Maruti Suzuki cars expensive by up to Rs 12,000

The New Year has arrived and the automakers in the country are working on plans to raise the prices of their cars to cash in on the boom in the market.

Maruti has announced their plans. The company will increase prices by as much as Rs 12,000 for different models, effective February 1.

Hyundai is also due to announce their price hikes soon.

Jagdish Khattar, managing director, MUL spoke on this price hike announcement: "We have informed all our dealers about the price hike. There has been steep rise in the cost of different raw material like steel and aluminum components. We are transferring a little burden of the rising cost to the customer, while absorbing most of the inputs costs, which have sharply increased in the past few months."

The company would not be increasing the price of their just launched Suzuki Swift Diesel car.

Suzuki to raise 2007 sales 8% on overseas demand - extended

Suzuki Motor Corp., Japan's fourth-largest automaker, plans to raise sales 8% this year as overseas demand for its compact cars rises, will increase production capacity in Hungary.

The company plans to sell 2.35 million vehicles in 2007, compared with 2.17 million last year, Suzuki said in a release today. Domestic vehicle sales including minicars will fall 3% to 675,000, while overseas sales will rise 13% to 1.68 million. Chairman Osamu Suzuki will spend ¥1 trillion ($8.3 billion) for the five years ending March 2010 to expand global production, as models including the SX4 and Swift compact cars attract more buyers. The company may lose its position as Japan's biggest minicar maker in 2007 to Daihatsu Motor Co., as it trims minicar production at home to build more compacts. „It's the right decision for Suzuki to focus on more profitable models,” said Atsushi Kawai, an analyst at Mizuho Investors Securities Co. in Tokyo, who has a „neutral plus” rating on the stock. Global vehicle production will rise 9% to 2.56 million units in 2007. Domestic output will be unchanged at 1.21 million, as Suzuki increases exports 8% to 399,000 vehicles. Overseas production will rise 19% to 1.35 million, surpassing domestic output for the first time. Shares of Suzuki, based in Hamamatsu City southwest of Tokyo, gained 0.6% to close at ¥3,490 on the Tokyo Stock Exchange. Daihatsu shares fell 1.55% to ¥1,206. Domestic minicar sales are expected to fall 4% to 585,000 units in 2007, Suzuki Motor said. Daihatsu, a unit of Toyota Motor Corp., plans to raise minicar sales at home 3.3% to 620,000 units, the company said in December.

Speaking at a press conference in Tokyo today, Osamu Suzuki said he's not worried about Daihatsu replacing Suzuki as the biggest minicar maker as long as his company's total production is growing. The chairman, who turns 77 next week, also said he plans to keep his position „as long as I'm alive.” Industry-wide sales of minicars, powered by engines no larger than 0.66 liters, rose 5.2% in Japan to a record 2.02 million vehicles in 2006, according to the Japan Mini Vehicles Association. Sales may drop 3.1% to 1.96 million this year, the group said. Suzuki, which released two new minicar designs in 2006, had a 30.2% share of Japan's mini-vehicle market last year. Daihatsu, which introduced three new models, had a 29.7% market share. Suzuki plans to open a new plant next year to build only compact cars, in Sagara City, near its head office. The company has been trimming its minicar production in Japan since September.

Suzuki's production in India will probably total 710,000 units in 2007, up 13% from 630,000 units in 2006, the company said. Output will jump 38% to 220,000 units in Hungary and 20% to 120,000 in Pakistan and more than triple to 45,000 in Canada. Suzuki plans to invest over Ft 50 billion at its plant in Hungary to expand output in 2007. The company plans to create about 1,000 jobs. Magyar Suzuki expects to come forward with its next model, the Splash, in the last quarter of 2007. Suzuki Splash will be a successor to Wagon R, built on the chassis of the Swift and providing space for five passengers. Magyar Suzuki employs 4,800 people at its Esztergom plant, while its suppliers employ more than 10,000.

Suzuki Motor plans to revise its five-year business plan in the 12 months starting April 1, as the company will likely meet its sales goal of 3 trillion yen two years early, Osamu Suzuki said. Under the plan, Suzuki will increase production capacity in Hungary to 300,000 vehicles a year in 2008, from 160,000 now. The company builds the Swift and SX4 compact cars at the plant. It also supplies the SX4 to Fiat SpA, Italy's largest manufacturer. In India, production capacity will increase to 960,000 units a year by March 2010. The company owns 54% of Maruti Udyog Ltd., which makes half of all vehicles sold in India. In Pakistan, the carmaker's annual output capacity will rise to 170,000 units by March 2010.

