Maruti’s position makes it vulnerable to attack from the new & existing players in the small car segment. Will it lose its leadership position anytime soon?

With a ‘Work hard party harder’ philosophy in mind, many companies go by the philosophy of sweating it out in the Indian market to launch the right set of offerings for the consumer. And if it delivers the desired results, the celebrations that follow are often grander and much more long lasting. However, Maruti Suzuki doesn’t seem to be leaving anything to chance ever since it saw its market share erode from highs of around 90%. Even after staying ahead of the curve in the premium hatchback segment by launching the Swift in 2005, its market research team was again out in the market asking consumers about how they could do better. Rather than organising gala celebrations boasting of its strong hold in the segment, Maruti Suzuki focused on making the product more sporty and stylish. Even as it became the fastest car model to reach the 3-lakh milestone in a period of just three years and eight months in February 2009, the market leader came up with the new generation Swift in August 2011. “The motive was to understand what the modern consumer was missing in the Swift and with the second generation of the product, we included all possible changes to make it more appealing to the TG,” says Shashank Srivastava, Chief General Manager – Marketing, Maruti Suzuki.

While many experts argued that there was no need to launch a new-generation Swift as the earlier model was still a category leader with a waiting period running in months, the company had different plans. Perhaps the rising competition in the small car segment forced Maruti Suzuki to go back to the drawing board and look at the bigger picture.

A lot has changed for the market leader over the past few years. Till early last year, Maruti Suzuki always boasted of 50%+ market share but rising labour problems and aggressive launches by the competition have put the company on the backfoot. As per a report from Prabhudas Liladhar, Maruti Suzuki will file an 11% decline in overall volumes for FY 2011-12 standing at 1.1 million units but will bounce back with a 14.8% growth by the end of FY 2012-13 to sell 1.3 million units. Car sales for the company in October were 55,595 units, down by around 53.2% yoy, thanks to the strike.

Needless to add, India has always been a small car market and is expected to tread the same path even in times to come. As per estimates from J.D. Power, India is expected to become the third largest automobile market by 2020 with light vehicle sales expected to touch 11 million units. From the late 1990s where the consumer only had options like Maruti 800, Zen, Santro and Matiz to choose from, the small car segment offers 26 options today in terms of models.
 
Undeniably, as the Indian market has grown in volumes, Maruti has expanded its portfolio to seven hatchbacks and continued its dream run on the perch. But the competition has been eying the huge pie that the market leader holds for long now. Going by the trend in the west, the market leader in the automotive segment holds 20-25% market share on an average. For instance, in the US, the market leader (General Motors) holds 20% market share. “In a scenario where competition is rising by the day, new entrants will corner market share from the biggies like Maruti Suzuki. That has been the way it has happened globally and India is no exception,” said an automobile veteran on conditions of anonymity. From a market share of 52.16% in 2008-09, 50.13% in 2009-10 and 48.74% in 2010-11 in the passenger car segment, Maruti’s market share has come down to 41.23% in FY 2011-12 (April-October). However, the alarming fact is that most of this market share has come from the small car segment, which has been its bread-and-butter for decades. For the uninitiated, Maruti Suzuki held a dominating 56.11% market share in the small car segment at the end of 2009-10, which fell marginally to 55.78% at the end 2010-11. Today, it stands at 45.9% for FY 2011-12. Clearly, competition is gaining, and they are looking to take share from the leader.

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Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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26/02/2012 10:02pm

Company’s ability to keep launching products in line with consumer aspirations will remain a major plus points.

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27/02/2012 1:41am

Market share erosion is inevitable as cars move to the mass market in India and the industry as a whole outpaces the leader. But Maruti Suzuki has one major advantage – it is in touch with customer aspirations and inhibitions specific to India.

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27/02/2012 2:02am

The company had different plans. Perhaps the rising competition in the small car segment forced Maruti Suzuki to go back to the drawing board and look at the bigger picture.

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27/02/2012 2:25am

The company was showcasing the concept model of cars along with other offerings in its portfolio .It is well-established tradition of creating such works in performance, and that his masterpieces were recorded

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27/02/2012 4:31am

It has already got dedicated sales personnel in place for the product, who have been trained especially to deal with the target customer .It has been able to provide consumers with products that they’ve always been looking ..

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27/02/2012 8:44pm

The automobile industry, one of the core sectors, has undergone metamorphosis with the advent of new business and manufacturing practices in the light and globalization.A detailed analysis of Automobile industry has been covered in respect of past growth and performance.

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27/02/2012 8:57pm

The fundamental aspect consists financial and Non-Financial analysis of both the Industry. We have considered share prices analysis, moving average etc.Also have been specified so as to make the research work more meaningful and purposeful.

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27/02/2012 9:46pm

The term industry refers to that part of business activity which is relates to production processing or fabrication of products. It is trying to bring invarying products to suit requirements of different class segments of customers & more competitive in the export market due to its advances quality and technology.

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27/02/2012 9:59pm

In the relationship between the automotive industry and its ultimate consumers. This is due to the fairly standardized nature and the low switching costs associated with selecting from competing brands.And also required establish manufacturing capacity to achieve minimum efficient scale is prohibitive.

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27/02/2012 10:45pm

The growing internationalization of business induces changes in the positioning of competitors and appropriate competitive strategies. They expanding their business and effectively performing international operations of products,developing strategy, Advertising Research and customer needs.

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28/02/2012 12:24am

The strategy is synchronized, the firm may be involved in every stage in the life cycles related to products, services and markets.However, success will depend on the ability of the companies to understand the markets unfolding around them and develop a rational strategy for long term gains.

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28/02/2012 1:48am


Intensive competitions or rapid globalization in products and services segment. Fast moving technology and changing consumer preference, it is essential for the companies to develop the strategic.Researchers have emphasized that towards maximizing the lifetime value of customers.

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28/02/2012 2:47am

"Maruti has been so successful in the Indian market so far only because it has been able to provide consumers with products that they’ve always been looking for. We are confident that Kizashi will replicate the success.”

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28/02/2012 2:49am

“The motive was to understand what the modern consumer was missing in the Swift and with the second generation of the product, we included all possible changes to make it more appealing to the TG,” says Shashank Srivastava, Chief General Manager – Marketing, Maruti Suzuki.

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28/02/2012 2:55am

Maruti has expanded its portfolio to seven hatchbacks and continued its dream run on the perch.To increase to the fullest the employee’s satisfaction and self-actualization, develop and maintain a quality of products .

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