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A PROJECT REPORT ON MARUTI SUZUKI PRESENTED TO: Mr. HIMANSHU VAIDYA ON SEPTEMBER 10, 2010 IN THE PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE STRATEGIC MANAGEMENT COURSE IN THE PGPM DHIREN VYAS 1

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A PROJECT REPORT ON MARUTI SUZUKI

PRESENTED TO: Mr. HIMANSHU VAIDYA ON SEPTEMBER 10, 2010

IN THE PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE STRATEGIC MANAGEMENT COURSE IN THE PGPM

DHIREN VYAS

Approval............

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ContentsIndustry Overview................................ ................................ ................................ ............... 3 Current Scenario ................................ ................................ ................................ ............. 3 Overview of the four wheeler passenger car industry ................................ ........................ 3 The Maruti phase ................................ ................................ ................................ ............ 3 Post Maruti Phase ................................ ................................ ................................ ........... 4 Maruti Suzuki ................................ ................................ ................................ ..................... 7 About Maruti ................................ ................................ ................................ ................... 7 Core Competencies ................................ ................................ ................................ .......... 7 Market Segment and Target market ................................ ................................ .............. 8 Product Life Cycle stages ................................ ................................ ................................ .... 8 Strategies................................ ................................ ................................ ............................. 9 Key strategic initiatives by Maruti ................................ ................................ ................. 9 Pricing Strategy ................................ ................................ ................................ ............. 10 Product Differentiation................................ ................................ ................................ .. 10 Corporate Strategies- Stability ................................ ................................ ..................... 10 Promotional Strategy................................ ................................ ................................ ..... 10 Corporate Social Responsibility (CSR) ................................ ................................ .......... 10 Repositioning of Maruti Products................................ ................................ .................. 10 BCG Matrix ................................ ................................ ................................ ....................... 11 GE Matrix ................................ ................................ ................................ .......................... 12 SWOT Analysis ................................ ................................ ................................ ................. 12 PEST Analysis ................................ ................................ ................................ ................... 14 Competition Analysis ................................ ................................ ................................ ........ 15 New Strategy Formulation and Implementation for MUL ................................ .............. 18 The Future................................ ................................ ................................ ......................... 19 Conclusion ................................ ................................ ................................ ......................... 20 BIBLIOGRAPHY................................ ................................ ................................ ............... 21

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Industry OverviewCurrent ScenarioIndian Automobile Industry Size of auto and ancillary industry Vehicle sold in India 2009-10 of which export 1.8 million GDP share of auto sector People employed by industry USD 50 billion 14 million 7% 13 million

Indias Position in worlds auto market (Numbers in Millions) Domestic Sales + Export 2.4 1.1 0.6 10.5

Global Position Passenger Vehicle 7 Commercial Vehicle 4 Three Wheeler 1 Two Wheeler 2 (Source: www.businessclubindia.org)

Overview of the four wheeler passenger car industryThe passenger car industry in INDIA is mainly divided into three time frames: 1) Pre Maruti (1951-1981) 2) Maruti phase(1982-1993) 3) Post Maruti (1993 onwards) The car industry has gone through major changes from post independence. Maruti is considered as the benchmark in the automobile industry as it changed the way the industry was growing and working in INDIA. As said earlier the INDIAN automobile industry can be divided into three phases. Our study will be on the Maruti phase and post Maruti phase in INDIA.

The Maruti phaseMaruti stated off by producing Maruti 800 in 1983. At that time there were mainly only two players who dominated the market; Hindustan Motors and Premier automobiles. The main strategy of Maruti they applied at that time was that they created a whole new market for itself. INDIAN market has always been considered very big and at that time there were a growing number of upper middle class families in INDIA. They targeted3

that market with their moderately priced car which was also high on fuel efficiency. In fact Maruti was the first in INDIA who stated the concept of fuel efficiency in INDIA. Thus with so much product differentiation they went on to become the market leader in no time. They also fuelled the car market growth in INDIA. Maruti continues to be the market leader for more than two decade s now although it has now lost its market shares post liberalisation of the economy in 1991. The main reason Maruti still continues to be the market leader can be attributed to the following reasons: It was exposed to the market for almost a decade without competition. But it did not take it for granted. It continued to serve the market with full efficiency and credibility. They went on built excellent customer relationships which further enhanced their trust among customers. Although it is criticized that they did not think beyond 800 which also not upgraded they went on launching other models too like Maruti 1000 ZEN and Esteem to capture other forms of market. By this mean they did become a stereo type of car manufacturer like ambassador.

