FLANKING AWAY TO GLORY

At a time when auto majors like Tata Motors have been painted in deep red, market leader Maruti Suzuki has been pulling all stops to move ahead SWIFTly

SHASHANK SRIVASTAVA, CGM-MKTG., MSI

Did you know that the design for Maruti Suzuki’s bestseller Swift was initially rejected on grounds of being far too radical? “Even months after it was launched in 2005, Swift wasn’t able to generate desired volumes for us,” avers Shashank Srivastava, Chief General Manager-Marketing, Maruti Suzuki India. Even Maruti’s long standing dealers doubted the potential of this car. They perceived it as ‘made for tech-freaks’ initially.

Today, honchos at Suzuki must be thanking their stars that they stuck with their plans for nurturing the Swift at that time with a carefully selected team of ‘Swift Champions’ to push Swift sales. Not only has the car delivered Maruti from the bane of being known as a small car maker, but the model also cornered about 70% of the market share in the premium A2 segment, adding significantly to the car maker’s bottomline in FY09. “You may not be the first mover in a particular category but catch that place in the consumer mind, the race is half won,” says Srivastava, referring to the fact that even though Hyundai was the first to launch a ‘premium compact’ car in India (Getz), in popular perception Suzuki Swift wears that honour. The launch of Swift DZire in March last year ensured that Suzuki created more than a splash in the sedan segment too during the last fiscal.

But this is not just about Swift. Fact is that Maruti, which sells every second car in the country, has been driving smoothly for a long time now. The key strategy is to create new segments within segments and flank its own offerings. Market watchers believe that it is this strategy that helped the company to smooth sail even during October-December quarter last year when auto sales saw a steep fall. Sure, like other auto majors, the year on year domestic sales growth for Maruti has been minimal, but the auto maker has registered mind boggling net profits of Rs.12.1 billion. While the steep profits were partly helped by its exports that registered a growth of 32% in the last fiscal, the bulk of the credit for beating the slowdown blues goes to the growth generated from clutter breaking models like Swift DZire and A-star. “DZire has eaten on to the sales of SX4 but overall it has expanded our share in the A3 category,” adds Srivastava.

In fact, experts believe that the A-star can be the next iconic product for Maruti Suzuki as the car is successfully positioned as one for the cool young urban consumer. Apart from creating new segments, the company’s expanded reach in India’s hinterlands has also helped it to maintain its profitability. Going forward, Maruti expects the rural contribution to its total sales to go up from the present 11-12% to 19-20% in the current fiscal. And then there is the high level of consumer trust and reliability that has been working in brand Maruti Suzuki’s favour even in times of slowdown. Just one worry though. Maruti is continuing to ride high on models made on the Swift Platform (DZire and Ritz), which can surely upset the company’s apple cart when a more innovative competitor saunters in. For now, Srivastava is also predicting a robust FY10 for India’s auto czar!

Pawan Chabra

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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