General Motors Corp., the world's largest carmaker, in March 2006 reduced its stake in Suzuki to 3% from 20%, by selling a 17% stake to Suzuki Motor for 230 billion yen. Suzuki said at that time it would hold the 17% stake for a year to give GM the option of buying it back. Osamu Suzuki said today his company may keep the stake longer. „We agreed to keep a good long-term strategic partnership,” he said, referring to a November meeting with GM CEO Rick Wagoner. „So we don't need to stick with the deadline.” GM and Suzuki have partnerships including joint production in Canada and co-development of fuel-cell cars and gasoline-electric hybrid vehicles. GM staff helps set up and run Suzuki's dealerships in the US, Osamu Suzuki said. Suzuki Motor, which will introduce the SX4 in the U.S. this year, plans to increase the number of US dealers to 600 by 2009 from 540, Senior Operating Officer Shinzo Nakanishi said. Detroit-based GM has also sold its stakes in Japanese carmakers Isuzu Motors Ltd. and Fuji Heavy Industries Ltd. as it tries to return its North American operations to profit. (Bloomberg)

Car Wars: Maruti takes on Tata Motors

Stung by Tata Group Chairman Ratan Tata's accusation that competitors were fuelling controversy over its small-car project at Singur in West Bengal, Maruti today dared the Tatas to name the competitor.

"I don't know which competitor he is talking about. Since he has the knowledge, he should tell it," Jagdish Khattar, managing director and CEO, Maruti Udyog, said today.

Asked about Tata's comments last month to a private television channel that he suspected the hands of competitors in the controversy, Khattar said: "We don't do all these things (scuttling a rival's project). We believe in healthy competition."

This is not the first time the two major car makers are invloved in public sparring over the small car, also known as the Rs 1 lakh car, that is scheduled for roll-out in 2008.

Last year, Osamu Suzuki, chief executive of Suzuki Motor Corp, the parent of Maruti, had ridiculed the Tata project, saying it was not feasible and could only be a cheap product.

Suzuki had said in the advent of the planned stricter safety and environment norms, producing such low-cost cars was not possible unless the government made some exceptions.

Tatas had then maintained that they would roll out a good product within the projected price. Ratan Tata said his 'people's car' would not be a cheap three-wheeler with an additional wheel, but would be a proper family car, which could seat four-five passengers.

Subsequent obstacles by way of protests by political parties and civil society groups over acquisition of land for the project prompted Ratan Tata to suspect the involvement of Tata Motors' rivals in the controversy.

Maruti's Manesar unit cannot be an SEZ

Automobile major, Maruti Udyog Ltd (MUL) proposal to convert its car production facility being set up at Manesar, Haryana into a Special Economic Zone (SEZ) may not come through owing to opposition from both Finance and Commerce Ministries.

Sources divulged that MUL’s proposal came up for an intense debate at a meeting of a Committee of Secretaries (COS) convened by Prime Minister’s Principal Secretary T.K.A.Nair on last Wednesday.

Sources divulged that Commerce Secretary Gopal K Pillai is not in favour of Maruti’s proposal to convert the Manesar production unit into an SEZ. Instead, Udyog Bhavan officials have asked the MUL and its parent company, Suzuki Motor Corporation (SMC) to identify an alternative site in any of the multi-product SEZ to set up a production facility meant for export markets.

For automobile manufacturing units, the minimum cover area prescribed for creating an SEZ is 100 hectares.

T.K.A.Nair convened a meeting on the issue after MUL Managing Director Jagdish Khattar made a representation. Khattar’s letter to PMO was a follow up of issues raised by SMC Chairman O. Suzuki during his visit in September last year.

From this facility, the Suzuki and its subsidiary, MUL propose to export 200,000 cars beginning June 2008, it is learnt.

While opposing the MUL proposal to convert the Manesar facility into an SEZ, Commerce Ministry has cited the SEZ Act of 2005 where such conversion is not allowed as it defeats the very purpose of attracting fresh investments, creating additional infrastructure and employment through these zones.

Finance Minister P.Chidambaram is on record saying that conversion of existing units or expansion of prevailing production bases into SEZs would lead to revenue loss in a big way.

While seeking conversion of Manesar facility into an SEZ, the MUL management has requested for allowing domestic sale of cars rolled out from this facility without payment of any import duties.