Post Maruti PhaseThis phase started with the government liberalising the economy. The first to foray to compete in this sector was Tata motors (then TELCO) with their INDICA. It failed to make any impact as there were wide spread complaints about the car and also had high maintenance cost. Shortly after that HYUNDAI came into picture and they captured the market very quickly with their Santro model. The main reason why Hyundai could capture the Maruti market here was Maruti for a long time did not change their 800 model and went on with the same look. Santro gave the consumers a break and to go for new designs. Hyundai passed the test and went on to give excellent service. With the success of Hyundai other car manufactures across the globe started coming to INDIA mainly through joint ventures. At present there are more than ten players in INDIA catering in the various segments in the industry. Examples of such players include HYUNDAI, TOYOTA , MAHINDRA, HONDA etc. Thus post liberalisation the market has become much more competitive and aggressive. Where does Maruti stand now and how they overcome the competition? With huge competition in the sector Maruti stands at par with its competitors at this moment. Although it has lost its market share but it still continues to have more than 50% market share even though it has so many competitors. It has been criticised that Maruti has failed to hold the market share it held earlier when faced with competition. But if compared the competitors there shares in the market are4

not that significant individually excepting Hyundai which is enjoying around 17% market share.(source CMIE market shares ) It is obvious that market share is expected to erode with competition but standing tall being the leader is a big time success for Maruti. Without competition the market does not grow and no new innovation takes place. When competitors started pouring in Maruti was quick to react to the competition and became more competitive and stated launching new products or re designing its old models. They reduced the queuing periods of cars to almost nil which earlier was around 5-6 months. It introduced new models like new 800, A-Star, Ritz, Alto, Zen Estilo, SX4 etc. They also have launched recently the K-series engines. It revamped its total production style and introduced the JIT concept the first of its kind in the industry. It further increased its network service centres which them ahead of competitors by many miles. The company has a sales network of 802 centres in 555 towns and cities, and provides service support to customers at 2,740 workshops in over 1,335 towns and cities (as on March 31, 2010). As of June 2010 it currently has 800-plus dealerships across more than 500 cities in India. It plans to expand total number of dealerships to 1,000) To compare with Hyundai it currently has a 295 dealer network and 591 strong service points across India, which will see further expansion in 2010. (source: Wikipedia and marutisuzuki.com) They also diversified themselves into second hand car business with TRUE VALUE program which was previously catered by the unorganised sector only. Competitors also tried to invest in this sector but they are far behind Maruti s second hand car business. They also did internal structuring by Suzuki taking over more than 90% share of the company from Maruti Udyog and consolidating its position so as to reduce government interference. The Indian government held an initial public offering of 25% of the company in June 2003. As of 10 May 2007, Govt. of India sold its complete share to Indian financial institutions. With this, Govt. of India no longer has stake in Maruti Udyog. (Source: Wikipedia) Maruti with increased competition also concentrated on the export market and today it exports their car to more than 100 countries. It exports doubled in 2009 -10 to 147,000 units. it stands next only to Hyundai Motors which exported 240,000 cars made in India. (Source: msn.com & hyundai.co.in)

