Rain, traffic jam and Maruti2.0

Yesterday when the whole of Delhi came out on the roads for Raksha Bandhan, Rain God decided to join the party. Problem was, as it had been in the past, rain and Delhi roads were, are and will never be bosom buddies who can have a party together. The net result was serpentine queues of vehicles, stuck for hours and impatient people, me included, getting trigger happy in blaring horns and blowing their lids off. Not a good behaviour, I must admit.

Therefore, it won’t be amusing to many to know that the big boss of automobile industry in India — Maruti Suzuki is looking ahead to the next 30 years and is determined to sell 3 million cars a year. By the way last year the company sold 1.16 million cars. Does it mean nearly three times increase in traffic jams? Much more.

Well it’s time to get synced with reality and traffic jams, not only in Delhi, Mumbai or Bangalore but elsewhere in India, are only going to get worse. There are many people like you and me in our country who love to own and drive a car and even greater is the population which is aspiring to have their first car. This is where Maruti and the rest of car companies are playing the game.

As for Maruti Suzuki, due credit must go to it for giving Indians access to modern cars and changing the way we commute. It has understood the need of Indian consumers and delivered products that suit them for 30 years. However, the journey of the next 30 years, described as Maruti2.0 by its Chairman RC Bhargava will not be as easy as the previous three decades.

Many people may think that it is the rivals who are going to give the company a tough time. To an extent yes but the bigger challenger for the company is itself.

Since the economic liberalisation of 90s, most of the global companies — American, European, Japanese and Korean alike have entered India. Just look at where General Motors and Ford are in India after more than a decade and half of existence in India. When Maruti Suzuki sells nearly a 90,000 vehicles a month in India, the next biggest competitor Hyundai sells around 26,000.

First time buyers have been Maruti Suzuki’s sweet spot. In the next three decades, their number will be there but how about those who bought the company’s cars in the previous 30 years? Today many of the company’s small car owners are looking to upgrade and left with no option they have moved to different brands. Honda is a top notch gainer from this with its City sedan. The soon-to-be-launched Ciaz is the apparent answer but will it be enough considering the SX4 experience?

Maruti’s compact sedan Dzire is doing fine but is facing heat from Amaze, again from Honda and Xcent from Hyundai. Add the neat looking compact Figo from Ford in the near future to the mix, the competition is going to be intense. The Ertiga multi-purpose vehicle has done well for itself stabilising sales at around 4,500 units a month but Mobilio from Honda has entered to rock the boat. That’s the competition factor.

The challenge of competition will always be there, as it should be in a free market but to prepare for the next 3 decades, it is time for Maruti to start looking within at first.

Leadership is a key issue for the company. The company has been lucky to have had amazing local leaders like Mr Bhargava himself and former MD Jagdish Khattar, who know the local market in and out. With all due respect to the Japanese top executives, considering how it functions in India, a good representation of local talent in top decision making body is required. As and when Mr Bhargava decides to hang up his boots, who will fill his shoes? An Indian or a Japanese?

How much of a chance do the current crop of Indian senior executives in the company have a chance to make it to the Director level? If they hit the so called glass ceiling, how such talents will be retained for the journey of Maruti2.0?

Apart from it’s first mover advantage, Maruti Suzuki’s strength has been its human resources, specially its sales and aftersales people, the strikes at factory notwithstanding. There are far better products in the market than Maruti’s but they don’t sell at all. Maruti manage to sell even when the market is down. So, who is going to lead these talented people in the journey of the next 3 decades? Can they be kept happy in the organisation and insulated from poaching by rivals?

Also, the Gujarat plant controversy is something the company could have afforded without. How Maruti’s management responds to parent Suzuki’s ‘out of box’ thinking but not necessarily in sync with Indian dynamics will also determine to a large extent how this upgrade to Maruti2.0 version will roll out.

 

 

 

 

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