Maruti Suzuki India Limited, formerly known as Maruti Udyog Limited, is an automobile manufacturer in India. It is a 56.21%-owned subsidiary of Suzuki and motorcycle manufacturer Suzuki Motor Corporation. As of January 2017[update], it had a market share of 51% of the Indian passenger car market. Maruti Suzuki manufactures and sells popular cars such as the Ciaz, Ertiga, Wagon R, Alto, Swift, Celerio, Swift Dzire, Baleno and Baleno RS, Omni,Alto 800,SX4,Eeco, Ignis. The company is headquartered at New Delhi. In February 2012, the company sold its ten millionth vehicle in India.
Maruti was established in February 1981 though the actual production commenced only in 1983. It started with the Maruti 800, based on the Suzuki Altokei car. As of May 2007[update], the Government of India, through Ministry of Disinvestment, sold its complete share to Indian financial institutions and no longer has any stake in Maruti Udyog.
- Under the Maruti name
In 1970, a private limited company named Surya Ram Maruti technical services private limited (MTSPL) was launched on November 16, 1970.[relevant?– discuss] The stated purpose of this company was to provide technical know-how for the design, manufacture and assembly of "a wholly indigenous motor car". In June 1971, a company called Maruti limited was incorporated under the Companies Act. Maruti Limited went into liquidation in 1977. Maruti Udyog Ltd was incorporated through the efforts of Dr V. Krishnamurthy.
- Affiliation with Suzuki
In 1982, a license & Joint Venture Agreement (JVA) was signed between Maruti Udyog Ltd, and Suzuki of Japan. At first, Maruti Suzuki was mainly an importer of cars. In India's closed market, Maruti received the right to import 40,000 fully built-up Suzukis in the first two years, and even after that the early goal was to use only 33% indigenous parts. This upset the local manufacturers considerably. There were also some concerns that the Indian market was too small to absorb the comparatively large production planned by Maruti Suzuki, with the government even considering adjusting the petrol tax and lowering the excise duty in order to boost sales. Finally, in 1983, the Maruti 800 was released. This 796 cc hatchback was based on the SS80 Suzuki Alto and was India’s first affordable car. Initial product plan was 40% saloons, and 60% Maruti Van. Local production commenced in December 1983. In 1984, the Maruti Van with the same three-cylinder engine as the 800 was released and the installed capacity of the plant in Gurgaon reached 40,000 units.
In 1985, the Suzuki SJ410-based Gypsy, a 970 cc 4WD off-road vehicle, was launched. In 1986, the original 800 was replaced by an all-new model of the 796 cc hatchback Suzuki Alto and the 100,000th vehicle was produced by the company.[dead link] In 1987, the company started exporting to the West, when a lot of 500 cars were sent to Hungary. By 1988, the capacity of the Gurgaon plant was increased to 100,000 units per annum.
- Market liberalisation
In 1989, the Maruti 1000 was introduced and the 970 cc, three-box was India’s first contemporary sedan. By 1991, 65 percent of the components, for all vehicles produced, were indigenized. After liberalization of the Indian economy in 1991, Suzuki increased its stake in Maruti to 50 percent, making the company a 50-50 JV with the Government of India the other stake holder.
In 1993, the Zen, a 993 cc, hatchback was launched and in 1994 the 1298 cc Esteem was introduced. Maruti produced its 1 millionth vehicle since the commencement of production in 1994. Maruti's second plant was opened with annual capacity reaching 200,000 units. Maruti launched a 24-hour emergency on-road vehicle service. In 1998, the new Maruti 800 was released, the first change in design since 1986. Zen D, a 1527 cc diesel hatchback and Maruti's first diesel vehicle and a redesigned Omni were introduced. In 1999, the 1.6 litre Maruti Balenothree-box saloon and Wagon R were also launched.
In 2000, Maruti became the first car company in India to launch a Call Center for internal and customer services. The new Alto model was released. In 2001, Maruti True Value, selling and buying used cars was launched. In October of the same year the Maruti Versa was launched. In 2002, Esteem Diesel was introduced. Two new subsidiaries were also started: Maruti Insurance Distributor Services and Maruti Insurance Brokers Limited. Suzuki Motor Corporation increased its stake in Maruti to 54.2 percent.