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Indian Auto Industry is witnessing more JVs and acquisitions than ever. Mergers, acquisitions and joint ventures have continued to be the driving force in the Indian automobile industry in sync with the dynamics of an open market. Leading automobile companies have either set up their own manufacturing base in India or have tied up with Indian automotive firms to roll out new products from Indian market. The list includes International, MAN, Daimler, Toyota, Nissan, Renault, Fiat, Honda, Kawasaki, Cummins and many more. During the first half of 2008, Daimler AG bought 26 per cent stake in Sutlej Motors. Indian companies have also been bullish in acquiring foreign automobile companies to reinforce their presence in the global market. The landmark deal in the first half of 2008 has been Tata Motors acquisition of Jaguar-Land Rover from Ford for US$ 2.30 billion. During this period M&M acquired three Italian companies GR Grafica Ricerca, Metalcastello and Engines Engineering. Indian firms are increasingly partnering with foreign firms India OEM Maruti Suzuki Mahindra Logan Tata motors KINETIC Group Foreign Partner Renault Fiat Sanyang Industry Co Ltd (SYM- Taiwan) Italjet -Italy Honda- Japan Ultra Motor Company, U.K Kawasaki Heavy Industries Ltd, Japan Engine Technology Kubota Corp, Japan L&T Ltd Ashok Leyland Scania-Spain Hino-Japan Irizar-Spain ZF-Germany Marco Polo-Brazil Cummins-USA Type of Partnership

Suzuki Motor Corporation-Japan Equity partner Joint Venture Tie-up for manufacturing and marketing in India Technology Tie-up for manufacturing and Distribution Technology Technology Engine Technology Technology Technology Tie-up for marketing in India Engine Technology Bus body Technology Gearbox Technology Bus/Coach Technology Engine Technology

Hero Hero Cycles Bajaj Auto

Tata Motors

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Maruti SuzukiSector: Four Wheeler Passenger Car Segment Why this segment in automobile industry? This particular sector in INDIA has been witnessing huge growth and competition with a host of MNC s like Honda, FORD, GM, TOYOTA, SUZUKI, competing in this sector. A lot of the above mentioned companies changed their strategies to form new ones to capture the market in INDIA. Companies like GM have usually focussed on sedans in other countries where as in INDIA they focussed on small cars. In fact they are now planning to launch cars within 1 lakh to compete with NANO. Also INDIA is expected to be the next destination for export of cars. Why Maruti? Maruti before liberalisation faced almost no competition but after market was opened it faced huge completion. What different strategies it adopted to face the competition and continue to be the market leader even after is interesting to know about and why did not wash off like Hindustan Motors and Premier Padmini can be known.

About MarutiMaruti Suzuki India Limited (MSIL, formerly named Maruti Udyog Limited) is a subsidiary of Suzuki Motor Corporation, Japan. MSIL has been the leader of the Indian car market for over two and a half decades. The company's two manufacturing facilities are located at Gurgaon and Manesar, south of New Delhi. The Manesar and Gurgaon facilities have a combined capability to produce over a million (1,000,000) passenger car units annually. Recently, the company has announced a further investment of Rs1700 crore (Rs 17 billion) for enhancing the production capacity by 250,000 units annually. The company has a portfolio of 13 brands and over 150 variants including international brands Alto, A-star, WagonR, Swift, Ritz and Estilo, off-roader Gypsy, SUV Grand Vitara, sedans SX4 and Swift DZire and the newest entrant Eeco and Alto K -10. Its present boss is Mr. Shinzo Nakanishi, who is the Managing Director and CEO.

Core CompetenciesOur core competency lies in manufacturing small cars. Last year, the total market grew at about 20-22 per cent, but the compact car segment grew at 30-32 per cent. But we know how to evolve with the times. With changing times, we would like to be more stylish and contemporary," said Mr Khattar( Ex-MD Maruti Suzuki ).7

As said in the above quote Maruti is a pioneer in small car industry in India. They are mainly known for the small cars but over time they have changed with the market demand and made their foray into sedans also. Another competency of Maruti is the fuel efficiency factor that their car provides. Although all the other car manufacturers have come up with fuel efficient engines but none of them could actually match up with Maruti in this case. Maruti competency lies also in the fact that they are priced very competitively. With wide variety of portfolio of cars Maruti s car are considered most cost efficient. Also the after sale maintenance cost of the cars are too the cheapest in the market. Maruti Suzuki s yet another competency lie in the fact that the customer trust they are having. Over the past ten years they have been awarded J.D. Power Customer satisfaction awards one of most prestigious awards in the automobile industry. According to the Brand Equity of Economic Times Maruti have the highest brand recognition in the industry and is among the top 100 most trusted companies in INDIA.

