Maruti A Success Story

PRODUCT ANALYSIS OF MARUTI SWIFT

1.0 INTRODUCTION

The case of the latest introduction of Maruti Udyog Limited into the small car segment in India is being analysed in this case study. We have tried to analyse MUL's new introduction "Swift" in terms of its strengths and weaknesses, its closest competitor - Getz, some feedback from a few owners of the vehicle and finally its market status with reference to segmentation, targeting and positioning of the product.

2.0 INDUSTRY OVERVIEW

In recent times, the production of passenger cars in India registered a massive growth of 118 per cent during the 1990s. The de-licensing of auto industry in 1993, however, opened the gates to international automakers into the country with an idea to tap the large population base in India. During the next 10 years, the production achieved an all-time high record, and managed to cross the 500,000 mark in 1999. That was \'Stage I of Auto India Inc\', as some players in the automotive industry have called it. It was the decade of establishing operations, brands, dealers, service networks and field teams.

Year 2001 was fine-tuning for new models, for expansion, signaling the beginning of \'Stage II of Auto India Inc.\' It saw a spate of new vehicle launches as well as controversies, financial troubles, mergers and shutdowns, both in India and worldwide. The mid-size car market has, however, seen a growth rate of 42 per cent, according to Society of Indian Automobile Manufacturers (SIAM).

Today, it seems that India has finally arrived in the big league of Asian car markets. Steady and impressive annual growth rate, presence of international automakers, relaxation of foreign exchange and equity regulations, reduction of tariffs on imports and few others are the components of its booming auto market. The country has now come to be recognized as a potential emerging market. The perception of foreign investors has changed, everybody wanting to be here.

For the first time, in the financial year end in 2005, the total sales of passenger vehicles - cars, utility vehicles and multi-utility vehicles - crossed the one-million mark to touch 1.06 million, with exports of 166,000 vehicles. Study says that by 2010 India will take over Germany in sales volumes and Japan by 2012.

An understanding of the zone-wise sales of passenger cars in the country shows the northern states at the top with over 43.9 percent of the country\'s total car sales in 1998, followed by western states with a share of about 25.3 percent and southern group with nearly 19.5 percent. The eastern states have less than 11.3 percent total car sales in the country.

The car penetration in India is concentrated in a few developed states. The eight states namely Delhi (which accounts 38% of sales in the Northern region and 16.7 percent of nationwide sales), Maharashtra (which accounts 10.3 percent of nationwide sales), Tamilnadu, West Bengal, Gujarat, Kerala, Karnataka and Uttar-Pradesh possessed major portion of cars sales in the country.

2.1 CURRENT SITUATION OF INDUSTRY

In 2002, the Indian government formulated an auto policy that aimed at promoting integrated, phased, enduring and self-sustained growth of the Indian automotive industry.

* It allows automatic approval for foreign equity investment upto 100% in the automotive sector and does not lay down any minimum investment criteria.

* Lays emphasis on R & D activities carried out by companies in India

* Weighted tax deduction of upto 150% for in-house research and R & D activities

* Formulation of an appropriate auto fuel policy to ensure availability of adequate amount of appropriate fuel to meet emission norms

* Confirms the government's intention on harmonising the regulatory standards with the rest of the world

India became the fastest growing car market in the world in 2004, growth rate of 20%. Car sales was 8,82,094 units against