In 2003, the new Suzuki Grand Vitara XL-7 was introduced while the Zen and the Wagon R were upgraded and redesigned. The four millionth Maruti vehicle was built and they entered into a partnership with the State Bank of India. Maruti Udyog Ltd was Listed on BSE and NSE after a public issue, which was oversubscribed tenfold. In 2004, the Alto became India's best selling car overtaking the Maruti 800 after nearly two decades. The five-seater Versa 5-seater, a new variant, was created while the Esteem was re-launched. Maruti Udyog closed the financial year 2003-04 with an annual sale of 472,122 units, the highest ever since the company began operations and the fiftieth lakh (5 millionth) car rolled out in April 2005. The 1.3 L Suzuki Swift five-door hatchback was introduced in 2005.
In 2006 Suzuki and Maruti set up another joint venture, "Maruti Suzuki Automobiles India", to build two new manufacturing plants, one for vehicles and one for engines. Cleaner cars were also introduced, with several new models meeting the new "Bharat Stage III" standards. In February 2012, Maruti Suzuki sold its ten millionth vehicle in India. For the Month of July 2014, it had a Market share of >45 %.
Joint venture related issues
Relationship between the Government of India, under the United Front (India) coalition and Suzuki Motor Corporation over the joint venture was a point of heated debate in the Indian media until Suzuki Motor Corporation gained the controlling stake. This highly profitable joint venture that had a near monopolistic trade in the Indian automobile market and the nature of the partnership built up till then was the underlying reason for most issues. The success of the joint venture led Suzuki to increase its equity from 26% to 40% in 1987, and to 50% in 1992, and further to 56.21% as of 2013. In 1982, both the venture partners entered into an agreement to nominate their candidate for the post of Managing Director and every Managing Director would have a tenure of five years
Maruti Suzuki has three manufacturing facilities in India. All manufacturing facilities have a combined production capacity of 1,700,000 vehicles annually. The Gurugram manufacturing facility has three fully integrated manufacturing plants and is spread over 300 acres (1.2 km2). The Gurgaon facilities also manufacture 240,000 K-Series engines annually. The Gurgaon Facilities manufactures the Alto 800, WagonR, Ertiga, S-Cross, Vitara Brezza, Ignis and Eeco.
The Manesar manufacturing plant was inaugurated in February 2007 and is spread over 600 acres (2.4 km2). Initially it had a production capacity of 100,000 vehicles annually but this was increased to 300,000 vehicles annually in October 2008. The production capacity was further increased by 250,000 vehicles taking total production capacity to 800,000 vehicles annually. The Manesar Plant produces the Alto 800, Alto K10, Swift, Ciaz, Baleno, Baleno RS and Celerio. On 25 June 2012, Haryana State Industries and Infrastructure Development Corporation demanded Maruti Suzuki to pay an additional Rs 235 crore for enhanced land acquisition for its Haryana plant expansion. The agency reminded Maruti that failure to pay the amount would lead to further proceedings and vacating the enhanced land acquisition. The launch of the Dzire was happened in the month of May 2017 and the variant is said to have good mileage
The Gujarat manufacturing plant became operational in February 2017. The plant current capacity is about 250,000 units per year. But with new investments Maruti Suzuki has plan to take it to 450,000 units per year.
In 2012, the company decided to merge Suzuki Powertrain India Limited (SPIL) with itself. SPIL was started as a JV by Suzuki Motor Corp. along with Maruti Suzuki. It has the facilities available for manufacturing diesel engines and transmissions. The demand for transmissions for all Maruti Suzuki cars is met by the production from SPIL.
Since its founding in 1983, Maruti Udyog Limited has experienced problems with its labour force. The Indian labour it hired readily accepted Japanese work culture and the modern manufacturing process. In 1997, there was a change in ownership, and Maruti became predominantly government controlled. Shortly thereafter, conflict between the United Front Government and Suzuki started. In 2000, a major industrial relations issue began and employees of Maruti went on an indefinite strike, demanding among other things, major revisions to their wages, incentives and pensions.
Employees used slowdown in October 2000, to press a revision to their incentive-linked pay. In parallel, after elections and a new central government led by NDA alliance, India pursued a disinvestment policy. Along with many other government owned companies, the new administration proposed to sell part of its stake in Maruti Suzuki in a public offering. The worker's union opposed this sell-off plan on the grounds that the company will lose a major business advantage of being subsidised by the Government, and the union has better protection while the company remains in control of the government.
The standoff between the union and the management continued through 2001. The management refused union demands citing increased competition and lower margins. The central government privatized Maruti in 2002 and Suzuki became the majority owner of Maruti Udyog Limited.
On 18 July 2012, Maruti's Manesar plant was hit by violence. According to Maruti management. The production workers at one of its auto factories attacked supervisors and started a fire that killed a company General Manager of Human Resources Avineesh Dev and injured 100 other managers, including two Japanese expatriates. The workers also allegedly injured nine policemen. However Maruti Suzuki Workers Union (MSWU) President Sam Meher alleged that management ordered 300 hired security guards to attack the workforce during the violence. The incident is the worst-ever for Suzuki since the company began operations in India in 1983.