Market Segment and Target marketSegment Price Range A < 3 lacs B 3-5 Cars Maruti 800, Reva, Omni Wagon R, Zen, Versa, Ambassdor, Fiat, Palio, Esteem, tata indica, indigo. C 5-10 Baleno, Elantra, Honda city, Lancer, Innova, Sx4 D 10-15 Octivia, corolla, Civic E 15-30 Honda CRV, Maruti Grand Vitara, Honda accord (Source: http://www.surfindia.com/automobile )

Product Life Cycle stagesIntroduction Stage:

Market share and growth is slight. Substantial research and development costs have been incurred. Marketing costs may be high in order to tests the market, undergo launch promotion and set up distribution channel. Highly unlikely that company will make profit on products. Example- A-star, Dezire.Growth Stage:

Characterised by the rapid growth in sales and profits. Profits arise due to an increase in output, getting benefit of economies of scale.8

Significant promotional resources are traditionally invested in products that are firmly in the growth stage. Cheaper for businesses to invest in increasing their market share. Example- Swift, Zen Estilo.Maturity Stage:

Competition is more intense as companies fight to maintain their market share. Any significant moves are likely to be copied by competitors. The maturity stage is the time when most profit is earned by the market as a whole. Any expenditure on research and development is likely to improve production efficiency and quality. Example- Alto, Wagon-RDecline Stage:

Market is shrinking, reducing the overall amount of profit. Possible to take out some production cost, to transfer production to a cheaper facility, sell the product into other, cheaper markets. Depending on whether the product remains profitable, a company may decide to end the product. Care should be taken to control the amount of stock s of the product. Example- Baleno, Esteem.

StrategiesKey strategic initiatives by Maruti :Turnaround Strategies that Maruti has followed are: At present have around 45% market share Plans to invest Rs. 1925 crore in its new plant in Manesar whi ch will annually increase their production capacity by 2.5 lakhs car annually with the existing capacity of 12 lakhs car per annum. They are also going to revamp their existing other five plants to increase production to cater the increasing demand of cars in the market. In April-August period 2010 there sales rose 26% to 4.8 lakhs cars.( source: Economic Times) They are also going to infuse an additional 2500 crore in their Rajasthan R&D plant ( source: Economic Times) Launch new models for different segments of the market. In its redesign plan, Maruti, launches a new model every year, reduce production costs by achieving 85-90% indigenization for new models. The company is planning to expand the number of dealerships to 1,500 by 2015.) As of June 2010 it currently has 800-plus dealerships across more than 500 cities in India. It plans to expand total number of dealerships to 1,000) source: Wikipedia Shift in focus from sell what we produce to "marketing and customer focus".9

Pricing StrategyIt caters to all segments and has a product offering at all price points. Their pricing strategy is to provide an option to every customer looking for up gradation in his car. Their sole motive of having so many product offering is to be in the consideration set of every passenger car customer in India. Here is how every price point is covered. Porter s Generic Strategy:

Product Differentiation Performance Mileage Best match with Indian road conditions Less Maintenance cost Resale price After sale services

Corporate Strategies- Stability They are maintaining status quo due to limited environmental opportunities for gaining competitive advantage. Consistent product and process development Strong distribution network and service station Heavy promotional budget Unique positioning for each segment

Promotional Strategy Maruti Driving School Advertisement through electronic media, Print Media, outdoor ads and web media CSR programs Sponsorship of Rode race e.g. Maruti Raid De Himalaya Sponsorship of other sports like cricket, golf and polo

Corporate Social Responsibility (CSR) National Road Safety Mission launched - a nation-wide Social responsibility (CSR) initiative to train 500,000 people in safe driving in three years. Targets reducing fresh water consumption and implement rain water harvesting. The company is moving towards making its entire fleet of cars green with advanced and efficient technologies. Promoting energy conservation.