MUL has taken the position that imposing import duty on cars from the newly carved out SEZ would make their automobiles non-competitive in the domestic market. Currently, import of new cars in finished form attract over 100 percent customs levy.

Commerce Ministry has cited the section 30 of SEZ Act that any goods sold in the domestic tariff area (DTA) will attract full customs duty including the anti-dumping, countervailing and safeguard duties as applicable under Customs Tariff Act of 1975.

However, MUL is its presentation before the PMO, has cited the Free Trade Zone (FTZ) norms applicable in US where domestic sale was allowed on payment of indirect taxes applicable to other local car manufacturers.

Both, Finance and Commerce Ministries are not inclined to allow the domestic sale of cars from the Manesar unit on payment of customs and excise duties as applicable to automobile manufacturers.

Their argument is that it will lead to differential taxation regime as domestic car manufacturers also pay duties and taxes on inputs apart from the final product.

Maruti launches diesel version of Swift

There good news for all who were waiting to buy a diesel run car. There is more in the basket that you can now choose from.

Country’s car major Maruti Udyog Limited, aiming to cash on in growing demand for diesel cars, on Wednesday launched two diesel variants of its premium 'Swift'.

The introductory price of the vehicle is Rs 4.68 lakh for the lower-end and Rs 4.96 lakh for the top-end model.

With this launch, the company is pinning its hopes on the new introduction to carve a big chunk of the diesel segment.

"With the launch of Swift Diesel we are expecting a change in current market shares of different segments of diesel cars," Maruti Udyog Managing Director and CEO Jagdish Khattar was quoted by news agency PTI as saying.

Khattar also said the company would launch two new models in the next fiscal, but did not disclose details.

Swift Diesel is powered by a new generation 1.3-litre engine manufactured by Suzuki Powertrain India Ltd (SPIL) – a joint venture between Suzuki Motor Corp and Maruti Udyog.

It is said to be the smallest 4-cylinder engine fitted in any passenger car in the world.

Compactness of the engine leaders to superior performance and better fuel economy, Khattar was quoted as saying.

This is Maruti's second tryst with diesel engines after its abandoned experiment with Zen and Esteem a few years ago.

The Swift diesel engine is introduced in India within months of its launch in Europe, making it the most contemporary diesel technology.

Khattar said this time the company was prepared to meet the demand and make the product more affordable to customers.

However, he declined to give any targets that the company has set for Swift Diesel, stating, as it was a new product the company would prefer to gauge the customer response.

Maruti steps on the gas for final showdown

This is Jagdish Khattar’s final fight. Before the 64-year old MD of Maruti Suzuki takes a bow this December, he wants to ensure that the largest passenger car maker in India maintains its lead. A decade ago, three out of every four cars sold was a Maruti. Entry of new players in the midnineties and more sophisticated models have eaten into its market share which is now 55%. With the top 15 automobile manufacturers in the world either expanding their presence in the country or in the process of setting up shop, the gap is narrowing. And Khattar is ready to shift into the top gear.

"This is the third phase for Maruti. The first phase for Maruti, between 1983 to 1993, was of dominance, while the second one saw global players enter the market making it competitive. Now that the industry has matured and more are players entering, we see new challenges in this third phase. We aim to make a million units by 2010 and we are gearing up for that," he says.

A second car plant, entry into the fast-growing diesel segment, new models, a revamp of the existing line-up and the stage is set for Maruti to take on the competition.

Beginning with the launch of new Zen Estilo last month, the entire range of Maruti models is set for an overhaul. It has also announced that it will be entering newer segments which include models above Baleno, its top-of-the-line model. The new Baleno and Grand Vitara are expected by mid-2007, while the next generation Alto and Esteem are not far behind. "We are working on a brand new car in Alto segment to be introduced in 2008-09. While the car is primarily for export to Europe, it will also hit Indian roads in due course," he says.

The company had stopped servicing the European market since September 2005, as bulging domestic demand had diverted exports from Europe. Besides, stringent emission norms in Europe would mean the Alto, which leads Maruti’s exports, would have to undergo major changes.

Maruti has increased its exports to non-European countries by more than three times. Three years ago, exports to non-European regions were around 12,000 units. They went up to about 22,000 last year, and this year it will export about 38,000-40,000 cars.

"Once the new model comes and we resume our exports to Europe, we are looking at total exports of over 1,60,000 units," Khattar says.

Hyundai overtakes Maruti on export track

Action is revving up in the auto exports sector. Domestic sector heavyweight Maruti may have established an iron hold on the small car segment in India, but the company is struggling to replicate its success in export markets. In a continuation of the trend that started two fiscals ago, the market leader’s exports have dropped by a third to just over 25,000 between April and December 2006.

