Business Today

The Midas Touch

Maruti Suzuki is having a dream run. It is also getting ready for the future.
Sumant Banerji   New Delhi     Print Edition: June 3, 2018
The Midas Touch
Photograph by Reuben Singh

India's largest passenger vehicle maker is on a high. In 2017/18, its domestic passenger vehicle market share edged up to nearly 50 per cent, the highest since the turn of the century when it had a 50.4 per cent share. In a big market like India, the worlds fourth-largest, it is uncommon for a leader to have such a high market share. It looks even more striking when we consider that just six years ago, Maruti's share had dipped to an all-time low of 38.3 per cent, as labour unrest at its factories crippled production for months.

From that position of vulnerability, when a lot of people wrote it off, Maruti has hit a rich vein of form. Between 2014/15 and 2016/17, its turnover grew at an average rate of 16.48 per cent per annum, the most among large companies. Its share price more than quadrupled during the period. In December last year, it breached the `10,000 mark for the first time, taking the market capitalisation to `3,00,000 crore. It was the sixth company overall and the only automobile player to reach the milestone.

Such growth is possible only when everything is going right for a company. Almost all its launches in the last few years have been blockbuster successes. It has successfully branched out into premium category cars with standalone Nexa showrooms and Baleno premium hatch and diversified into the utility vehicle space with a compact SUV, Vitara Brezza. Today, seven of India's top 10 best selling cars are from its stable.

"We had set a target of selling two million cars by 2020. Beyond that, even 2.5 million, three million, and so on. The existing set-up could not take so much pressure and so we needed Nexa," says Kenichi Ayukawa, Managing Director and CEO, Maruti Suzuki India. "Also, the consumer is evolving and we need to adapt all the time. We want that everybody should give us a chance and once somebody buys a Maruti car he should not go elsewhere."

When times are tough, companies often say that things cannot go any worse. Similarly, when times are good, like in the case of Maruti, there is always a nervousness if things will continue like this. The disruptions staring the domestic industry, be it tightening safety/emission norms or mass adoption of electric mobility, will test Maruti's resolve. But the company is readying itself for the challenges. It has tied up with Toyota to develop hybrid and electric vehicles and committed investments for a lithium ion battery unit in Gujarat.

"We have to remain relevant and attractive to our consumers at all times. Otherwise, we will not survive," says Ayukawa. "So, if consumer preference or rules or some policy changes, we have to be ready with an answer. Competitors can move ahead with their products, and in that case, we have to catch up. That's competition. So, we have a global tie-up for electric cars with Toyota. The first product will come sometime in 2020. We are also building a battery plant in Gujarat. But at the end of the day, customers will decide."

In the past, Suzuki's weakness in diesel technology has threatened to derail Marutis growth story in India. That time, the company showed remarkable pragmatism by borrowing engine technology from Fiat. Maruti can be trusted to find solutions to whatever challenges future may hold. 

Youtube
  • Print

  • COMMENT
BT-Story-Page-B.gif
A    A   A
close