Maruti rings down curtain on Baleno

India's largest car maker Maruti Udyog is slamming brakes on its upper-end mid-sized car Baleno. The company is discontinuing production of Baleno to make way for its new premium segment car — code-named YY4 — which is slated to hit the Indian roads by April next year.

Sources close to the development said Maruti — which has closed its plant for the annual maintenance shutdown — is not expected to restart production of Baleno when the plant reopens in the first week of January. "There are some limited stocks left with the dealers and efforts are underway to clear this inventory," a source said.

Company officials were not available for comments despite repeated attempts. Meanwhile, sources said the decision to discontinue Baleno was taken in view of the pending roll-out of the new sedan, which will be the costliest made-in-India Maruti Suzuki car till date. This new vehicle — which will be pitted against the Chevrolet Optra and Toyota Corolla in the premium mid-size car market — is being build from scratch by Maruti and Suzuki engineers.

Though the firm is yet to finalise brand name for this new vehicle, sources said there has been a line of thinking within Maruti to do a Zen encore and use Baleno badge for the new mid-sized car too. "However, there are some others who feel that the Baleno badge should be laid to rest and not used on the new car given the brand's not-so-inspiring performance in the Indian car bazaar," a source said.

Baleno was first introduced as a premium segment car, sporting a tag of close to Rs 8 lakh. However, the car failed to attract much demand and the company later slashed its tag to around Rs 5.6 lakh — a move that resurrected the brand in the domestic market.

This would be the third model being discontinued by the company after the original Zen (and the Zen Classic) and the Alto VXi (sporting a 1.1-litre engine). The new car — with a nearly Rs 8-9 lakh price tag — will be positioned in the fast-growing premium sedan market, which has witnessed an 80% growth in 2005, outpacing all other segments. "The car is being developed on an all-new platform and is being engineered from scratch by a team of Indian and Japanese engineers. This will mark a big image change for Maruti, which has till now been identified as being a small car maker," a source said.

Maruti wants more rail space to ferry vehicles

Auto major Maruti Udyog (MUL) has approached Indian Railways for allotting more rakes to transport its vehicles across the country.

Shifting its focus from road to rail, Maruti has demanded 30 rakes per month from existing eight per month. This will enable Maruti to enhance car transportation capacity from 1,000 vehicles per month to 4,000 vehicles per month by rail.

“Maruti has estimated a sharp rise in car sales in the next fiscal. Hence, the requirement for transporting cars from plant to all parts of the country,” a government source said.

“Timely supply of rakes is an important issue, which we are trying to address in the forthcoming Rail Budget. Also, we are looking at offering rebate on freight wagons. The rebate can be extended to up to 15%,” an official in the Rail Bhawan said. Currently, only 10% rebate is offered for such guaranteed rakes.

Railways is also planning to offer additional two rakes per month on a guaranteed basis, but there would be no freight rebate on these additional rakes.

Suzuki and Maruti will export 2 lakh cars per year from the latter half of 2008. It is also learnt that Suzuki chairman O Suzuki, while on a visit to India, had requested the government for improving rail infrastructure from plant to port, as export of 2 lakh units need seamless infrastructure facility. Mr Suzuki had also indicated upgradation of existing ports and development of new ports.

Suzuki will produce a brand new car in A-segment at the Manesar (near Gurgaon at the outskirts of Delhi) plant of Maruti Udyog and will supply 50,000 cars to Nissan. In addition, the company will produce another one lakh cars of the same model for exports to Europe.

Chevrolet Aveo U-VA to take on Maruti Swift

US based General Motors has launched an attack on India’s dominating automaker Maruti by launching their latest product Chevrolet Aveo U-VA.

Chevrolet Aveo U-VA would take on Maruti Suzuki Swift and the base model of the car is priced at exactly the same price of the Swift LXI model at Rs. 3.99 lakh.

The other cars in the segment include Hyundai Getz, Tata Indica and Fiat Palio.

Maruti has been quite successful with Swift in India as it dominates this segment in India. They sell around 5000 units of Swift per month compared to just around 1,300 units of Hyundai Getz.