On the whole, exports are on the rise. From 129,291 units in 2003-04, export volumes have gone up by 36 per cent to 175,772 units in 2005-06, and are tipped to cross the 2 lakh mark by the end of the current fiscal. But Maruti’s has been a show in contrast.

Arch rivals Hyundai and Tata Motors are having a field run. Hyundai not only overtook Maruti as the biggest exporter of passenger cars in 2004 but has also created a sizeable lead in just two years. The Korean carmaker has exported almost 88,000 units in this fiscal so far and has posted the highest ever exports in a month at 12,288 units in December 2006.

Tata motors, a large exporter of commercial vehicles, has also witnessed a spurt in exports in passenger cars, exporting 11,517 units in the fiscal so far as against just 3,954 units between April and December 2004. In all of this Tata’s market share has gone up from single digits to almost 11 per cent while Hyundai which had a third of the pie two years ago now commands more than half of it.

Maruti’s share has halved between 2003 and 2006. The main reason behind Maruti’s falling fortunes has been Suzuki’s decision to manufacture Swift from Hungary for the European markets. With a prominent exporting block out of the way, Maruti has been exporting Swift to neighbouring and African countries.

However, the scenario may see another slugfest in 2008 when Maruti launches a new small car in collaboration with Nissan. Backed by the new car, Maruti has set an export target of 400,000 units by 2010 which will catapult it back to the numero uno position. But that means a growth of 265 per cent per annum - a feat that industry watchers say is difficult but not impossible.

“Hyundai has utilised India’s market perfectly and has already done what others are now trying to do. With the industry taking exports seriously, and a Tata or a Hyundai car now available at almost all corners of the world Maruti’s target will be that much harder to achieve,” said an industry analyst.

Nissan may build $500 million plant in India

Japanese auto major Nissan Motor is planning a $500 million venture in India, according to a Japanese newspaper. The 2-lakh units per annum plant would start commercial production in 2009. Nissan is reportedly working on an all-new small car for the Indian market, which would sport a 1,000cc engine. Only a third of the production would be marketed in India and the rest would be exported.

Nissan would also bring in some of its major component suppliers to India. Together with the investments by the component manufacturers, total investments in the Nissan venture may cross $800 million – the paper said.

Nissan had last year indicated a manufacturing JV with Suzuki and Maruti, mostly for exports. This plan was later dropped and the company indicated that it may join the Renault-Mahindra JV to build a new 5-lakh units per annum plant. Reports suggest that Nissan may still join the Renault-Mahindra venture, but is considering a new plant of its own as India is a strategic market with very high growth potential.

Renault holds a 44-per cent stake in Nissan while Nissan in turn holds a 15 per cent stake in Renault. Carlos Ghosn, who is credited with turning around Nissan in the late '90s, heads both the companies

While Nissan is considering multiple locations in the East and West coast, Gujarat is believed to be the frontrunner. The company is reportedly looking at a location with port facilities to support exports. General Motors has already started work on a new plant in Gujarat to manufacture its small car, Chevrolet Spark.

Over the last few years, India has emerged as a major manufacturer and exporter of compact cars. Good quality component suppliers with high engineering skills, fast growing send this article to a friend domestic markets and active government support have encouraged global auto companies to look at India as a manufacturing base.

Maruti global sales rise by 23.7% in December

Maruti Udyog has reported a 23.7% year-on-year rise in December sales, to 56,985 units, according to a Press Trust of India (PTI) report. The increase has been attributed to year-end discounts and the advance notice of price rises in January.

Maruti initiates talks with Hazira Port Authority, Suzuki begins due diligence at Kandla

India’s largest car maker Maruti Udyog Ltd and Japanese auto major Suzuki Motor Corporation have separately initiated due diligence to set up a dedicated facility for automobile exports in Hazira and Kandla, respectively.

At a recent meeting held in the Prime Minister’s Office, the shipping ministry informed TKA Nair, principal secretary to the PM, that Suzuki would soon send a team of experts to study the suitability of Tekra (Tuna) in Kandla port as the site to develop a dedicated facility. Maruti has also started discussions with Hazira Port Authority for a similar facility.

According to government officials, an independent team of experts will undertake a comparative study between the Hazira and Kandla ports. A final decision would then be taken on the location of the dedicated facility in consultation with the shipping ministry.

