Business model of Maruti Suzuki is 2 company merger of auto sector's leading co. with large share of market in selling cars.

What is Business Model of Maruti Suzuki?

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Introduction  –

In developed countries like America, 850 four wheeler are seen for every 1000 people, whereas in China this evidence is seen 200 four wheeler for 1000 people. In India, this proof is found only 30 people have four wheeler out of 1000 people, from this we understand how good the future of four wheeler vehicles in the auto sector is in India. Maruti Udyog Ltd. This company was incorporated in 1981 by the Government of India, which today has become a foreign Indian company through a 56% acquisition of Japanese company Suzuki under disinvestment.

In this case study, in this article, we will try to know the business model of Maruti Suzuki this company, from the history of the company to what is the formula for the success of the company. Maruti 800 was the first model in India which has ruled the Indian four wheeler market for 21 years. We will know about the SUV brand of Maruti Suzuki company from Maruti 800 to today. Today, one Maruti Suzuki car is sold in India for every 2 sold vehicles, so after the globalization, many foreign brands have entered India.

The share of Maruti Suzuki Company is still seen as an important stock in the Indian stock market, in which investing is still a profitable deal. Doing business in the auto sector means investing a lot of capital and investing in technology, so there is not much competition in this sector. That’s why Maruti Suzuki company has continuously tried to know from this article how its product has maintained such a successful brand from the inception of the company till now.

Maruti Suzuki Company Profile  –

  • Company Name – Maruti Suzuki India Limited
  • Business Industry – Auto Sector
  • Company Establishment – 23 /2/ 1981
  • Main Office – New Delhi
  • Company President – RC Bhargava
  • Company CEO – Hisahi Takeuchi
  • Company Services – Automotive Finance , Vehicle Services
  • Net worth of the company – Rs 70,067 crore (2021)
  • Employee Number – 16,025
  • Parent company – Suzuki Motor Corporation (56% company holding)
  • Company’s share price – Rs 8,505
  • The market capital of the company – 2. 56 lakh crores (2022)
  • Famous models of the company – Breeza, Swift, Baleno, Wagner, Ertiga

History of Maruti Suzuki Company –

The company was established in 1981 by the Government of India under the name of Maruti Udyog Limited, in which its management is under the control of the Japanese company after Suzuki Motor Corporation’s increase to 56% stake in 2003. After 1990, the Maruti Udyog is being run under the shareholding of Suzuki under the disinvestment scheme. When this company was first started in 1981, then in partnership with Suzuki company, for the first time in India, it was launched as Maruti 800 in the four wheeler market for the common people of India.

Maruti 800 This model had been in the auto sector as a best seller for 21 years in India and 80% of the four wheeler vehicles were sold by Maruti Suzuki Company. Ambsidor and Padmini Premier This four wheeler was in the Indian market before the establishment of Maruti Udyog, but this vehicle was expensive due to being a luxury brand. That’s why it was a dream for common people to buy four wheelers before Maruti company’s vehicles came in the market. In 1970, this company was registered in the name of Maruti Tax Support Company, which was closed in 1977 by the Janata Party government.

When the Maruti 800 was introduced in India through Maruti Udyog, the lottery system was used to sell its first car. Because more demand was seen in the Indian market than what was being produced by Maruti vehicles. Harpal Singh Namak was the first person to be sold the first Maruti 800 car from the hands of Prime Minister Indira Gandhi which he kept till his last days. Under the leadership of Dr. V Krishnamurthy, starting this company under the name of Maruti Udyog, today it is still the leader car seller company in the Indian market by the name of Maruti Suzuki India Limited.

Business Model of Maruti Suzuki Company  –

In the Indian auto sector, before 1990, 80% of the Maruti company’s car market was available and after opening the Indian market through liberalization, its effect was seen on the sales of Maruti company, but even today one car for every two vehicles sold is Maruti. Suzuki belongs to the company, from this we can guess that the company has worked hard to be its number one from the beginning till date. The company has kept the company connected by creating an eco-system from vehicle sales to spare parts and finance.

This company was established in 1981 by forming the Government of India, which was acquired by Suzuki Company in 2003, but the Indian culture of the company has been kept the same. Good mileage, cheap maintenance and affordable price are the secrets of Maruti Suzuki vehicles. Indian tax laws are such that foreign companies have to spend a lot to produce vehicles according to the Indian market, so that company is not able to compete with Maruti Suzuki Company. Suzuki Motor Corporation is the original Japanese company whose engine technology has been the main driver of this success and the company has employed 1600 engineers for modification and has 12 patents registered.