Repositioning of Maruti Products: At the time when it was exposed tocompetition

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Whenever Maruti s brand grew old or its sales started dipping, it made the following efforts in the same field. Omni interiors and exteriors, Omni cargo and CNG omni (Fits all). Versa slashed prices by decreasing engine power (The joy for travelling together). Esteem new look to boost sales. Baleno price slash from 1999 (7.2 lac) to 2003 (5.46 lacs) WagonR modifications in engine and sporty look (For the smarter race). Zen modified 4 times and special editions (Shape your world). Maruti 800 introduced modified accessories (Change your life). Some recent repositioning strategies of Maruti Products:

It removed its iconic Maruti 800 and Maruti Omni from its portfolio due decreasing sales and to comply with the environmental norms. In place it positioned Alto as an alternative of Maruti 800. It introduced Maruti Echo in place of Maruti Omni. It removed its Maruti Esteem another successful brand with Swift Dzire. It introduced Maruti SX-4 in place of Maruti Baleno.In both of the above cases of SX -4 and Dzire they went on to give more aggression both on the looks and performance of the cars which will be able to take the like of Ford Icon Honda City and the likes. They again introduced two hatch backs the award winning Ritz and the A-star to give more choice to customers. They also launched the new look Wagon-R to increase its sales. They also introduced the K-series engine in their highly successful Alto model by increasing its engine capacity to 1.1 litres. With the complete revamp of its hatch backs segment they except to recapture the market in which there are at least 20 brands trying to outdo each other.

BCG Matrix

High

Stars Maruti Zen Swift

Question Marks SX4 A Star

Business Growth RateLow

Cash Cows Maruti 800 Wagon-R AltoHigh

Dogs Omni Versa BalenoLow

Relative Market Share

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Market Share Stars Question Marks Cash Cows Dogs High

Growth Rate High

Earnings High, Stable, Growing Low, Unstable, Growing High, Stable Low, Unstable

Cash Needs High

Strategy Invest, Integrate, Takeover Harvest, Divest Maintain mkt dominance & Leadership Harvest, Divest, Liquidate

Example Swift, Zen

Low

High

High

SX4, A star Maruti 800, Wagon-R, Alto Omni, Versa, Baleno

High

Low

Low

Low

Low

Low

GE MatrixIndustry Attractiveness- Size, market growth, pricing, competitive structure, industry profitability. Business Strength - Size - Growth - Share - Position - Margins - Image - People - Technology High High Protect Position (Swift) Build Selectively (A star & Dezire) Protect and Refocus (A Star) Medium Invest to Build (Alto) Selectively Manage for Earnings (SX4) Manage for earnings (Versa) Low Build Selectively (A Star) Limited expansion for harvest (Baleno) Harvest/ Divest (Omni)

Medium

Low

SWOT AnalysisStrengths:

Established distribution and after sales network. 600 New car sales outlets covering 393 cities. 265 Maruti True Value outlets spread across 166 cities. The company has a sales network of 802 centres in 555 towns and cities, and provides service support to customers at 2,740 workshops in over 1,335 towns and cities (as on March 31, 201012

Tie up with Adani group for exporting 200,000 units through Mundra port Gujarat They have good understanding of the Indian market and ability to liaison with the government. They have ability to design products with differentiating features. Brand Image Experience and know how in technology.Weaknesses:

Lack of experience with foreign market. Their products facing the problem of brand cannibalization. It means their one product is facing or suffering from another product. For example in the hatch back segment they have as many as 5 cars which may eventually compete with each other. Comparatively new to diesel cars thus needs to built its credibility in this segment. People resistant to upper segment model. Heavy import tariff on fully built imported model.Opportunities: At present the industry is enjoying the growth rate of 14-17% per annum with, domestic sales growth rate of 12.8%. The growth rate is predicted to double by 2015. As it is seen, the total sales of passenger vehicles and multi utility vehicles in the year 2005 reached the mark of 1.06 million. The current growth rate indicates that by 2012 India will overtake Germany and Japan in sales volume. The Indian auto industry is likely to see a growth of 10-12 percent in sales in 2010, according to a report by the global rating firm, Fitch. (Source: http://www.livetips.biz)