India expects automobile exports to cross 4 lakh units from 2009-10. While Nissan has decided to join Renault and Mahindra to set up a joint production facility in India to manufacture and export 2 lakh units, Suzuki and Maruti are gearing up to export another 2 lakh units to Europe from the latter half of 2008.

Suzuki is producing a brand new car in the A-segment at Maruti’s Manesar plant and will supply 50,000 units to Nissan. This partnership between Suzuki and Nissan remains unchanged despite the latter’s decision to join the Renault and Mahindra joint production scheme in India. In addition, Maruti and Suzuki will produce another 1 lakh cars of the same model for export to Europe. In a letter to the PMO, Maruti managing director Jagdish Khattar said another 50,000 units of other models would also be exported.

“Suzuki and Maruti will export 2 lakh units per annum from the latter half of 2008. This is much higher than what we have exported so far (maximum of 50,000 units),” Khattar wrote, reinforcing the need for a dedicated facility.

The port could be used by other carmakers also, shipping ministry officials said. According to a KPMG estimate, developing such a port required an investment of Rs 1,000 crore.

Small is beautiful

In step with India’s rapid GDP expansion, car sales continue to boom with growth of 22-23% expected this fiscal as against 16% in 2005-06. This explosive sales trajectory has been spearheaded by compacts or small car models such as the Maruti Alto, Swift, Wagon R, Hyundai Santro, Tata Indica, among others. Thanks to this exuberance, India has become the second largest market for small cars outside Japan. Global auto majors, especially the late entrants that have set up belated shop in India, are therefore acutely aware where the Indian market’s real volumes lie that might give them the scale of operations to justify investments in local manufacture.

Many, accordingly, have fast-forwarded their plans for small cars to challenge the dominance of Maruti Udyog, which has an overall market share of over 50%, with its majority owner Suzuki Motor Corporation being one of the world’s few small car specialists. Honda, for example, has started work on its small car project, and plans a second automobile plant to sell over 150,000 compact cars by end-2010. Nissan, too, has unveiled plans for a 200,000-units-a-year plant that will crank out its all-new 1,000-cc small car. Not to be left behind, General Motors plans to build compacts in Pune.

Maruti is obviously aware of the gathering challenge to its dominance. The company is rapidly expanding capacity to remain ahead of rivals on volumes-hoping to produce a million cars by 2010 and retain its current market share, even as the overall market touches two million. By then, it will be making more cars in India than Suzuki does in Japan. Perhaps Maruti’s bigger worry is the possibility of Tata Motors taking away its entry-level monopoly with its proposed Rs 1 lakh wonder. Costs, though, have risen and analysts don’t think the car could be any cheaper than Rs 1.4 lakh, before tax. No less of a serious challenge to Maruti’s current market dominance may emerge in the shape of Daihatsu, the small-car subsidiary of Toyota, the Japanese car-maker that revolutionised the production line and continues to impress management gurus with its yen for both product and process innovation.

New models jack up Maruti’s royalty burden

Maruti’s royalty payout to parent Suzuki has increased sharply on account of new model launches. The market leader’s first half (April-September) royalty payout to Suzuki jumped to Rs 154 crore, up 25% from Rs 123 crore in the first half of last financial year.

Company sources say this increase is primarily on account of “higher sales of newer models Alto, WagonR and Swift.” With the new Zen Estilo rolled out in the third quarter of this fiscal and Swift’s diesel version expected in Q4, the royalty payout should increase some more, say analysts.

The increase in royalty payout was primarily responsible for the sharp rise in other expenditure in the second quarter of this fiscal compared to last year, say analysts. Other expenditure moved up from Rs 264.34 crore last Q2 to Rs 315.23 crore this year. The half yearly tally rose from Rs 462.89 crore last year to Rs 561.99 crore this time round.Maruti’s royalty payment, which is based on net sales, consists of two parts.

The first part is the lump sum fee which varies from model to model and the other part is an annual fee for which the government of India has fixed some norms. According to MD Jagdish Khattar the lump sum fees paid by Maruti to Suzuki “is far less and quite reasonable when compared with other MNC subsidiaries.”

Maruti’s aggressive new product plans going through to 2010 is working around the issue of increasing royalty by using common platforms. Maruti will ultimately have three or four platforms in India, including future launches, to keep development cost and time down. According to Mr Khattar, the company has already saved around 20-25% in product cost in the last five years because of its strategy of commonalisation of platforms across models and countries.

