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MARUTI SUZUKI INDIA: DEFENDING MARKET LEADERSHIP IN THE A-SEGMENT
Jaydeep Mukherjee, Gaurav Mathur and Nikhil Dhar wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.
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Copyright @ 2015, Richard Ivey School of Business Foundation
Version: 2015-12-17
Maruti Suzuki India Ltd. (MSIL), a subsidiary of Suzuki Motor Corporation Japan, had dominated the Indian automotive industry with an unchallenged leadership position in the "A-segment since its inception in 1983. The Indian car market was normally divided into four product categories: hatch, sedan, sport utility vehicle (SUV)/multi- utility vehicle (MUV) and van. The hatch segment could be further divided into entry-hatch, mid-size-hatch and premium-hatch segments. The overall hatch segment was known as the A-segment (see Exhibit 1). Growth of the Indian car market was driven primarily by growth in this segment.
From 2008 to 2013, MSIL's competition had made inroads in the A-segment with cars like the Hyundai Eon, the Hyundai i10, the Tata Nano, the General Motors Beat and the Honda Brio. During this period, MSIL's A-segment market share declined from 61 per cent to 49 per cent. Industry sources estimated that the Indian car market would grow to annual sales of 4.7 million units -- and the A-segment to 2.4 million units - by 2017/18. A continued drop in market share in the A-segment could jeopardize MSIL's competitive advantage in the Indian car market. The company needed to reassess its strategy to sustain its market position (see Exhibit 2).
Among other initiatives planned in March 2013, the MSIL board had sought a product roadmap to sustain its
design, develop, test and produce with a budgeted spend of approximately 26 billion,' apart from associated opportunity costs; hence, it was an important activity for MSIL. The general manager of the product planning department was entrusted with the assignment.
THE INDIAN CAR MARKET
India's total passenger vehicle industry (including passenger cars and commercial vehicles) was the sixth largest in the world, with annual production of more than 3.9 million units in 2011, while the country's passenger car market was the seventh largest in the world, with sales of almost 2.7 million units in 2011. As a car manufacturer, India was
on to exceed the 2 million mark in 2006.2
1 All figures are in & (INR or Indian rupee) unless stated otherwise; 1 = US$0.02 on May 5, 2015. 2 Society of indian`"Automotive Manufacturers, "Industry Performance in 2014-15,""www.siamindia.com/statistics.aspx? mpgid=8&pgidtrail=9, accessed July 30, 2015.
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