GM is benefiting from the government’s policy of low taxes on cars with up to 1.2 liter engine. Swift has a larger engine thus could not gain tax concessions on this ground.

GM is aiming at sales of 20,000 units of this car per year. Rajeev Chaba, president and managing director, General Motors India added on this: "We will not launch the diesel variant of U-VA until the end of the next calendar year."

Government to exit from MUL

The United Progressive Alliance Government on Thursday went into overdrive, ostensibly to kick-start some earlier proposals — residual stake sale in Maruti Udyog Limited and amendment of insurance laws, including a hike in the FDI cap — which were put on the back burner, mainly for lack of consensus in the wake of stiff opposition from its Left allies.

The Cabinet Committee on Economic Affairs (CCEA), at its meeting here, cleared the proposal for the Government's exit from Maruti by selling its 10.27 per cent residual stake in the joint venture with Suzuki Motors of Japan. The stake sale, at current prices, is likely to fetch the Government about Rs. 2,700 crore. Currently, Suzuki has the majority stake of 54.2 per cent in Maruti, which commands more than 50 per cent share of the domestic passenger car market. The sell-off of the Government's stake will imply offloading the remaining 2,96,79,689 shares (as on September 30, 2006) to public financial institutions, private sector banks and domestic mutual funds. For selling the stake, the Government is likely to come out with a floor price over which bids are to be invited. Finance Minister P. Chidambaram, however, refused to indicate when the shares would actually be sold. "Significant money can be raised through the sale which can be this fiscal, may be next fiscal... depends on the market condition. The call is mine," he told a briefing. The proceeds from the sale would not go to the National Investment Fund. "Strictly no, as this not a disinvestment of a public sector undertaking."

The decision completes the gradual withdrawal by the Government from Maruti. In June 2003, it sold a 27.5 per cent stake in the auto major to the public at Rs. 125 a share to mop up Rs. 993 crore.

On the insurance front, the Cabinet took up for discussion the hike in FDI cap from 26 to 49 per cent, which was part of the comprehensive amendments proposed earlier, and referred the issue to a Group of Ministers (GoM).

Mr. Chidambaram was confident that the GoM would not take more than two sittings to give its views. "It should not take much time since already, [the] K.P. Narasimhan Committee's report is there, views of [the] Law Ministry are there.''

The changes proposed pertain to amendments in the Insurance Act of 1999, the LIC Act, 1956 and the IRDA Act, 1999, among others. The UPA Government the proposed a hike in the FDI limit in its maiden budget in 2004-05. However, no decision could be taken in view of the Left opposition.

Maruti Udyog: A godsend for Suzuki and India

As the Indian government looks to shed its final 10 per cent stake in Maruti Udyog Ltd, few will recall the fortuitous chain of events that got the automaker up and running a quarter-century ago.

Back then, India was an automobile backwater where annual car sales, mainly of British knock-offs, were below 40,000--or one car for every 14,000 of its 550 million people.

The government had just nationalised Maruti, set up in 1971 as a pet project of Sanjay Gandhi, son of then-Prime Minister Indira Gandhi, to produce an affordable, Made-in-India 'people's car'.

But Maruti needed a foreign partner.

In 1980, a search team dispatched to Europe all but settled on collaboration with Renault. The French firm had already set up in India, and plans to build the Renault 18 sedan with Maruti started to roll. Then, the following year, a handful of technocrats replaced the project team.

R C Bhargava, a core member of that group, says it was quickly decided to drop the Renault 18. Market surveys had shown that Indians wanted low cost and fuel efficiency, and the French model provided neither.

Bhargava's team set off around the globe, scouting companies from Fiat SpA to Fuji Heavy Industries Ltd. There were few takers. Japan's Suzuki Motor Corp was among those that demurred, opening the door for Maruti to start talks with Suzuki's local rival Daihatsu Motor Co.

"It was purely by chance that Suzuki again got involved in this project," recalls Bhargava, an articulate, sharply dressed ex-bureaucrat who still sits on Maruti's board.

It transpired that Suzuki had not meant to give Maruti the brush-off. In early 1982, a Suzuki director in India saw a newspaper article about Maruti's imminent deal with Daihatsu. Alarmed, he phoned headquarters and was told that Maruti's search team had been turned away.