The commonalisation of platforms strategy involves launching multiple models on the same platform. For example the Zen Estilo, WagonR and Alto share a common platform while multiple markets like Japan, China, Hungary and India share the Swift platform. This helps bring down product cost as the amortisation is done over more models and bigger volumes.

Maruti to roll out Vitara's new version in 2007

Car industry leader Maruti Udyog Ltd (MUL) is all set to unveil a diesel engine run Swift as well as an all-new version of sports utility vehicle Vitara in the next three months. The aggressive strategy aims to re-establish its dominating position in the compact car segment.

"With the launch of 1.3 litre diesel Swift and Vitara in the next quarter, Maruti would have unveiled four cars in the past two years. The company has already hit the road with petrol version of Swift and upgraded WagonR," MUL managing director Jagdish Khattar told the Hindustan Times shortly before leaving for Japan with Prime Minster Manmohan Singh.

Suzuki Motor Corporation chairman Osamu Suzuki had committed to introducing five new models in five years during his last visit to India. "We will honour our commitment," Khattar stated.

Though Maruti had witnessed internal churning due to decision to discontinue first generation and adjust production schedule of Alto and WagonR, the company is confident of surpassing its last year performance in the fourth quarter of the current financial year. The company had sold 1.49 lakh cars in the fourth quarter of 2005-06.

"Our diesel plant will roll out cars in the next quarter. With the 1 lakh per annum capacity manufacturing line operational, Maruti will be able to overcome capacity constraints that had often dogged us in the three quarters of the financial year," Maruti managing director stated.

The compact car A-2 segment has posted 27.50 per cent growth between April and October this year with 4,07,912 units being sold compared to 3,19,913 units in the corresponding period last year. As a result, the share of the A-2 segment cars to total sales rose to 63.70 per cent as against 60.60 per cent last year.

However, Maruti has grown less than the industry as it has discontinued the production of the first generation 'Zen'. Maruti sold 2,30,137 units during April-October this year, a growth of 23.50 per cent as against 1,86,035 units in the same period last year. Maruti's share in the A-2 segment in seven months of the financial year is 56.40 per cent.

Maruti foresees a certain distortion in the car market in the fourth quarter of the current fiscal. The company sold 1.45 lakh cars in the last quarter of 2005-06. "There was a drop in car sales in February 2006 due to expectation of an excise duty cut in the Budget. This resulted in a surge in sales in March 2006. As a result, we may even post negative growth in March 2007," Khattar stated.

With Love from Japan

A few years after World War II, in 1949, prime minister Jawaharlal Nehru donated two elephants to the Ueno Zoo in Tokyo. The gesture was soon followed up with massive iron ore exports, that helped Japan rebuild its war-devastated economy.

However, things haven’t been smooth between the two nations as the world moved on. The bilateral relations touched a nadir immediately after Pokharan II in 1998. The only nation that bore the brunt of atomic bombs couldn’t just carry on with another, who, then seemed hell-bent on walking the fission talk.

Well, that was then. Today, Japan Inc is fast rediscovering the potential of the Indian market as it faces an internal slowdown and a looming China. The number of Japanese companies operating in India have increased from 231 in August, 2003 to 328 in January, 2006. Bilateral trade touched $6.8 billion in 2005 and Prime Minister Manmohan Singh’s visit to Tokyo next week, is expected to boost trade ties further and push it to touch $10 billion. Even Indian IT companies are looking at the Japanese market.

Ryoichi Horie, deputy chief of mission of Embassy of Japan in New Delhi, feels that the Japanese presence in India is much more than what is reflected in trade figures. “Many top Japanese companies have manufacturing hubs in Asean countries, but their products are sold in India. It’s more a multilateral business. But now, many Japanese companies are willing to set up their own manufacturing base in India. We are also encouraging exchanges at provincial level too.”

For most Indians, the bond with Japan and Japanese goods has remained fresh. On one hand, it’s the market forces ( read chemistry between Indian and Japanese companies) of Maruti-Suzuki, Hero-Honda and Toyota-Kirloskar, along with the huge spread of household brands like Sony and Fujifilm across the country. Then came Delhi Metro, Buddhist tourist circuits etc. ,which are results of Japanese ODA (Official Development Assistance) worth over Rs 5,000 crore per year.

In fact, India and Japan are in sync with the rhythms of globalisation. The Chinese bogey will help both the Asian countries bond their relations better. Anti-Japanese nationalism is intrinsically linked to political self-expression in China. Just type the words ‘Boycott Japanese products in China,’ in Google — it gives as high as seven lakhs pages!

