Maruti Suzuki Company

Maruti Suzuki: An Introduction

Maruti Suzuki India Limited, an Indian automobile manufacturer, was formerly known as Maruti Udyog Limited, and its headquarter is based in New Delhi, India. Maruti Suzuki was a Government of India-owned automobile manufacturer (until 2003) which was founded in the year 1981, and in 2003, it was sold to Suzuki Motors Corporation, which is a popular Japanese Automaker. The company has a market share of more than 44% in the passenger car market of India, according to the latest data of February 2022.

Maruti Suzuki: History

On Jan 24th, 1981, the Government of India founded Maruti Udyog Limited with the help of Suzuki Motors Corporation (which was a minor partner in the company at that time), only to become the license holder of Suzuki and a formal Joint Venture Partner in the August 2021. The first manufacturing factory or plant of the Maruti Udyog Limited was established in the same year (1981) in Gurugram, Haryana.

Chronological History

Affiliation with Suzuki:

It was the year 1982 when Suzuki Motors Limited of Japan signed a licensed and joint venture agreement with Maruti Udyog Limited, and both of these automaker companies started working together. At first, the Joint Venture of Maruti Suzuki was only acting as an importer of passenger cars. In the first two years of these two joint ventures, Maruti got the right to import Suzuki's two fully built-up passenger cars into India's closed market, and even after these two years, the primary goal of the company (or Government of India) was to use only 33% indigenous part in the cars imported to Indian closed market. But this company's attitude came as a big upset for all local manufacturers. But there were some reasons behind this conservative plan of the company, and the primary reason among them was that there were some concerns for the company regarding the Indian market. Among all these concerns of the company, the primary concern was that the Indian automobile market was too small at the time to absorb the comparatively large production planned by the Joint venture in its initial days. These concerns were also visible to the Government of India, and they were also planning to come out of this problem as soon as possible so that they could regain the confidence of local manufacturers.

To come out of such a tricky situation, the Government of India is planning to lower the excise duty and consider adjusting the taxes levied on Petrol. When the Indian Government finally lowered excise duty and adjusted taxes levied on petrol, the domestic manufacturers started gaining confidence, and it became a turning point in the Indian automobile market. As the domestic automobile manufacturers gained more confidence from the Indian government, the local production of Maruti Suzuki also started in 1993. The first Maruti Suzuki car that was manufactured domestically was the SS30/SS40 Suzuki Fronte/Alto, which was based on Maruti 800, and with the production of this model, Maruti Suzuki also entered the local manufacturing business. The next model of the company under the domestic manufacturing segment was Maruti Van, and it was released in 1984 & had the same three-cylinder engine model as in Maruti 800. Since the domestic production of Maruti Suzuki was increasing, the company was focusing on increasing the capacity of its domestic manufacturing plants. In the same year when Maruti Van was launched, the company's production and installation capacity of the Gurgaon plant reached more than 40,000 units.

Again, in the next year (1985), Maruti Gypsy, based on Suzuki SJ410 and a 970 cc 4WD off-road vehicle engine, was launched by the company in the Indian automobile market. The brand new 796 cc hatchback engine model replaced the classic 800cc engine model of the company in 1986. This new engine model was first installed in Maruti Suzuki Alto (SS80) model, which was also launched in the same year. When the company launched its brand new 796 cc hatchback engine, it also unveiled that it had achieved the milestone of manufacturing the 100,000th vehicle. Maruti Suzuki also started to export its manufactured cars to western countries in 1987, and Hungary was the first country where the company exported its cars. More than 500 cars manufactured by Maruti Suzuki were exported to Hungary in 1987 itself. The capacity of the domestic plants of the company was increasing continuously, and it reached more than 1 lakh units for the Gurgaon plant of the company by the end of 1988.

Market Liberalisation

After gaining higher capacity in its domestic plants, Maruti Suzuki started launching the new car as well as engine models both in the local and international markets. The company launched its newest 970-cc engine model, which was India's first contemporary sedan, and Maruti 1000 in early 1989. The company's domestic production increased gradually, and it resulted that 65 percent of the components of all the vehicles produced by the company were indigenized by the end of 1991. As the Indian market was opening after liberalization, Suzuki part of the company was planning to increase its stake in the company. To increase its stake in the company, Suzuki had multiple meetings with the Government of India. After a lot of meetings, Suzuki increased its stake in Maruti to 50 percent in a mutual agreement. When this deal was finalized between Suzuki Corporation and the Government of India, it resulted in the company becoming a 50-50 joint venture between the two partners.