Suzuki telexed Maruti seeking a second chance. Within weeks, Bhargava's team was back in Japan, meeting Chief Executive Osamu Suzuki. Bhargava, Suzuki and V. Krishnamurthy, another core member of the Maruti team, immediately hit it off.

Between the strong personal rapport and Suzuki's suitable product line and cost-consciousness -- Bhargava recalls being shocked at the lack of air-conditioning in Suzuki's offices in Hamamatsu, near Mount Fuji--the team concluded Suzuki was it. A letter of intent was signed in April 1982.

BEATING THE ODDS

Suzuki Motor proved a godsend for Bhargava's team.

Because Osamu Suzuki took a personal interest, decisions were made swiftly. He treated Maruti like one of his own even though the Japanese firm's equity stake was initially only 26 per cent.

"Right from the beginning, everything proceeded very, very smoothly," Bhargava, who became the first head of the reborn Maruti, said. "Mr. Suzuki was a force for that success."

Maruti's demands were far from easy.

The Indian government, which said on Thursday the cabinet had approved the sale of its remaining Maruti stake to banks and financial institutions, wanted production to start in 1983. That gave the partners 20 months to resolve legal issues, draft a licensing agreement and overhaul an idled, rudimentary plant that had been taken over by monkeys.

Suzuki balked, but the team wasted no time. Working late into the night through interpreters, a final joint venture pact was signed at a Delhi hotel on Oct 2, 1982, and the first Maruti 800--an 800cc hatchback based on Suzuki's Alto--rolled off the assembly line at the converted shed in Gurgaon, outside New Delhi shortly before the government's December 1983 deadline.

"The promise Mr Suzuki made, he fulfilled completely," Bhargava, now in his early 70s, remembers.

Suzuki didn't stop there. Insisting on equality in the workplace in a class-conscious society, he ordered open-plan offices, a single canteen and uniforms for executives and assembly-line workers alike.

A BIG BET

The venture worked for both sides.

In the early 1980s, Japanese automakers were preparing to build their first cars in the United States, the world's biggest car market. Suzuki's tiny cars had little chance of competing there, and it needed another battleground.

India was not an obvious target. Few believed demand could even reach 100,000 cars a year--a target the government had set for Maruti--and the economy was heavily regulated.

It looked a big gamble for Suzuki. Its 26 per cent stake, which has since risen to 54.2 per cent--cost nearly as much as its $22 million net unconsolidated earnings that year.

But Maruti was an instant success.

The automaker singlehandedly created a car market that is now one of the fastest-growing in the world. Maruti's production reached 100,000 cars within a few years, and order books were more than full.

Last year, Maruti accounted for half the 1 million cars sold in India, contributing handsomely to Suzuki's bottom line.

Suzuki's stake in Maruti is now worth more than $3 billion.

Maruti ranks highest in customer satisfaction

According to the findings of the 2006 four-wheeler Total Customer Satisfaction study released by leading market information provider, TNS, an international market research firm, Maruti and Honda rank highest in multiple segments owing to higher satisfaction with their overall brand experience.

The 2006 four-wheeler Total Customer Satisfaction (TCS) study conducted by TNS specialist division, TNS Automotive, is the largest syndicated automotive study in India, representing the responses of more than 7,500 new car buyers.

Key areas

This comprehensive study covers over 50 models with customer evaluations taken in the key areas of sales satisfaction, product quality, vehicle performance and design, after-sales service, brand image, and cost-of-ownership.

Index score

The TCS index score provides a measure of satisfaction and loyalty a given model enjoys with its customers.

"Maruti's older models such as 800, Zen, and Esteem continue to lead their segments for total customer satisfaction owing to an enhanced ownership experience," said Pradeep Saxena, senior vice-president of TNS Automotive.

"Maruti continues to maintain high levels of market share and customer commitment by delivering on its promise of peace-of-mind for the new car buyer," Mr. Pradeep Saxena said.

Rankings

Rankings for the TCS study are done at the vehicle segment-level to provide comparisons among similar groups of vehicles.