Increasing disposable income of people. Availability of a variety of vehicle models meeting diverse needs and preferences. Greater affordability of vehicles. Easy finance schemes. Favourable government policies.Threats: According to Fitch s report, Indian auto sector outlook, completion in the country s auto sector is likely to increase due to increasing penetration of global original equipments manufacturers (OEM). India today is becoming one of the favourite destinations of foreign auto players which is clear from the number of initiatives taken by them:

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German car major Audi will start assembling its sport utility vehicle Audi Q5 from mid 2010. The company plans to assemble more cars locally at its Aurangabad plant instead of importing completely built units (CBU). Ford India commenced commercial production of its compact car Figo, and diesel and petrol engines at a new factory in Chennai. The Figo will b e built exclusively in India and exported to Asian countries and South Africa. Volkswagen has set a target to localise production in India to about 80% in 2 -3 years from the current level of 50% as it seeks to offer cars at more competitive prices.The greatest challenge and competition would be from the Chinese automobile industry. The Chinese automobile industry has been able to give stiff competition to India in terms of productivity, manufacturing cost, technology. Again the present trend of excess manufacturing capability, reduced margins put additional pressure to the industry.

PEST AnalysisPolitical-legal factors:

Auto policy: before liberalization Maruti Suzuki was highly protected by the government of INDIA, but after competitors started coming in it did loose considerable amount of share in the market. Thus Auto Policy was a major factor for Maruti in the time of liberalization. Fiscal policy: Policies such as prices of raw materials such as iron, rubber etc interest rates of government impact the sale of cars in INDIA.Economic Factors:

Rising per capita income: the per capita income is on increase and this will lead to more demand for passenger cars in future. For this cars for various segments needs to be launched. Favorable demographic distribution with rising working population middle class. Urbanization rising at level of 40%. Increasing disposable incomes in rural sector: Still few years before the rural agriculture sector was not booming but with urban markets set to become stagnant in near future Maruti in a pro active approach should try to capture the rural market by introducing their low cost model in this sector. Greater affordability of vehicle. Robust production.

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Social factors

Growth in urbanization: as life gets more complex with more urbanization need for car have increased. It is no more considered a luxury in some cases. Thus there is no doubt that the car market is booming and Maruti need to ofcus on the needs and demand of the sector. Low interest rates translating to low financing and acquisition costs hence greater affordability. 85% of Cars are financed in India. Changing consumer preference Changing life style in urban IndiaTechnological factors:

Research and development institutions. Bio-fuels for commercial utilization.

Competition Analysis

Threat of new Entrants:

The presence of sizable economies of scale in production is one of the factors which make others to enter into the industry. For example Suzuki Motorcycle India plans to double production capacity of its two-wheelers to 300,000 units by the end of current fiscal year.15

High capital is required to set up a manufacturing plant in India which is one of the entry barriers for the new entrants. In automobile industry, distribution channel is a major area of concern. Market majors like Maruti Suzuki having a strong accessibility of distribution channel creates entry barrier for others. Very liberal government policies lead to attract new players to enter into the industry.Power of suppliers:

In Indian automobile industry, suppliers have little or no bargaining power because in industry huge number Original Equipment Manufacturers (OEM) are there who supply auto components to the auto manufacturers. The presence of global as well as domestic suppliers leads to low bargaining power of suppliers. And auto component industry is highly competitive. Most automotive players are present in more than one segment.Power of buyers: The bargaining power of buyer is stronger in automobile industry because of following reasons:

Buyer switching costs to competitive brands are low. Increasing awareness among the consumer. Consumer is now aware regarding the quantity and quality of the products. Buyers are large and having very high expectations regarding the performance, service etc.Threat of substitute: In automobile industry there is very low threat from substitute products. Industry players may threaten from hybrid and electric cars. Industry Rivalry: Industry rivalry is stronger in Indian Automobile industry because of following reasons:

In industry there are so many players are there, domestic players and foreign players. And these players are undertaking fresh actions to boost their market standing and performance at the expense of rivals. Rivalry is increased because the products of foreign players like Audi and others become standardized. So, their products are significantly differentiated from others .