“It’s not all about strategic or economic relations. Japan and India share common values and ethics. We can’t ignore the fact that both are vibrant democracies in Asia,” says noted defence strategist C Uday Bhaskar.

Diesel Swift soon!

Carmaker Maruti is only two weeks away from entering the diesel passenger car segment; a segment that has captured more than 20% of the market. It will launch the diesel variant of the Swift, with a 75 BHP engine, reports CNBC-TV18.

The engine will be manufactured by Suzuki Powertrain India, in which Maruti holds a 30% stake. The engine manufacturer will also begin exporting diesel engines to Hungary from the middle of the year. By 2010, Maruti will invest Rs 2,500 crore in its diesel plant, which will manufacture 3 lakh cars.

MUL to invest Rs 9,000 cr for upgradation

Maruti Udyog (MUL) is drawing an ambitious investment plan to upgrade its capacities. The capex programme will require Rs 9,000 crore by 2010.

Jagdish Khattar, MD, MUL said, "We will invest in increasing new plant capacity, transmission and diesel plants and upgrade Gurgaon plant."

The diesel and transmission plant will consume Rs 2,500 crore, wherein the engine capacity will be increased from the present one lakh units a year to three lakh units.

The new plant in Manesar will make three lakh cars a year from the present capacity of one lakh cars. The budget for this will be Rs 2,500 crore.

The Gurgaon plant, will get a face lift, which will see Rs 4,000 crore investments. By 2010, when all these are completed, MUL will have a capacity to make a million cars a year. The company can now make six lakh cars a year.

According to auto analysts, the Indian passenger car is expected to touch two million cars a year by then. When MUL launched its new car Zen Estilo in New Delhi, there was one VIP visitor who was not noticed — CEO of Suzuki Pakistan.

"In fact, we have now been asked to assist Suzuki’s operation in Pakistan, Indonesia and a few Latin American markets. We have started knowledge sharing sessions with our counterparts in these countries," Khattar said.

"We are planning to double the service capacity. We have asked our production team to chalk out work-shop strategies to increase throughput at dealer workshops," he added.

Maruti Udyog to enter European market for exports

Maruti Udyog is looking on emerging markets like Egypt, Algeria, Jordan, Chile, Morocco, Sudan, Sri Lanka and Nepal for its future exports.

The company expects to achieve an export figure of 42,000 units in 2006-07 compared to 34,800 cars in the last fiscal, a growth of nearly 21%. These days, MUL exports cars only to non-European countries. However, the company plans to enter Europe in 2008-09 with a new car. This car will be manufactured at its Indian facility purely for the European market.

MUL has recently launched the Zen Estilo. This is a lifetsyle car, which comes with a bigger engine (1061 cc), offers more boot space and superior air-conditioning.

Maruti Udyog Limited (MUL), incorporated in 1983, is India`s largest automobile company. The company is a subsidiary of Suzuki Motor Corporation. The other activities of the company comprise facilitation of pre-owned car sales, fleet management and car financing. It is the market leader in the passenger car segment with a share of 60%.

Suzuki readies to drive Maruti alone

The company's former CMD R C BHARGAVA drives down memory lane as the government plans to sell its remaining stake

The Union Cabinet has approved the sale of its remaining 10 per cent government equity in Maruti Udyog Limited. When implemented, this decision will complete the transition of a 100 per cent government company to a pure private company. This change coincides with the Indian automobile industry having attained international stature and production levels headed for two million in the next four years or so. Export of cars from India are growing and India is likely to be a major producer of compact cars for the global marketplace.

The primary credit for this happy situation goes to the vision of then prime minister Indira Gandhi, who was determined to implement Sanjay Gandhi’s dream of providing Indians with a small affordable car and to modernise the industry. Soon after Sanjay died in 1980, the government established Maruti Udyog Limited. The company was required by an act of Parliament to modernise the Indian automobile industry, and produce large numbers of fuel-efficient cars since this was considered necessary for economic growth. The establishment of a government company to produce cars was a departure from ideological dogma, as cars were treated as luxury goods and available resources were meant to be allocated for higher priority investments. Maruti was also required to form a joint venture, with 40 per cent foreign equity, again a departure from policy as PSUs were all fully owned by the government. This decision to establish Maruti was criticised by many but events have proved that it has enormously benefited Indian industry, the national economy and government finances.