Maruti Suzuki started launching new models of engines installed in the cars manufacturing by it, and following are the two most popular engine models launched by the company in the early 1980s:

1. The Zen: This was a 993-cc engine hatchback, and this engine model was launched by the company in 1993.
2. Esteem Sedhab: This was a 1,298-cc powered engine model, and it was launched by the company for the Indian market in 1994.

The production power of the company was also increasing with every passing year, and soon (in 1994 itself), the company produced its one-millionth vehicle since the commencement of production. With the increasing demand for Maruti Suzuki cars in the Indian market, the company was looking to install its second domestic manufacturing plant so that it could fulfill the demands of Indian consumers. Following its development plans of increasing its production capacity, the company started its second plant in 1995 with an annual production capacity of 2,00,000 units. In the opening ceremony of its second domestic manufacturing plant, the company also launched a 24-hour emergency on-road vehicle service for its PAN India customers. In 1995, the first change in the design of Maruti Suzuki cars was seen in 1986, when the company launched its newest car model, Maruti 800. In the launch event of Maruti 800, a redesigned Omni, Maruti's first diesel vehicle, and a 1,527-cc diesel hatchback (Zen D) were also introduced by the company. Wagon R, one of the all-time most popular car models of Maruti Suzuki, was launched in 1999 along with the launch of the 1.6-liter Maruti Baleno three-box sedan.

Maruti Suzuki started a call center for the customer as well as internal services in 2000, and it became the first automobile manufacturing company to do so in India. In the following year, the company introduced a new model of its Alto series, and in the same year, the company also launched a platform where customers could buy and sell used cars & named this platform 'Maruti True Value.' After launching its buying and selling platform subsidiary in the Indian market, the company also launched two new models in the market, which are described below:

1. Maruti Versa, which was launched in October 2001,
2. and Maruti Esteem Diesel, which was launched in 2002

In the meanwhile, the company also managed to introduce its two new subsidiaries into the Indian market, and these two company's subsidiaries are listed below:

1. Maruti Insurance Brokers Limited
2. and Maruti Insurance Distributor Services

With the increasing demand for Maruti Suzuki Cars in the Indian market, the Suzuki Corporation part was aiming to increase its stake in the joint venture so that it could earn more profit from this partnership and the Indian market. With this plan, Suzuki Corporation started to look for opportunities where it could purchase more shares of the company so that it could become the major stakeholder in the joint venture. Besides this, Suzuki Corporation, part of the joint venture, also had multiple meetings with the Government of India to describe their proposal to the Indian government. The Indian government at first did not seem interested in the proposal of Suzuki Corporation, but after multiple meetings and proposals of multiple different types of agreements from the Suzuki part in the joint venture, the government finally seemed interested in their proposal. Finally, in 2002, Suzuki Corporation became successful in the ready Indian government to increase stake in the joint venture. And, without any delay, the Suzuki Corporation part increased its stake to more than 53 percent in the joint venture in the very same year.

The popular launched models of the company, the Wagon R & the Zen, were redesigned in 2003, and along with it, the company also introduced the new Suzuki Grand Vitara XL-7. Soon, the company was able to achieve the milestone of manufacturing the four millionth vehicle, and with this milestone, the company entered into a partnership with the biggest bank in India at that time, SBI (State Bank of India). After a public issue, Maruti Udyog Limited was successfully listed on NSE and BSE, and the IPO of the company saw an oversubscribed tenfold, which shows how powerful and popular the company was in the Indian market. After two decades, the legacy of the Maruti 800 as the best-selling car in the Indian automobile market was dethroned by Alto, the newly launched model of the company. A new variant, the Versa 5-seater (the five-seater car model of the company), was created by the company, and along with the introduction of this five-seater variant, Maruti Suzuki also introduced its popular model, Esteem. With an annual sale of more than 472,122 units, Maruti Udyog Limited closed the financial year 2003-04 while recording the highest number of sales made by the company since it was incorporated. The beginning of the next financial year was also a milestone achieving moment for the company as it was able to produce five millionth vehicle in April 2005 itself.

