How Japan’s Suzuki became India’s Maruti
Osamu Suzuki shares his story of 1982, the year Suzuki Motor Corporation (SMC) took a leap of faith into India with the Maruti joint venture.Updated: Nov 21, 2015 11:09 IST
At this juncture in his life when he should be playing with his grandchildren or going on long cruises, 85-year old Osamu Suzuki is showing no signs of slowing down. He is still the chairman of Suzuki Motor Corporation (SMC) and the longest-serving CEO in the auto industry with 37 years at the helm.
A bundle of energy and with a mind as sharp as a Samurai’s sword, the bushy-browed patriarch over two hours and several cups of green tea (good for his longevity) narrates, for the first time ever, his story on how Maruti really happened.
His elephant-like memory for dates and details make it seem like it was yesterday and not 1982, the year Suzuki took a leap of faith into India with the Maruti joint venture.
A TWIST OF FATE
Unknown to most is the fact that Suzuki’s association with India and the Gandhi family began 13 years earlier, when a little 360cc two-cylinder Suzuki Fronte participating in the 1969 Asia Highway Rally rolled into the Ashoka Hotel in New Delhi.
Osamu Suzuki recalls. “I was not there for the rally personally but the Suzuki team was approached by a rather polished gentleman who requested them to come to the house of his boss, whose sons were very interested in the Suzuki car.
“When the Suzuki team arrived at the house, it turned out to be the official residence of Indira Gandhi, who was then prime minister of India. The Suzuki team was welcomed by Rajiv Gandhi and Sanjay Gandhi. At that time, Sanjay had just come back from the UK and was planning to start a ‘People’s Car’ project in India. Rajiv had a keen interest in cars as well, and so, they both got behind the wheel and took the Fronte SS for a test drive on the streets of New Delhi and came back impressed. Both brothers expressed their intention to enter into technical collaboration with Suzuki and asked the Suzuki team to immediately convey the same to the headquarters in Japan.
“Unfortunately, the situation surrounding Suzuki did not allow us to accept the offer at that time: 1970-1975 were difficult years and we were busy trying to save the company. However, it seems a marvellous bond between India and Suzuki was destined.”
In 1978, Osamu Suzuki became the president of SMC, and it was under his leadership that a new small car was developed – the Alto. This micro car went on to become the staple for the company for decades. “The Alto was very popular in the Japanese domestic market and we grew by leaps and bounds with this particular model. In fact this was the same vehicle we brought to India in the form of the Maruti 800. It gave us confidence to develop new markets overseas, especially since there was an economic crisis in Japan,” Suzuki recalls.
Suzuki’s India story is the stuff fairy tales are made off. It was a matter of chance and a bit of luck, but finally it was Osamu’s doggedness that clinched the deal with Maruti.
“One of our engineers was on his way to Pakistan, where we had established a plant. He had taken an Air India flight in which he read (in India Today magazine) that the government was asking manufacturers to come and make a small car for India. I told the person who brought this article back to Japan to go to the Indian embassy and check if they are still accepting applications for the project, but the Indian embassy declined the application because the time limit was over. So, I told this person that the actual sales process starts when you are turned down! I instructed him to keep visiting the Indian embassy till they accepted our application, which they did on his third visit.”
After several twists and turns that saw sure-shot partners like Volkswagen and Daihatsu back out at the last minute, Suzuki seemed to be the only choice left for Maruti. Besides, Osamu saw India as a potential jackpot that he didn’t want to lose. “You see, India was a big opportunity for SMC which happened to be the smallest auto manufacturer in Japan, ranking 13th. So, I took India as an opportunity to show what we can do overseas and made it my resolution to make this project successful.”
The top management of the newly-formed Maruti Udyog Ltd were novices in car-making. In his first meeting with V Krishnamurthy (chairman) and RC Bhargava, Osamu Suzuki remembers explaining the basics of setting up a car plant. “I met Krishnamurthy and Bhargava at the Imperial Hotel in Tokyo for around three hours, during which they asked me all sorts of questions like what is required to set up a car manufacturing plant, what will be the size and so on. I borrowed a white board and explained everything, after which I requested them to visit our plant.”
Entering an unknown country that had no manufacturing culture or supplier base at the time required guts and an appetite for risk, which the fiery Osamu Suzuki was known for. But was he ever, at any point, afraid?
“I asked Krishnamurthy if he would leave the project to me a 100%, because that was the condition with which I would go ahead. Krishnamurthy said ‘yes’ and entrusted everything to me. Also, (Indira) Gandhi used to trust Krishnamurthy and Bhargava and I told them both I would give my 100% if the project was left to me.
“More than car-making, I showed how to set up a plant, how the management was supposed to be done and the first time I visited India, I also visited the half-finished plant constructed by Sanjay Gandhi.”
Suzuki very quickly established a benchmark for manufacturing efficiency. Besides massive economies of scale, it was Osamu Suzuki’s legendary cost-cutting and frugal ways that made Maruti the most profitable car-maker in India by far.
Suzuki admits that the low-cost, low-margin end of the market that Maruti dominates is a challenge that requires special skills. “The key to making a small car is to make a success of the concept of a minimum standard for cost and quality. In small vehicles, the total value of the car is less and the profit on them is also small. To ensure the base level of quality in the vehicle, you have to get the cost right, specifically for small cars. This is precisely the challenge,” he says.
Did Suzuki’s experience with bikes help? “The two-wheeler experience and even the two-wheeler supplier base definitely came in handy when developing the car,” he admits.
India is second home for Osamu Suzuki. He has a permanent suite in the Maurya Sheraton in Delhi and his favourite restaurant is the Bukhara, where he once donned a chef’s hat to skewer and cook a chicken! So what is it about India that still fascinates him? People, traffic, food?
“All of these! Otherwise, I wouldn’t have visited India over 200 times. When we were establishing ourselves, I would personally check the concrete on my factory floor and everything. I am 85, and I know what Japan was before World War II. Those days, the highway between Osaka and Nagoya was not paved, there were poor people, so for me, I know what hardship people have gone through and when I see poor people in India, I can understand.
“Since we sell more cars in India than in Japan, I have thought about moving our corporate headquarters to India, but my family won’t let me!”
That remark is best taken as in made in jest, because though he has handed over the reins of the company to his eldest son, Toshihiro Suzuki (president and COO), it’s unlikely that anyone is going to tell Osamu Suzuki, who has single-handedly shaped the fortunes of SMC for nearly four decades, what to do.
In partnership with Autocar India