Maruti Suzuki: Dominance in the Indian Passenger Car Market

Key Learnings for Global OEMs

May 3, 2023

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Table of Contents

Section Slide

A. Maruti Suzuki Case Study

A1. History 03

A2. Product Strategy 04

A3. Pricing Strategy 05

A4. Distribution and Service Strategy 06

A5. Communications Strategy 07

B. Key Conclusions 09

C. Relevant Offerings from Frost & Sullivan (F&S) 11

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Present Stake 56.21%

Maruti’s story started in 1970 but the company picked momentum only after its JV with Suzuki in 1982

Maruti Suzuki: How the Company evolved over the years

Maruti Suzuki India Limited: History

Maruti Technical Services Private Ltd was launched on Nov 16, 1970 It was a private company aimed at providing technical know-how

Maruti Limited was incorporated

Maruti Udyog Limited was incorporated

Joint Venture Agreement (JVA) is signed between Maruti Udyog and Suzuki of Japan Suzuki had 26% stake in the JV i.e., Maruti Suzuki India Limited (MSIL)

Production commences and the first car, Maruti 800 is launched

Suzuki increased the stake in the JV to 40%

Suzuki further increased the stake in the JV to 50%

Suzuki further increased the stake in the JV to 54.2%

1970 2015

2013

2002199219871983

1982

19811971

Source: Frost & Sullivan Analysis; Note: All trademarks, icons & logos are acknowledged as the property of their respective owners;

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Since inception, Maruti Suzuki India Limited (MSIL) has launched products on a regular basis to stay ahead of the competition

Maruti Suzuki: Market Share vis-à-vis Introduction of Products (Product Strategy)

Source: Frost & Sullivan Analysis, Company Websites; Note: All trademarks, icons & logos are acknowledged as the property of their respective owners;

Maruti Suzuki India Limited: Product Launch Timeline

Note: The trend line in the below chart depicts the indicative market share of Maruti Suzuki in the PC market; * Tata Motors entered the ‘Passenger Car’ market ** Discontinued

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Through its various models & variants, MSIL ensures that it has a vehicle for each price band

Maruti Suzuki: Pricing (2015)

Omni Alto 800 Eeco Alto K10 WagonR Celerio Stingray Ritz Swift Swift DZire

Gypsy Ertiga Ciaz₹ 0

₹ 200

₹ 400

₹ 600

₹ 800

₹ 1,000

₹ 1,200

47

8 75

12 39 7

8 3

9

11

₹248

₹310

₹267

₹391

₹334

₹447

₹337

₹426

₹382

₹482

₹411

₹601

₹438

₹502

₹468

₹675

₹483

₹755

₹536

₹813

₹600

₹652₹646

₹923

₹765

₹1091

USD 3.9

USD 17,2

Between its least expensive to most expensive vehicles across models, MSIL has a product at approximately every INR 50K (~USD 789) interval

INR 50K = USD 789 INR 100K = USD 1,577 INR 247,715 = USD 3,907 INR 1,091,128 = USD 17,210

Note: All trademarks, icons & logos are acknowledged as the property of their respective owners; Source: Maruti Suzuki Website, Other online publications; Note: The prices mentioned in the chart above are ex-showroom prices in Mumbai (India) as at 10h July 2015; Exchange Rate of 1USD = INR 63.3994 has been used

Note: All figures in the chart are in 000s. Price range indicates the prices for base &top-end variants. Numbers in the bar indicates the # of variants

Maruti Suzuki India Limited: Pricing Strategy

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The Company understood that Indian customers like to see a big network of service outlets

It takes 1-2 interactions with sales outlets but customer interacts with the service outlets throughout the lifetime of the vehicle

MSIL has created an unmatched sales & service network. The company focuses a great deal on service & support

Maruti Suzuki: Distribution and Service Strategy

Geographical Reach (cities) Sales & Service Network (outlets)

Sales Service0

500

1,000

1,500

1,097

1,454

Only for India Only for India

Sales Service0

800

1,600

2,400

3,200

1,421

3,060

3,060 Service Outlets 40K+ vehicles serviced per day33,000+ Service Professionals

Maruti Suzuki India Limited: Sales and Service Network

Source: Maruti Suzuki Website, Annual Reports and Management Presentations; Note: All trademarks, icons & logos are acknowledged as the property of their respective owners;