It proved almost impossible to find a partner who was willing to invest 40 per cent equity and who also had cars which could be produced and sold in large numbers. Credit has to be given to O Suzuki, then president and CEO of Suzuki Motor Company, for taking the risk of investing 26 per cent in Maruti, since this project was considered to be highly political, the company was a PSU and the car market was very small. He was confident that he could work with the government and the Indian management. Suzuki took personal interest to ensure that all inputs required for Maruti’s success were provided. We could always approach him directly for help and he was always very supportive. Maruti became very successful, and in 1987, Suzuki exercised its option to increase equity to 40 per cent. Suzuki developed trust and confidence in the Indian management, and also high regard for the IAS. In 1992, when he had the option of nominating the MD, he did not bring in a Japanese person. He also decided to induct Jagdish Khattar, the present MD, into Maruti as a possible successor to me. Not many Japanese companies have shown the same confidence in Indians.

Indira Gandhi greatly facilitated Maruti’s success by ensuring that the company was board-managed, and there was no interference. Her government gave the management of Maruti a free hand to select a partner, purchase plant and machinery, give out major contracts and appoint key personnel. Even after her death, the ministry of heavy industry remained very supportive. Its representatives on the Board, till 1995, had a positive and business-like approach. The finance and other ministries were always helpful. There was total trust between the government and Suzuki. This was why Suzuki, in 1991, asked for its equity to be increased to only to 50 per cent, though the laws permitted higher equity and the government was keen to invite FDI.

The road ahead became bumpy in 1995, three years after Maruti legally ceased to be a PSU, and despite the company continuing to perform outstandingly. The Department of Heavy Industry apparently lost faith in Suzuki and the company’s management. Various proposals, including the introduction of a new engine for the 800 cc car, modernising the paint shop, and deciding the site for further expansion of production, were delayed for many months as the government examined these matters. Even exports were discouraged. This background led to the final breaking point over the appointment of my successor in August 1997. The government chose to nominate a person without consulting Suzuki — which led to Suzuki filing a petition for arbitration against the government. Fortunately, people changed and the dispute was amicably settled.

The consequence was that Suzuki’s equity increased to 54 per cent, there was an IPO and the government equity reduced to 28 per cent. The government further diluted its holding to 10 per cent in 2005. The markets welcomed these moves and Maruti’s share is now priced at 180 times its face value.

The component supply industry both facilitated and benefited from the growth of Maruti. As a policy, Maruti supported vendors in all possible ways, including finding technology partners, giving financial, technical and management support and bringing transparency in its dealings. As a result, the component industry is now world class and highly competitive. It is acquiring companies abroad, and supplying components to many car manufacturers in the world.

Customer care was another plank of Maruti’s approach to modernise the industry. Maruti devotes considerable resources to dealer upgradation and this is reflected in the numerous J D Power awards won by the company.

Success could never have been possible without the support and involvement of all employees. Based on inputs from Suzuki, Maruti changed many PSU practices and introduced systems to create a very productive and mutually beneficial relationship between the company and its workers. Workers understood that their job security and future prosperity was linked to the success of Maruti. Management practiced what they preached and had good communication with workers, thereby building trust with them. Productivity levels comparable with the global automobile industry were achieved, and total employee costs have always been near 2 per cent of the ex-factory price of cars.

It could be argued that this justifies the public sector concept as a means of efficient resource utilisation. However, a big difference was that Maruti was a joint venture and inputs from Suzuki resulted in creating a significantly different work culture. In areas like factory layout and selection of equipment, production and quality control systems, kaizen and suggestion schemes, and the importance of training, Maruti followed Suzuki’s advice with great benefit. Good incentives could be introduced for increasing productivity and accountability was enforced. There was no adverse government interference in the critical growth years. There was much greater stability of management in Maruti because of Suzuki’s continuance as CEO from 1981 till today. Unfortunately, PSUs are unable to have the same operating environment.

Maruti to do a Zen with Baleno

India’s leading automaker Maruti stopped the manufacturing of their popular Zen model earlier this year to launch a totally updated car under the same brand just a couple of weeks back.

Now the company is planning to something similar with their Baleno model which has not been very successful for the company.

Maruti Suzuki has decided that they are now discontinuing production of Baleno to make way for its new premium segment car which is currently code-named YY4.

Maruti is expected to launch this new model in April next year. Market sources had earlier said that the company would be launching the updated version of Baleno in the country.

Maruti just might use the Baleno name on this upcoming car just like they did with the newly launched Zen Estilo model. Or maybe they can bring in a fresh identity considering Baleno was not a very lucky name for this car.