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Rivalry is increased because it is less costly for buyers to switch brands. In market so many models are available at more competitive prices. Competition in selected segments is very high for example small and mid car segment.

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New Strategy Formulation and Implementation for MULMaruti still now have focused on family cars and had been a high success in this segment. But with competitors foraying into picture Maruti needs to cope up with the growing competition to stop its slide in market share. For this it needs to focus on the other car segments like high end sedans. In its sedan segment Maruti is only having SX-4 and Swift Dzire which are in the price bracket of around 6 to 8 lakhs. It can introduce cars which can compete with the likes of Hyundai Sonata, Chevrolet Cruze and Toyota Corrolla etc. They also need to focus on the growing MUV (multi-utility vehicle) segment. Maruti is not having a single car in this segment except Grand Vitara which for niche market although all the competitors are having cars in this segment. If they can introduce a car in this segment consumers can accept it as it carries the brand name of Maruti. The only thing that Maruti needs to concentrate it needs to do more R&D into diesel engines before they enter the above said sectors as a little mistake can ruin their total image. They also need to concentrate on the growing LPG market and launch brands equipped with LPG kits.

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The Future The Indian automobile industry is expected to grow to US $ 40 billion by 2015 from the current level of US $ 7 billion in 2008. By the year 2016 the industry is expected to contribute 10% to the nation s GDP. The industry manufacturers will manufacture over 11 million vehicles a year, employing more than 3 million people. (Source: http://www.livetips.biz) The greatest challenge and competition would be from the Chinese automobile industry. The Chinese automobile industry has been able to give stiff competition to India in terms of productivity, manufacturing cost, technology. Again the present trend of excess manufacturing capability, reduced margins put additional pressure on the industry. The global recession has had a dampener effect on the growth of the industry, but market experts believe it is only a short term phenomenon and are confident of the industry bouncing back. On the positive side, India s strength in software sector, combined with skilled labor and low cost of manufacturing should place it in a favorable position globally. Recently Mr.Ratan Tata, Chairman (Tata Motors) created history by launching the world s cheapest car NANO. The car s price is around one lakh, gaining instant recognition in the automobile industry across the globe. It heralded the coming to age of the India Automobile Ind ustry. In the coming years INDIA is also expected the hub for export market for cars and the process have already started with a lot of manufacturers like SUZUKI and HYUNDAI already starting the process.

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Conclusion The Indian automobile industry has flourished like never before in the recent years. This extra-ordinary growth that the Indian automobile industry has witnessed is a result of a two major factors namely, the improvement in the living standards of the middle class, and an increase in their disposable incomes. Taking the sale trend in to account MUL sold a record number of vehicle 7, 14,842 in 2007-08 including 53,024 units of export. In 2007-08 it record a turnover of INR 145,922 million which rose to 178,603 million in 2007 -08 showing a growth of 20%. Maruti Suzuki controls slightly over half of the domestic car market in the country. It designs small cars suitable for the Indian conditions as a strategy to beat the stiff competition with the entry of global auto makers. The company's change in strategy and emphasis on developing effective marketing communications began to yield results. In the J.D. Power Asia Pacific 2004 India APEAL study, WagonR and Zen were ranked first and third in the premium compact segment; Esteem was picked as the best entry level car in the mid-size category. As per the J.D. Power Asia Pacific 2005 India Customer Satisfaction study, MUL ranked highest in customer satisfaction with after-sales service for the sixth consecutive year.

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BIBLIOGRAPHYReference Book:Business Policy and Strategic Management by L. M. Prasad Strategic Management by V S P Rao and V Hari Krishna Marketing Management by Philip Kotler

Websites:www.wikipedia.com www.marutisuzuki.com www.businessclubindia.org www.surfindia.com www.livetips.biz

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