Starting a new company in the auto sector requires a lot of capital expenditure, so it is very difficult for small companies to enter it and foreign companies find it difficult to compete with the Indian setup of Maruti Suzuki Company. Insurance, finance and maintenance services are provided through the company through 3000 outlets in 1900 cities of India. For the first time in India, Maruti Suzuki was launched by the company for customer care service. Through driving school, the company started attracting its customers for the first time, which has been an important factor in the success of the company.

Share Market & Maruti Suzuki Company 

This largest company in the auto sector of the Indian stock market is considered according to the market capital. Despite this share price being high on the basis of fundamentals in the Indian stock market, this stock will be considered a good investment to invest in this company, considering the future of future electrical vehicles and being the number one company. Suzuki Motor Corporation’s shareholding in the company is 56.37% and FII’s investment is 22.9%, Mutual Fund’s investment in the company is 7.47%. The share price of Maruti Suzuki Company in the stock market today is Rs 8505.

The company’s sales growth has been 7% in the last 10 years and due to the Corona crisis, the company’s production capacity has seen results for the last 2 years. Shortage of Semi-conductor This is the second biggest problem due to which the production of the company has been affected, so the company’s profit has been affected in the last 2 years of the company. Talking about the share price of Maruti Suzuki, negative results have been seen for the last 3 years and the stock has fallen continuously.

For the past few days, the percentage of return on the investment of Maruti Suzuki stock has shown decreasing, which has been seen from 11 percent to less than percent. The market capital of the company is 2.56 lakh crore and the book value price of the company’s share is Rs 1831.75, the face value of the share is Rs 5. The company’s sales have been affected due to rising prices of petrol, shortage of semi-conductors and the crisis of Corona, but looking at the future of electrical vehicles and looking at the past history of the company, the future of the company is still visible from the investment point of view.

Success formula of Maruti Suzuki Company  –

  • 29% tax for 1200 cc engine and 4 meter length car
  • 45% tax for cars with 1200 cc engine and more than 4 meters in length
  • 50% tax for engine capacity above 1200 cc

Due to this criteria, foreign companies have not been able to compete with Maruti Suzuki Company for the last several years. To meet this rule, foreign competing companies like Maruti Suzuki Company will have to build a structure in India. The investment that will have to be made for this, the amount of sales required to bring in profit has not happened in India, and it is not possible for other companies to spend separately for modification. There are some restrictions on the sale of cars in India due to low labor force and still lack of infrastructure.

Therefore, this requirement Maruti Suzuki company is able to recover its expenses due to the dominance of 50% of the sales of the market, but other foreign car companies are not able to do this, this is a plus point for Maruti Suzuki. In future, if there are some changes in the regulation, then its result can be seen in the market. Maruti Suzuki company sells its car by creating an eco system, for which many services like spare parts, driving school, insurance, finance and sale of used vehicles are provided, which is another important factor in the success of the company.

Economical prices, good mileage and low maintenance have been very important in the success of Maruti Suzuki Company. Maruti 800 This vehicle was ruling the market as the best seller vehicle in India for the last 21 years. The main reason for this was the good price and powerful engine which was much better than the luxury expensive vehicles of that time which were not seen in the elite class vehicles like Ambassador and Padmini. Even today, ordinary brands like Swift, Alto are very much liked by the general customers and the sale of vehicles at lower prices than other companies has been the formula for the success of Maruti Suzuki Company.

Maruti Suzuki & Indian Auto Sector  –

Vehicles running on electric batteries have revolutionized the auto sector, making it a challenge for companies dominated by better engine technology. In view of the initiative of the Government of India to make the country pollution free, all petrol in the next 20 years And electric vehicles will replace the vehicles running on diesel. The biggest benefit of which is seen by the Maruti Suzuki company. Maruti Suzuki’s market dominance was once 80% of the vehicles sold which has been gradually decreasing.

The sales of Maruti Suzuki company’s vehicles are more than 50% even today, which will see good sales in the change of electrical vehicles. Because India’s market still has a lot of room to grow in the four wheeler sector. The market has increased further in the change of electrical vehicles and will see very good sales in future. Due to Corona crisis and shortage of semi conductor chip, we are seeing waiting in all auto sector vehicles and its result is being seen on production.

The company has suffered heavy losses due to the shutdown of production for a long time in the lock-down and due to the shortage of the electronic semi-conductor chip involved in the automation of the vehicles, the company will have to make a lot of modifications for the production in the future. Due to which the arrival of electronic vehicles in the market can see a lot of changes in technology, like we saw with the arrival of Android mobile in the year 2000. Therefore, Maruti Suzuki Company will have to work hard on modification to remain number one in the market.