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Sensing the demand of the Indian market, MSIL’s communication focused upon service and reliability for a long period

Maruti Suzuki: Focus of Communication (over the years)

1983-1997

1983 201520102005200019951990

1998-2007 2008-Present

Service & Support

Convenience

Product Features

Reliability

Celebrity Endorsements

Youthful & Sporty

Product Features

The Company has changed its communication strategy and logo as now, being trustworthy is a hygiene factor and no longer a USP1. Customers are becoming less brand loyal and more brand conscious

Maruti Suzuki India Limited: Communication Strategy

Source: F&S Analysis; Note: All trademarks, icons & logos are acknowledged as the property of their respective owners; 1. Unique Selling Proposition

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Table of Contents

Section Slide

A. Maruti Suzuki Case Study

A1. History 03

A2. Product Strategy 04

A3. Pricing Strategy 05

A4. Distribution and Service Strategy 06

A5. Communications Strategy 07

B. Key Conclusions 09

C. Relevant Offerings from Frost & Sullivan (F&S) 11

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All through, MSIL has been extremely effective with its product, pricing, distribution & service and communications strategies…

Maruti Suzuki: What has it done well and how?

Strong Product Strategy

Robust Distribution & Service Strategy

Effective Pricing Strategy

Impactful Communications

Strategy

Maruti Suzuki has understood the customers’ needs and psyche and has accordingly formulated & implemented robust strategies

Maruti Suzuki India Limited: What has it done well and how?

Looking at the price-sensitive market, launched primarily hatchbacks Never lost the grip on A,B & C Segments; ensured regular model launches

Indian market is price-sensitive MSIL ensured that they meet the demand of customers of each price band

Indian customers like to see a big network of service outlets Network is in-sync with the psyche /expectations of customers

The Company has given the right messages It evolved the focus of the communications as per the changing needs

Source: F&S Analysis;

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…and it has helped the company in retaining the market leader position in the passenger car market

Maruti Suzuki: Market Share (Passenger Car Market)

1985 1990 1995 2000 2005 2010 2014

Maruti Suzuki Competitors

80%* 66% 76% 60%* 46% 52%48%*

Source: F&S Analysis; Society of Indian Automobile Manufacturers (SIAM), ‘The Maruti Story’ by RC Bhargava; * F&S Estimates

Market Position/Rank

A commanding market share of 52% in the passenger car market is rare India took the liberalization path and foreign competitors poured in. Yet, MSIL remained No. 1

Maruti Suzuki India Limited: Market Share (Passenger Car Market)

The key learning from the Maruti Suzuki story is to ‘UNDERSTAND WHAT CUSTOMERS WANT’

Note: The historical market shares have been taken from various websites, journals, publications and industry sources. These are approximate figures

1 1 1 1 1 1 1

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Table of Contents

Section Slide

A. Maruti Suzuki Case Study

A1. History 03

A2. Product Strategy 04

A3. Pricing Strategy 05

A4. Distribution and Service Strategy 06

A5. Communications Strategy 07

B. Key Conclusions 09

C. Relevant Offerings from Frost & Sullivan (F&S) 11

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F&S offers a customized study titled, ‘Understand the New Car Buyer’, which uses qualitative and quantitative approaches

Understand the New Car Buyer: Description and Approach

Qualitative Immersion And Ethnography Quantitative Survey

Understanding the Motivations & Concerns Of The New Car Buyer

Understanding What Makes The New Car Buyer Tick – What Are The Moments Of Truth

Measuring The Needs, The Purchase Process, And The Choice Drivers

Profiling The New Car Buyers – Demographic and Psychographic

1 2

Car Purchase Journey and Decision-Making Process

Key Parameters for Selection and Importance of each Parameter

Brand Perception

Effectiveness of Marketing Channels & Role of Social Media

Influence of Sales Personnel

Best Practices

Understanding the New Car

Buyer

Source: F&S Analysis; Note: All trademarks, icons & logos are acknowledged as the property of their respective owners;

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Research Team

Animesh KumarAssociate DirectorAutomotive & Transportation Practice

(60) 3620 45818animesh.kumar@frost.com

Lead Analyst & Research Manager

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