Quote:
Originally Posted by vikrantj In my personal opinion Maruti Suzuki has always been a non-innovative company.
They have survived because of couple of reasons. First and foremost Indian government till 2007 had a stake in it so funding it was never a problem, a case similar to Hindustan Motors. They have always followed the markets and never lead the markets in bringing about changes in their vehicles especially bring about important safety features like ABS etc. They have kept their cost low by using licensed technology and cheaper workforce (I got surprised when Maruti's workers resorted to murder, is the situation that bad in the factory ?)
Maruti has a goodwill because because it was a first mover in India. About Maruti's service network , it is equivalent to Tata or Mahindra so nothing spectacular. |
Some points that I agree to and some to which I disagree too
:
Non-innovative:. Not really. They started the revolution, else we could have been still driving decades old cars in India likes Premiers and Ambys (not really in 2013 but definitely until the 2000!). But agree that they were late to introduce ABS/ air bags and other such features, esp. when they have the cushion (& somewhat moral responsibility) being a market leader. They should have in fact pioneered it.
Regarding the Govt's stake, until 2007 they held about 25% of the company shares, but regarding the funding part, Maruti was never a loss making concern hence I am not sure if they needed fund (s) from the Government to keep them going. In fact, it is regarded as one of the most profitable joint -venture and Suzuki was always keen to increase its share, so the question of Govt. funding does not arise. You have yourself cited the example of Hindustan Motors, which of course is a loss making and financially sick concern, which requires Govt funding to go on. Also, Govt funding does not ensure a successful company esp when it is dealing directly with the public in a competitive market. Again please refer to your own example: HM.
As you say,
they have followed the markets. I would say, they followed what the people wanted. Maruti's strong hold is the A & B segment and no other manufacturer has held the pulse of the people as much as Maruti. The delivered what people in India wanted. So, I would say they followed people, not the market. No manufacturer 'lead the markets' esp. in these segments, IMO. Agreed, now most cars have literally become the cash cows for them, they are just 'milking' profits from them. Even a 25 years old Omni and a 30 years 800 sells because its backed & branded by Maruti. Intelligently sharing the platform for a lot of models also helps reduce both research and production costs, but the benefit is passed to the customer by pricing the car in sane manners.
Regarding Licensed technology, yes, the brain behind is Suzuki. There would be no Maruti if there was no Suzuki; literally. But what was PAL (Padmini, & Peugeot), HM(Lancer, Isuzu, and many more), Escorts (Ford), Tata (Mercedes Benz), but agreed, Maruti was much more dependent on Suzuki as it was not a manufacturer then. Currently the story might be different as production has localized to a great extent. But the point is its only the customer's gain, else we would have been decades back if Indian companies had to develop indigenous technology.
Regarding the MS plant violence, though I am not an IR expert, but the facts highlighted in wikipedia discusses other issues. Also, some monetary demands look little exorbitant. This is strictly my personal opinion.
Goodwill as a first mover: Yes, definitely, it has the early mover advantage and they deserve it and why not? But sustaining it was difficult with better and global players coming to India. But still Maruti has sustained its leadership for over 30 years now in all sorts of environment!
Last point is where you have said that
service network is equivalent to Tata & Mahindra which is grossly wrong. The network in sheer numbers, the quality and ease of job and overall customer satisfaction is miles high than Tata & Mahindra. BTW, I could not understand why Mahindra? They have one or two passeger cars in the market and not really the segment MS operates in. So I don't really think that they should be compared at all with MS.
There can be some off incidents in all service stations but overall, MASS is beyond comparison of the two, at least for the current time and for the near future too.
Thanks,
Saket