The models ranking highest in their respective segments for total customer satisfaction are Maruti 800 in "Entry Compact", Maruti Zen in "Premium Compact", Maruti Suzuki Swift in "Upper Premium Compact", Tata Indica Diesel in "Small Car - Diesel", Maruti Esteem Petrol in "Entry Midsize", Honda City in "Midsize", Skoda Octavia in "Premium Midsize", Ford Fiesta Diesel in "Midsize Car - Diesel", Honda Accord in "Entry Luxury", Toyota Innova in "SUV/ MPV", and Honda CRV in "Premium SUV". Tata Indica Diesel continues to top the small car diesel segment.

Indica owners were satisfied most with the brand Image of Tata and the sales experience followed by performance and design.

Delighted

They were delighted by the fact that the sales process went through without anyone putting excessive pressure on them for buying.

It was supported by the Tata brand image of a financially solid company with market leadership.

Ford Fiesta Diesel, a new entrant in the Midsize Car - Diesel segment, ranks the highest overall in this segment and across all satisfaction parameters.

Response

Customer response to Fiesta has been strong with average monthly sales of 2,000 cars.

Customers were especially delighted with the sales experience where they appreciated the dealership atmosphere and the range of financing options available.

In terms of product, their delight emanates from the overall exterior styling.

They also believe that Ford makes exciting cars they are proud to own.

Single point

In the premium midsize segment, Skoda Octavia pips the new Honda Civic by a single point with a strong performance across all satisfaction measures.

Civic owners were extremely satisfied with all aspects of their ownership experience except for their sales experience, where the lack of post purchase contact was a key contributor to their dissatisfaction.

Common strength

Despite losing out to Octavia in the premium midsize segment, Honda leads in three other segments with City, Accord, and CR-V. A common strength for all Honda models is the industry leading satisfaction with Honda's brand image.

"This example clearly shows the growing importance of brand image in creating a satisfying ownership experience," Mr. Pradeep Saxena said.

Maruti to hold its own for model touch-ups

India’s largest car maker Maruti Udyog will increasingly work independently on model upgrades and collaborate with parent company Suzuki Motor on all new model launches.

Maruti intends to launch a new car and two model upgrades every year, which means Maruti’s R&D team will work independently on the facelifts and collaborate with Suzuki on designing and developing new models right from scratch.

This follows a recent communication from its Japanese parent to step up its local R&D efforts. “We received a message from Suzuki saying Maruti should ‘grow up’ and help Suzuki’s other global subsidiaries.

Suzuki says it is short of manpower in Japan and it has to divide its attention between Hungary, China and India. They are pushing us to do our own work now as making major changes in cars is a time-consuming process,” said Mr Jagdish Khattar, MD, Maruti Udyog.

About 20-30 Indian engineers had worked with their Japanese counterparts for two years to help design the Swift, a hatch-back car and make it suitable for Indian conditions. Maruti is expected to play an incremental role in all future product launches, said Mr Khattar.

Maruti has budgeted around 4% of its turnover for R&D and is setting aside a major portion of land at its new Manesar facility for a test track. Suzuki is investing in training Indian engineers, who spend two to three years in Japan learning the ropes.

What started with a chance meeting between Mr Khattar and the senior MD(Engineering) of Suzuki Motor (SMC) on the stairway in Suzuki’s headquarters six years ago has grown into a fairly large operation today with three divisions employing over 250 engineers.

Nearly 90 of these engineers have been trained in Japan by SMC and Suzuki has committed to extending further help by stationing four senior engineers from Japan in India to train and guide the team here.

Maruti kicked off its R&D operations six years ago and its first baby was the Zen facelift in 2003-end. This was followed by the Esteem facelift and the Swift collaboration.

When the Zen Estilo was unveiled earlier this month, the R&D team at Maruti Udyog had much to celebrate as the new car came fitted with over 91% of local components. This is considerably higher than the indigenisation on cars launched by any of Suzuki’s other subsidiaries, usually around 60-65%, and helped Maruti keep the cost of the car competitive.