Features of Maruti Suzuki Company  –

  • Maruti 800 through Maruti Udyog Limited This was the company’s first car model, which was the number one model in India for 21 years and was the most sold.
  • The company started in 1970 under the name Maruti Tax Support which was started under the Companies Act which was closed by the Janata Party government in 1977.
  • Indira Gandhi, who was the Prime Minister of India, and Sanjay Gandhi’s dream had started this company, for which technology was needed, for which many foreign companies from Suzuki were proposed for joint venture.
  • In 1983, the first Maruti 800 car was handed over to the salt man Harpal Singh after coming out of the lottery system from the hands of the Prime Minister, which he kept till his last days.
  • Buying a four wheeler in India before the establishment of Maruti Udyog It was only Aamir’s business. It was a perception that car was seen as a luxury product.
  • Ambassador, Padmini and Mahindra Jeep This luxury car was sold in the market at very expensive prices and ordinary people could just dream of buying it.
  • To buy the vehicles of Maruti company, three years of waiting had to be done, in which the production of vehicles was less and the demand for the vehicles was more.
  • When the Maruti 800 was first introduced on the Indian roads in 1983, it was priced at Rs 47,500.
  • The main reason for the success of Maruti Udyog Company was a good eco system, good mileage, powerful engine, and low maintenance Affordable price, due to this reason it is still India’s best seller vehicle.
  • Maruti Alto After bringing this brand in the market, Maruti 800 this model was discontinued.
  • Maruti Suzuki has been able to increase its sales through the ecosystem through services such as driving school, service centre, finance and insurance.
  • Before 1990, in the name of Maruti Udyog Limited Company, the market share in the sales of the company was 80%, which later it is still up to 50%.
  • Since 1981, when the Government of India’s joint venture with Suzuki Motors Corporation, Suzuki has bought a 26% stake in Maruti Industries, which was increased to 56% in 2003, and took control of the company’s management.
  • In the success of Maruti Suzuki company, 1900 engineers were appointed for modification and today the company has 16,025 employees working all over India.
  • Maruti Suzuki Company sold 1652,653 units on 2020-21 and it is 13% from last year. It has been growing at a growth rate of 4%.

Critical Analysis of Maruti Suzuki Company  –

Maruti Suzuki’s Manesar plant in the state of Haryana witnessed a clash between employees and management, in which one officer was killed and several officers were injured and the plant was set on fire. Due to this, there was a lot of financial and reputation damage to the Maruti Suzuki company, due to which the demand for changes in the labor law was raised by the companies. It was the biggest mistake of the company to treat the employees of the company as only profit making.

The employees working on the contract system and the permanent employees saw a lot of difference in their salary and there were cases of exploitation, so in this the company’s flaw became the reason for affecting the production of the company. Maruti Suzuki Company did not pay much attention to its research and development, due to which the company’s sales have been falling continuously since 1990 in the Indian market. When it comes to safety, Maruti Suzuki cars have been seen to have security flaws many times in comparison to foreign vehicles.

The basic problem of customers in India is low income, due to which people want to buy low-cost vehicles, but this trend is slowly changing, for example, the failure of the Tata company’s Nano vehicle which was made an economic vehicle. In India today people see four wheeler as a status symbol. Therefore, Maruti Suzuki Company should make its model the best and produce international class vehicles. Some old laws of India which provide protection to Maruti Suzuki Company will be gradually abolished, which is going to be difficult for the company.

Conclusion –

In this way we have seen how the journey from Maruti Udyog to Maruti Suzuki Limited Company has been for the last fifty years. Although it remained an Indian brand till 2003, it became a foreign company registered in India after Japanese company Suzuki took a 56% stake. Establishing a new company in the auto sector is a very difficult task as it takes a lot of capital and still it takes a lot of time for the company to get established.

Despite being a good foreign brand, we have tried to know through this article how Maruti Suzuki company has kept itself at the number one position. This company was established with the initiative of Indira Gandhi and Sanjay Gandhi, in which the Government of India, by partnering Suzuki Motors Corporation, kept its control over this company till 2003. After 1990, liberal policy was adopted in India through which under disinvestment policy. The government stake was sold partly to the Suzuki company.

Through this article, we have tried to know what is the secret of the success of the company and through the critical analysis of the company, we have tried to find the flaws of the company. Most of the people in India have the impression that Maruti Suzuki is an Indian company but now its management is in the hands of Japanese Suzuki Motors Corporation. Some of the company’s models have been successful in the market even today, but some critics believe that this vehicle has failed to make an attractive design. Hope you like our information, if you have any suggestion then send mail to us. … Thank you

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