Since April 2012, the Manesar union had demanded a three-fold increase in basic salary, a monthly conveyance allowance of ₹ 10,000, a laundry allowance of ₹ 3,000, a gift with every new car launch, and a house for every worker who wants one or cheaper home loans for those who want to build their own houses. According to the Maruti Suzuki Workers Union a supervisor had abused and made discriminatory comments to a low-caste worker, Jiya Lal,. These claims were denied by the company and the police. Maruti said the unrest began, not over wage discussions, but after the workers' union demanded the reinstatement of Jiya Lal who had been suspended for allegedly beating a supervisor. The workers claim harsh working conditions and extensive hiring of low-paid contract workers which are paid about $126 a month, about half the minimum wage of permanent employees. On 27 June, 2013, an international delegation from the International Commission for Labor Rights (ICLR) released a report alleging serious violations of the industrial right of workers by the Maruti Suzuki management . Company executives denied harsh conditions and claim they hired entry-level workers on contracts and made them permanent as they gained experience.Maruti employees currently earn allowances in addition to their base wage.
The police, in its First Information Report (FIR), claimed on 21 July that Manesar violence is the result of a planned violence by a section of workers and union leaders and arrested 91 people. Maruti Suzuki in its statement on the unrest, announced that all work at the Manesar plant has been suspended indefinitely. The shut down of Manesar plant is leading to a loss of about Rs 75 crore per day. On 21 July 2012, citing safety concerns, the company announced a lockout under The Industrial Disputes Act, 1947 pending results of an inquiry the company has requested of the Haryana government into the causes of the disorder. Under the provisions of The Industrial Disputes Act for wages, the report claimed, employees are expected to be paid for the duration of the lockout. On 26 July 2012, Maruti announced employees would not be paid for the period of lock-out in accordance with Indian labour laws. The company further announced that it will stop using contract workers by March 2013. The report claimed the salary difference between contract workers and permanent workers has been much smaller than initial media reports – the contract worker at Maruti received about ₹ 11,500 per month, while a permanent worker received about ₹ 12,500 a month at start, which increased in three years to ₹ 21,000-22,000 per month. In a separate report, a contractor who was providing contract employees to Maruti claimed the company gave its contract employees the best wage, allowances and benefits package in the region.
Shinzo Nakanishi, managing director and chief executive of Maruti Suzuki India, said this kind of violence has never happened in Suzuki Motor Corp's entire global operations spread across Hungary, Indonesia, Spain, Pakistan, Thailand, Malaysia, China and the Philippines. Mr. Nakanishi apologised to affected workers on behalf of the company, and in press interview requested the central and Haryana state governments to help stop further violence by legislating decisive rules to restore corporate confidence amid emergence of this new 'militant workforce' in Indian factories. He announced, "we are going to de-recognise Maruti Suzuki Workers’ Union and dismiss all workers named in connection with the incident. We will not compromise at all in such instances of barbaric, unprovoked violence." He also announced Maruti plans to continue manufacturing in Manesar, that Gujarat was an expansion opportunity and not an alternative to Manesar.
The company dismissed 500 workers accused of causing the violence and re-opened the plant on 21 August, saying it would produce 150 vehicles on the first day, less than 10% of its capacity. Analysts said that the shutdown was costing the company 1 billion rupees ($18 million) a day and costing the company market share. In July 2013, the workers went on hunger strike to protest the continuing jailing of their colleagues and launched an online campaign to support their demands.
A total of 148 workers were charged with the murder of Human Resources Manager Avineesh Dev. The court dismissed charges against 117 of the workers. On 17 March 2017, 31 workers were found guilty of variety of offences. 18 were convicted on charges of rioting, trespassing, causing hurt and other related offences under Indian Penal Code sections. The remaining 13 workers were sentenced to life in imprisonment after being found guilty of the murder of General Manager of Human Resources Avineesh Dev. Twelve of the thirteen sentenced were office-bearers of the Maruti Suzuki Workers Union at the time of the alleged offences. The prosecution had sought the death penalty for the thirteen.
Both prosecution and defence have announced they will appeal the sentences. Defence counsel Vrinda Grover stated, “We will file appeals against all convictions in the HC. The evidence, as it stands, cannot withstand legal scrutiny. There is no evidence to link these workers to the murder. The 13 who have been convicted, it’s important to remember that they were the leaders of the union. Therefore, it is clear that this is targeted framing of these persons. We hope for justice in the superior court.”
