Maruti Suzuki

Maruti Suzuki India Limited, formerly known as Maruti Udyog Limited, is an automobile manufacturer in India.^[8] It is a subsidiary of Japanese automobile and motorcycle manufacturer Suzuki.^[7] As of November 2012, it had a market share of 50% of the Indian passenger car markets.^[9] Maruti Suzuki manufactures and sells popular cars such as the Alto, Swift, Zen, Swift DZire, SX4 and Omni.^[10] The company is headquartered at New Delhi.^[2] In February 2012, the company sold its ten millionth vehicle in India.^[11]

History

Logo of Maruti Udyog

Maruti Udyog Limited was established in February 1981, though the actual production commenced only in 1983. It started with the Maruti 800, based on the Suzuki Alto kei car which at the time was the only modern car available in India. Its only competitors were the Hindustan Ambassador and Premier Padmini. Originally, 74% of the company was owned by the Indian government, and 26% by Suzuki of Japan.^[12] As of May 2007, the government of India sold its complete share to Indian financial institutions and no longer has any stake in Maruti Udyog.^[13]

Chronology

Under the Maruti name

In 1970, a private limited company named Maruti technical services private limited (MTSPL) was launched on November 16, 1970. 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.^[14]

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.^[15] 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.^[15] Local production commenced in December 1983.^[11] 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.^[14] 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. The 1.6 litre Maruti Baleno three-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.^[16]

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.^[16] Cleaner cars were also introduced, with several new models meeting the new "Bharat Stage III" standards.^[16] In February 2012, Maruti Suzuki sold its ten millionth vehicle in India.^[11] For the Month of July 2014, it had a Market share of >45 %.^[17]

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 further to 50% in 1992. 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^[18][19]

Manufacturing facilities

Maruti Suzuki has two manufacturing facilities in India.^[20] Both manufacturing facilities have a combined production capacity of 14,50,000 vehicles annually. The Gurgaon manufacturing facility has three fully integrated manufacturing plants and is spread over 300 acres (1.2 km²).^[21] The Gurgaon facilities also manufacture 240,000 K-Series engines annually. The Gurgaon Facilities manufactures the 800, Alto, WagonR, Estilo, Omni, Gypsy, Ertiga, Ritz and Eeco.

The Manesar manufacturing plant was inaugurated in February 2007 and is spread over 600 acres (2.4 km²).^[21] 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.^[22] The Manesar Plant produces the A-star, Swift, Swift DZire, SX4, Ritz 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.^[23] It plans to set up a plant in Gujarat and has acquired 600 acres of land.^[24]

Industrial relations

Since its founding in 1983, Maruti Udyog Limited has experienced problems with its labor 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.^[25][26]

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.^[25][27]

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.^[28][29]

Manesar violence

On 18 July 2012, Maruti's Manesar plant was hit by violence as workers at one of its auto factories attacked supervisors and started a fire that killed a company official and injured 100 managers, including two Japanese expatriates. The violent mob also injured nine policemen.^[30][31] The company's General Manager of Human Resources had both arms and legs broken by his attackers, unable to leave the building that was set ablaze, and was charred to death. The incident is the worst-ever for Suzuki since the company began operations in India in 1983.^[32]

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.^[33][34] According to the Maruti Suzuki Workers Union a supervisor had abused and made discriminatory comments to a low-caste worker.^[35] These claims were denied by the company and the police.^[31] Maruti said the unrest began, not over wage discussions, but after the workers' union demanded the reinstatement of a worker who had been suspended for beating a supervisor.^[32] 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.^[35] Maruti employees currently earn allowances in addition to their base wage.^[36] Company executives denied harsh conditions and claim they hired entry-level workers on contracts and made them permanent as they gained experience. It was also claimed that bouncers were deployed by the company.^[33]

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.^[37][38] Maruti Suzuki in its statement on the unrest,^[39] announced that all work at the Manesar plant has been suspended indefinitely.^[32] The shut down of Manesar plant is leading to a loss of about Rs 75 crore^[40] per day.^[41] 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.^[40] 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.^[42] 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.^[43]

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 went to each victim apologising for the miseries inflicted on them by fellow workers, and in press interview requested the central and Haryana state governments to help stop such ghastly 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.^[44][45]

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.^[46] 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.^[47]

Products and services

Current models

Model	Launched	Category	Image
Omni	1984	Minivan
Gypsy	1985	SUV
WagonR	1999	Hatchback
Swift	2005	Hatchback
Grand Vitara	2007	Mini SUV
DZire	2008	Sedan
Ritz	2009	Hatchback
Eeco	2009	Hatchback
Alto K10	2010	Hatchback
Ertiga	2012	Mini MPV
Alto 800	2012	Hatchback
Stingray	2013	Hatchback
Celerio	2014	Hatchback
Ciaz	2014	Sedan
Baleno	2015	Hatchback
S-Cross	2015	Mini SUV

Discontinued models

Model	Launched	Discontinued	Category	Image
Gypsy E	1985	2000	SUV
1000	1990	2000	Sedan
Zen	1993	2006	Hatchback
Esteem	1994	2008	Sedan
Baleno	1999	2007	Sedan
Versa	2001	2010	Minivan
Grand Vitara XL7	2003	2007	Mini SUV
800	1983	2012	Hatchback
Alto	2000	2012	Hatchback
Zen Estilo	August 2009	2013	Hatchback
A-star	2008	2014	Hatchback

Sales and service network

As of 31 March 2014 Maruti Suzuki has 933 dealerships across 666 towns and cities in all states and union territories of India. It has 3,060 service stations (inclusive of dealer workshops and Maruti Authorised Service Stations) in 1,454 towns and cities throughout India.^[48] It has 30 Express Service Stations on 30 National Highways across 1,436 cities in India.

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.^[49][50]

In the year 2015 maruti suzuki launched a new premium sales channel called NEXA.^[51] Maruti Suzuki India Limited’s Managing Director & CEO, Kenichi Ayukawa said: “NEXA provides a new experience of hospitality from Maruti Suzuki. Indian market and Indian society are rapidly changing and new segments of customers are emerging. We have to take new initiatives to meet diversifying expectations from our customers”.

He added: “The mission of NEXA is to offer innovative value and direction so that we can adequately respond to the new segments of Indian customers and offer them the experience which they value. While we will of course continue to enhance customer satisfaction in our current network, with NEXA, I am confident Maruti Suzuki will be able to cater to a broader range of customers who value pampering, innovation and a personal touch in their car owning experience”.

S-Cross, India’s first premium crossover that debuts in August 2015 will be the first car to be sold under NEXA. 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.^[52]

Maruti Insurance

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^[53]

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.^[54]

Maruti Finance

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.^[55] 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^[56] 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.^[57]

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%.^[58] 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 TrueValue

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 31 March 2010 there are 342 outlets.

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.^[59]

Maruti Accessories

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.^[60]

Maruti Driving School

A Maruti Driving School in Bangalore

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.^[61]

A 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."^[62]

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^[63] and eleventh position in 2014^[64] among the most trusted brands of India.

See also

• Cars in India
• Automobile industry in India

References and notes

External links

Wikimedia Commons has media related to Maruti trucks.

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