In the upcoming years, the company launched many new models in the Indian market, and some of them went so successful, but some of them were not able to impress domestic consumers because of their limited features or high-end cost. Following are the two most popular car models that were launched by the company during the financial year 2005-06:

1. Recreated the most popular Alto model in early 2006,
2. and the company also introduced the 1.3-liter Suzuki Swift five-door hatchback in late 2005

With the success of the ongoing joint venture, Maruti Suzuki Limited, both company partners were planning to set up another joint venture that would be specifically oriented toward the Indian automobile market. After a lot of planning and developments made between both partners, Maruti Udyog Limited and Suzuki Corporation finally set up another joint venture to build two new manufacturing plants and named this joint venture "Maruti Suzuki Automobiles India." The two new manufacturing plants, which were aimed to build with the incorporation of this new joint venture, were incorporated as soon as this new joint venture started functioning in the Indian market. These two new manufacturing plants were assigned different roles; one for manufacturing of engine of the car and the other for manufacturing vehicles, and these two plants were incorporated to increase the annual production of the company.

With the concerns regarding Air and Noise pollution started spreading over the Indian automobile market, the company introduced the concept of 'Cleaner Cars,' and it soon became one of the all-time major hits of the company. Under this 'cleaner cars' concept, the company was aiming to produce new car models that would produce less air & noise pollution, and that's how it would be able to attract more customers from the Indian market, including environmental activists. Following this strategy, the company started producing new vehicles under this 'cleaner cars' segment, and some of these models were so efficient at that time that they were meeting the new Bharat Stage III emission standards. By the closing of the 2000s decade, the company was becoming the most popular automaker company in the Indian market, and by the year 2014, it had an Indian market share of more than 45%, according to the data released in July 2014.

The company's annual capacity was increasing with every passing year, and in 2015, the company introduced its newest model, Maruti Suzuki Swift Dzire. Along with the introduction of this new model, the company was also able to achieve the milestone of manufacturing the 15 millionth vehicle. When the new rules and regulations for controlling Air pollution, Bharat Stage VI emission standards, were introduced by the Indian government for all the domestic as well as international automobile manufacturers, Maruti Suzuki, on April 25th, 2019, also announced that it would phase out production of their own manufactured diesel cars by the starting of next financial year (April 1st, 2020). The new Bharat Stage Emission Standards were so strict that it forced the company to make a significant investment in its research and development department to upgrade its existing diesel engines to comply with these more stringent standards.

Maruti Suzuki: Manufacturing Facilities

In today's time, Maruti Suzuki is one of the biggest names in the domestic automobile market, and the trust of common people as local suppliers is even bigger in this brand. Maruti Suzuki is famous for delivering to local dealers on or before its promised date, and it always comes up with the cars having all the latest features with pricing according to the Indian budget. To fulfill and stay on the standards set by the company itself, Maruti Suzuki needs to deliver cars to local suppliers in bulk quantities, and for this, the company has set up multiple manufacturing facilities in India. Following are the manufacturing facilities of the company available in the Indian market:

(1) Two Manufacturing Plants in Haryana:

There are two manufacturing plants of Maruti Suzuki available in Haryana, and both of them are present in the Gurgaon district (One in Gurgaon and One in Manesar). Following is a brief description of the manufacturing plants in Haryana:

1. Gurgaon manufacturing plant: This was the first domestic manufacturing plant-incorporated by the company, and it is also known as the main manufacturing plant of Maruti Suzuki.
2. Manesar Manufacturing plant: This manufacturing plant is spread over 600 acres, and it was incorporated by the company in 2007.

(2) Manufacturing Complex in Gujrat:

In Gujrat, the company has one manufacturing complex located in Hansalpur, Ahmedabad, and it was inaugurated by the company in 2017. This Gujrat manufacturing complex is wholly owned by parent company Suzuki, and it also supplies its entire production to the joint venture.

The joint venture has a total annual production capacity of 2,250,000 vehicles annually, from all three plants of the company as described above. Other than these three plants, the company is also planning to open a big plant in IMT Kharkhoda in the Sonipat district of Haryana with an investment of 18000 crores, and it will be covering around 900 acres.