The Maruti Suzuki Workers Union is continuing to organise industrial action and protests calling for the workers to be released and criticising the judgement and sentences an unjust. An international appeal for the release of the workers has been made by the International Committee for the Fourth International (ICFI) and other organisations such as the Peoples Alliance for Democracy and Secularism.
Products and services
Sales and service network
Maruti Suzuki has 1,820 sales outlets across 1,471 cities in India. The company aims to double its sales network to 4,000 outlets by 2020. It has 3,145 service stations across 1,506 cities throughout India. Maruti’s dealership network is larger than that of Hyundai, Mahindra, Honda, Tata, Toyota and Ford combined. Service is a major revenue generator of the company. Most of the service stations are managed on franchise basis, where Maruti Suzuki trains the local staff. Other automobile companies have not been able to match this benchmark set by Maruti Suzuki. The Express Service stations help many stranded vehicles on the highways by sending across their repair man to the vehicle.
In 2015 Maruti Suzuki launched NEXA, a new dealership format for its premium cars.
Maruti currently sells the Baleno, Baleno RS, S-Cross, Ciaz and Ignis through NEXA outlets. S-Cross was the first car to be sold through NEXA outlets. Several new models will be added to both channels as part of the Company’s medium term goal of 2 million annual sales by 2020.
Launched in 2002 Maruti Suzuki provides vehicle insurance to its customers with the help of the National Insurance Company, Bajaj Allianz, New India Assurance and Royal Sundaram. The service was set up the company with the inception of two subsidiaries Maruti Insurance Distributors Services Pvt. Ltd and Insurance Brokers Pvt. Limited
This service started as a benefit or value addition to customers and was able to ramp up easily. By December 2005 they were able to sell more than two million insurance policies since its inception.
To promote its bottom line growth, Maruti Suzuki launched Maruti Finance in January 2002. Prior to the start of this service Maruti Suzuki had started two joint ventures Citicorp Maruti and Maruti Countrywide with Citi Group and GE Countrywide respectively to assist its client in securing loan. Maruti Suzuki tied up with ABN Amro Bank, HDFC Bank, ICICI Limited, Kotak Mahindra, Standard Chartered Bank, and Sundaram to start this venture including its strategic partners in car finance. Again the company entered into a strategic partnership with SBI in March 2003 Since March 2003, Maruti has sold over 12,000 vehicles through SBI-Maruti Finance. SBI-Maruti Finance is currently available in 166 cities across India.
Citicorp Maruti Finance Limited is a joint venture between Citicorp Finance India and Maruti Udyog Limited its primary business stated by the company is "hire-purchase financing of Maruti Suzuki vehicles". Citi Finance India Limited is a wholly owned subsidiary of Citibank Overseas Investment Corporation, Delaware, which in turn is a 100% wholly owned subsidiary of Citibank N.A. Citi Finance India Limited holds 74% of the stake and Maruti Suzuki holds the remaining 26%. GE Capital, HDFC and Maruti Suzuki came together in 1995 to form Maruti Countrywide. Maruti claims that its finance program offers most competitive interest rates to its customers, which are lower by 0.25% to 0.5% from the market rates.
Maruti True service offered by Maruti Suzuki to its customers. It is a market place for used Maruti Suzuki Vehicles. One can buy, sell or exchange used Maruti Suzuki vehicles with the help of this service in India. As of 10 August 2017 there are 1,190 outlets across 936 cities.
N2N Fleet Management
N2N is the short form of End to End Fleet Management and provides lease and fleet management solution to corporates. Clients who have signed up of this service include Gas Authority of India Ltd, DuPont, Reckitt Benckiser, Doordarshan, Singer India, National Stock Exchange of India and Transworld. This fleet management service include end-to-end solutions across the vehicle's life, which includes Leasing, Maintenance, Convenience services and Remarketing.
Many of the auto component companies other than Maruti Suzuki started to offer components and accessories that were compatible. This caused a serious threat and loss of revenue to Maruti Suzuki. Maruti Suzuki started a new initiative under the brand name Maruti Genuine Accessories to offer accessories like alloy wheels, body cover, carpets, door visors, fog lamps, stereo systems, seat covers and other car care products. These products are sold through dealer outlets and authorized service stations throughout India.
Maruti Driving School
As part of its corporate social responsibility Maruti Suzuki launched the Maruti Driving School in Delhi. Later the services were extended to other cities of India as well. These schools are modelled on international standards, where learners go through classroom and practical sessions. Many international practices like road behaviour and attitudes are also taught in these schools. Before driving actual vehicles participants are trained on simulators.
