India drives Suzuki's growth? Sure, they skimp on safety features and build quality, but at the lowest segment of the market, a majority of the buyers have not matured to the level of understanding how important these safety features are, or simply don't care. For such, the lower end products fit the bill perfectly.

Finally, the thread title needn't have that "or" between the two statements. Both are true, and non-mutually-exclusive.
1) I dont think that we are making a compromise when we buy a Suzuki car. Lets consider Swift. Though the interior fit and finish is not upto the mark, Suzuki has not compromised onto chassis stiffness. There was a thread on G2HC about compromise on chassis stiffness. Suzuki has not avoided. Swift, Ritz cannot be called safety compromise.

For that matter, consider the fact that Indica Vista is planned to be modified to even score 3 stars at ENCAP. We Indians have a bad habit of considering of considering a car as unsafe if we find the skin panels thin. Arguments like steel guage come up which are not going to protect occupants in case of an accident.

No other car maker offers what Suzuki offers at a given price. Consider almost any car. And add to that the fact that Suzuki cars are very very reliable, perhaps if interior fit and finish errors are not considered, IMO, Suzuki cars are as reliable as Toyota ( i.e. mechanically ).

2) If the statements of Making compromise stands true, then what about Versa, Estilo, GV and upto some extent Baleno ? Why was the first generation Zen discontinued ?


IMHO, this thread is of no use with no real stuff or poisitive intention. We Indians buy what we like. Look at honda city ( current generation ) and Jazz. These along with some cars listed in 2) prove that we Indians are not making compromise by buying Suzuki.
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Old 4th November 2009, 18:19   #11
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Quote:
Originally Posted by DCEite View Post
Small cars form a big chunk of Suzuki's portfolio. You cannot neglect this fact.

Why are you worried about Suzuki not selling well in the US. Talk about what you get here in India, and what the competition *here* has to offer.

See, the point is, the markets are substantially different. By your logic, i can argue that Chevrolet was the largest selling car manufacturer in US, but in India, its presence is negligible. Does that mean people of US are making a compromise?

Don't compare apples to oranges. Markets are different, and so are product portfolios. That is why Suzuki does well in India and not so well in the US. As long as the Indian buyer is happy with his Maruti, whats the problem ?
Man, for sure you own a maruti. I wanted a healthy debate here ok. And I am not comparing Apples to Oranges. Look at Japan/europe small car territory isn't it. So what happened there then.

Forget america, forget Chevrolet and your counter logic doesn't make sense either, they are not selling well anywhere on earth for the matter. And Americans didn't compromise else GM wouldn't loose out to Japanese guys there.

Why are you so content with Indian Maruti buyer being just happy, why not the rest of the world. Have you seen a Swift europe version and compared it with an Indian variant, they dont offer all those stuff here still manage to sell very good numbers here.
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Old 4th November 2009, 18:25   #12
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We make compromises just for the sake of A.S.S. and lower maintenance costs by buying Marutis. Yes, I am NOT a maruti fan and will never be, simply because their cars lack the overall feel, and I cannot trust their safety standards and rattling bodies after hard use in our roads.

Moreover, I simply hate the concept of HCTS segment only in our country (hatch-converted-to-sedan segment) and still there are countless Dzires that I see daily and the more I see, the more I hate it. Even their designs are disproportional.

No offense meant to MSIL owners, just my view.

Last edited by sidindica : 4th November 2009 at 18:28.
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Old 4th November 2009, 18:27   #13
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If we decifer the sale figures for Swift , VXI / VDI & LXi /LDI from the large chunk of sales.
Zxi may be selling in single digits if Swift , VXI / VDI & LXi /LDI sell around 90 % plus of total swifts sold.
Suzuki has studied the customer over the past 2 decades and bought cars variants like VXI / VDI & LXi /LDI , not only they cost less without safety features like ABS & Airbag to name a few.
Cleverly Swift has not positioned a ZDI in Swift base model mirroring the features of ZXi as the cost would rise to 7 lakhs and would invite less buyers.

Suzuki has thus understood the Indian customer better , but do they offer these hot selling variants for export in Europe and other markets, I dont think so.
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Old 4th November 2009, 18:28   #14
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Quote:
Originally Posted by samsan02 View Post
Or Is buying a Maruti Suzuki car just another compromise when it comes to us as Indians.
I believe you are a victim of analyzing data in isolation. If you are genuinly trying to analyze why Suzuki is selling less numbers, say in US, first information we need to bring on board is how US automobile market is behaving.

To put rough figures, US auto sales were down ~23% against the same in 2008 on YTD basis. This is mostly due to positive Oct 2009 sales, which the TOI article does not have. Else the figures would have been much worse. Also understand Suzuki does not have a single car in the US top 20.

To conclude, Suzuki has been doing worse than competitors in markets
a) experiencing negative growth
b) Where Suzuki is a marginal player in terms of Market share

Similarly, Suzuki has been doing better than competitors in markets
a) experiencing growth
b) Where Suzuki is a major player in terms of Market share

Sounds good?

Quote:
We make compromises just for the sake of A.S.S
A high quality product backed with high quality support is essential to succeed in any automobile market. There is nothing "Indian" here. Just check US reviews for VW Jetta, and see how it never became a great hit.

Last edited by WhiteKnight : 4th November 2009 at 18:32.
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Old 4th November 2009, 18:33   #15
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India contributed almost 50% of Suzuki's Worldwide sales

I think Maruti's don't have the build quality of the European Cars but they excel in the lower pricing and extensive A.S.S. network that they have. They have been here for quite a long time and now reaping the rewards for it.
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