There are speculations that the R&D team at Maruti may be slowly inching towards an indigenously designed car. “ Suzuki is not in a hurry and neither are we. At the end of the day in terms of quality, safety emission etc we have not reached the top level. Suzuki has to step in there and revalidate our efforts,” said Mr Khattar.

Maruti's Esteem, Baleno gear up for makeover

After Zen, it is time for Esteem and Baleno to undergo a makeover. Sources said Maruti Udyog will roll out two new sedans with a price tag of Rs 5 lakh and Rs 9 lakh next year.

While the sedan with lower price tag will replace Esteem, that carrying higher sticker price will edge out Baleno, MUL’s jinxed offering in the luxury segment.

Ahead of that, MUL will introduce the diesel variant of Swift next February-March. The diesel plant that is under construction, will cater exclusively to Swift.

While most of it will be used in domestic market, the rest are likely to be shipped to Suzuki’s Hungary plant where Swift is manufactured for EU markets.

While a huge chunk of customers are awaiting Swift with diesel powertrain, those who currently own Esteem, Baleno or other mid-sized cars are looking forward to MUL’s serious foray into sedan segment.

"Despite the runaway success of Esteen, sedan segment has been the biggest chink in MUL armour. Parent company Suzuki Motor provided MUL a huge portfolio of small cars to choose from. But sedans were not its strength. The new cars will help address the gap," a source said.

In 2008, MUL will launch a new compact car for exports. "A major chunk of cars exported last year was to EU. This year, all 42,000 cars are bound for non-European countries in South Asia, Africa and Latin America," Mayank Pareek of MUL said.

MUL eyes emerging mkts for exports

Maruti Udyog Ltd (MUL) is betting big on emerging markets like Egypt, Algeria, Jordan, Chile, Morocco, Sudan, Sri Lanka and Nepal for future exports.

Talking to newspersons here on Thursday, Mr Mayank Pareek, chief general manager (marketing) at MUL said: “Maruti has entered markets like Egypt, Algeria, Sudan, Morocco and Chile and witnessed sizeable growth. We are also exploring the Venezuela and Argentina markets. Our focus will be on Far East, South Africa and Latin America."

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. Our exports to Europe is nil this fiscal as Suzuki Motor Corp (SMC), through its new facility in Hungary, is supplying cars to the European markets," Mr Pareek said. Japan’s Suzuki Motor holds 54.21% in MUL.

"In countries like Alegria, Morocco and Chile, MUL is witnessing a huge growth. In 2002-03, MUL exported only 780 units to Alegria. But in the current fiscal, we hope to achieve an export figure of 9,800 units in Algeria. Similarly, in countries like Chile we expect to export 5,900 cars compared to 700 in 2002-03. The maximum growth has come from Morocco where we expect to export of 2,300 cars compared to 100 cars in 2005-06," he added. Popular models in the non-European countries are Maruti 800, Alto, Omni and WagonR.

However, MUL plans to yet again enter Europe in 2008-09 with a new car. "This car will be manufactured at our Indian facility purely for the European market. It will not be sold in India," said Mr Pareek.

MUL on Thursday launched Zen Estilo in the city. Earlier, it had withdrawn the first generation Zen from the Indian market this June. While unveiling the car, Mr Pareek said: "This is a lifetsyle car which comes with a bigger engine (1061 cc), offers more boot space and superior air-conditioning. We will not export this car right now. We will watch its acceptability in the domestic market and then take a call on exports."

Maruti to export Zen Estilo to South East Asian markets

Maruti Suzuki is the largest automobile maker in the Indian market and they have just launched their Zen Estilo model here in the domestic market.

The company added that after fulfilling the initial domestic demand they would start exporting this car to the South East Asian markets.

Maruti Udyog Ltd managing director Jagdish Khattar said in a statement on their plans: “We have a plan wherein we will initially sell the product in India and master it. After that we will look at exports in the next year.”

Estilo is being made as a right hand model in India thus exports would be limited to markets where these models could be sold.

Khattar added: “We are working with Suzuki on the South African market and plan to enter it next year.”

The company has priced the Zen Estilo in India between Rs 3,30,440 and Rs 3,89,783.

Source: http://business.techwhack.com/1514/maruti-to-export-zen-estilo/