It was not quite the call that Kenichi Ayukawa, managing director and CEO of Maruti Suzuki India Ltd, had expected on a Sunday afternoon.
Subros Ltd, one of Maruti’s component suppliers in which Suzuki Motor Corp (Maruti’s Japanese parent) holds a 13% stake, was up in flames. To put things into perspective, Subros supplies 60% to 65% of the air conditioners in Maruti cars.
When Ayukawa reached Subros’ plant at Manesar in Haryana at around 6pm on May 23, parts of the factory were still burning. Next day Maruti stopped production of its vehicles. Ayukawa started working from the Subros plant, held meetings with the management, and got the factory up and running.
“It could have taken three months to start the plant… we did it in two weeks,” recalls Ayukawa. He calls it the “improving quality of business”, an important step in improving the quality of products, by having more discussions between the management, employees and vendors, and implementing their ideas.
The long-term goal is to get to the target of selling two million cars annually by 2020. India’s car sales are expected to touch five million by then.
The fire at Subros was not Maruti’s first brush with challenges. In 2011-12, when labour strikes halted production, Maruti’s marketshare dropped to 38.3%.
Cut to 2015-16. Maruti’s marketshare is 46.7%. Nearest rival Hyundai is at 17.3%.
It all began in 1983, when the company sold the Maruti 800 – a car that was meant for narrow Japanese streets, but which became the symbol of India’s growing middle-class.
Since the last two years, from being a small carmaker, Maruti has entered new segments. Its current portfolio includes a premium compact car (Baleno), a premium crossover (S Cross), a mid-size sedan (Ciaz), and a compact SUV (Brezza). It also plans to launch a new version of the Swift, a car that has been around for over a decade. Then there is Ignis, the compact crossover expected to have a four-wheel-drive technology. The company is the leader in most segments.
Baleno and Brezza sell 20,000 units a month together. But that’s not the only reason why Maruti should be pleased. Baleno, launched in October last year, has an eight to nine-month waiting period. Older models, including Swift and Dzire, have up to four-month waiting period.
The compact segment, which contributes over 40% to passenger vehicles sales, has 12 carmakers with double the number of models, vying for customers.
So Ayukawa is looking at more launches. There are 15 more models in the pipeline. “All these are not new models, but full model changes as well.”
And considering that Suzuki wants a model change every six years, Maruti will have one of the youngest fleet in the country.
“Buyers are shifting from mini to compact cars, and Maruti is leading that change. Its average selling price is going up… It was a laggard in technology and design, but Baleno and Brezza matches global standards,” says Anil Sharma, analyst at IHS World Markets Automotive. The Baleno comes with a plastic fuel tank (others have it in metal), which reduces the weight of the car, and increases fuel efficiency.
For Ayukawa, the worldwide web is driving a major portion of the change. An aspiring Indian now wants the same features in his car, which are available in the US or the UK.
Even entry-level cars, including the Alto and the WagonR, will go through full-body changes, and have more features in technology and safety.
It’s not just a product blitzkrieg, Maruti is also adding new capacity. Its Gujarat plant will be operational next year, and will produce 2,50,000 cars in the first phase. Once fully up and running, the plant will make 7,50,000 cars. It is adding small outlets to boost sales in villages, which contribute to 30% of its volumes.
And with Suzuki struggling globally, a successful stint in India is the need of the hour for the company. “For Suzuki, India is the centre of the entire global market,” says London-based Deepesh Rathore, co-founder of Emerging Markets Automotive Advisors.
Ayukawa wants to refresh some parts of Maruti’s 30-year old history. But he has not forgotten the labour strike of 2011-12. He meets the union once in a week. They don’t understand each other’s language – they speak in Hindi and Ayukawa in English. “But looking at their face I understand what they want to say. That’s being human.”