At the launch ceremony for the school Jagdish Khattar stated "We are very concerned about mounting deaths on Indian roads. These can be brought down if government, industry and the voluntary sector work together in an integrated manner. But we felt that Maruti should first do something in this regard and hence this initiative of Maruti Driving Schools."
Awards and recognition
The Brand Trust Report published by Trust Research Advisory, a brand analytics company, has ranked Maruti Suzuki in the thirty seventh position in 2013 and eleventh position in 2014 among the most trusted brands of India.
Viewers' Choice Car of the Year published by CNBC-TV18 OVERDRIVE, Overdrive is Indias No.1 Auto Publication for Cars and Bikes in India, has awarded Maruti Suzuki Baleno the Viewers' Choice Car of the Year 2016
References and notes
There is something amiss about General Motors India, well known in the country by its brand ‘Chevrolet’.
Earlier today, Lijee Philip, a journalist with The Economic Times wrote an interesting piece detailing GM’s losses in India. The story states that General Motors India recorded a loss of Rs. 746 crore in 2012. And that ever since GM began its India operations, its losses have piled up to Rs. 1598 crore, making it the least profitable car company in India.
For a company that's been here since 1994, that's pretty dismal. Why? A. It is a long time to get your act together. B. On the face of it, GM doesn't seem to have any big teething problem. Let me explain. Now it is pretty well known that Fiat doesn't do well in India because the company has issues when it comes to after sales and network. Maruti Suzuki is the market leader but it has a limitation in terms of number of diesel engines it can buy from Fiat or ones that it can make in its own plant. Honda India does not even have a diesel engine so it is obvious that Honda’s sales volumes will take a hit. Volkswagen is fairly new in the country and doesn’t have a small car in its portfolio to compete with the likes of Maruti and Hyundai. Renault and Nissan still have a pretty small sales and after sales network.
Chevrolet does not seem to have any of these issues. It has the technology, portfolio of products which includes a small car, quite a few sedans, a utility vehicle and a network which covers almost 170 cities in the country. But it continues to remain a fringe player.
- Chevrolet India's sales performance in the last decade
Come to think of it, this is a subsidiary of General Motors, one of the largest car companies in the world. The story becomes a little bit more curious when you compare the Indian unit’s performance against GM’s operations in other parts of the world. GM is doing pretty well in Brazil, in China, in South Korea, in Russia, in America…except India.The top 10 markets for Chevrolet in 2011 looked like this: America, Brazil, China, Russia, Mexico, Canada, Argentina, Uzbekistan, India and Colombia. Things changed quite a bit in 2012. India sales crashed from 1, 11, 056 in 2011 to 94, 757 units in 2012. That’s a drop of 15 percent.
What's going wrong? Last week I spent some time chatting with a dealer of Chevrolet in Mumbai. Here’s the essence of what he said. Chevrolet in India is an average performing car company. Everything about it is average - their cars, design, engines, sales and after sales. They aren't exceptionally great in any of these areas. “In the mind of the customer, Maruti Suzuki stands for the best in class fuel efficiency and network. The mantle of German engineering is held by Volkswagen. People believe what they are buying is a premium vehicle with great engineering. The stamp of reliability is with Toyota. What do we stand for?” he said. Tough one. I understand that in the US, GM stands for sports utility vehicles, trucks, crossovers and muscle cars. Obviously it has none of that positioning in India.
Then, how is life as a Chevrolet customer? The JD Power 2012 India Customer Satisfaction Service Index study ranks Chevrolet as third from the bottom amongst 12 manufacturers. For a company that's been in India for 19 years, GM should have done better.
This problem reflects in the decisions customers make. The dealer had an interesting case study. “A customer walked in to look at the Chevrolet Sail (hatchback) but he said it is too long for his parking place. So he moved on to look at the Chevy Beat. The moment he did that I knew that he has several other cars from competition to choose from. He said he will come back later. But he never did,” adds the dealer. Analysts believe that there is another serious issue of cannibalisation. “GM's major hurdle is to get increased footfalls in the showrooms and improve upon conversions. The last few GM products have all ended up cannibalising pre-existing products. The Beat finished the Spark and the Sail will damage the Beat’s sails,” said Deepesh Rathore, managing director of IHS Automotive India, a forecasting firm.
Quite a few people believe that GM’s cars look outdated. I am not so sure about that. Well, sure GM is no Hyundai in the design department but then there are quite a few ugly looking vehicles in the market which are happily lapped up by customers.
Any Chevrolet car owners out there, I'd love to hear your feedback.