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April 6, 2000
The Rediff Business Special/ Neena Haridas
Maruti on a comeback trail
Maruti is hitting back! And hard!
The auto giant has touched an all-time high in fiscal '99-00 in its 17-year history, selling over 406,000 vehicles, which includes exports of 21,447 units. It sold 333,000 cars in the previous year.
The turnaround really happened in March 2000 with Maruti selling 44,167 units. March sales included 3,980 units for export. In March, Maruti sold 12,348 units in the 'B' segment, including 7,510 units of Zen and 4,838units of Wagon R.
The company sold 2,095 units in the 'C' segment, including 1,398 units of Esteem and 74 units of the Maruti 1000 and 623 units of Baleno. It sold 1,89,061 units of Maruti 800 in March.
In January and February 2000, Maruti's market share had fallen to an embarrassing 51 per cent from the 80 per cent that it had been enjoying for almost a decade-and-a-half. However, March has brought the company back into the fast lane.
The Indian major's market share rises
Sample this: Maruti's share in the domestic car market grew more than 24 per cent, selling 376,000 units as against 302,000 units sold during the corresponding period last year.
During this period, Maruti 800 saw a sales growth of 17 per cent. Sales of Omni grew by 41 per cent, while Zen offtake increased 24 per cent over the corresponding period last year.
Maruti's latest offering, the Wagon R, sold 4,838 units.
Maruti's gain was the Koreans' loss: Hyundai and Daewoo, after the initial euphoria, ended the fiscal on a lacklustre note. In fact, Hyundai and Daewoo have lost out to Telco's Indica, too.
In March, Hyundai sold 6,418 units of Santro, Telco saw 7,270 Indicas being grabbed up, while Daewoo sold 5,853 Matiz. Fiat witnessed sales of 1,250 Unos.
Telco ended the financial year selling 54,990 units, helping the company to acquire an 8 per cent market share. In January, the company had standardised the five-speed gearbox for all its models.
It also launched the Euro-II diesel model in the National Capital Region. Compared to a volume of 10,121 cars in '98-99, Daewoo Motors sold 40,217 cars in '99-00. Hyundai Motors India Limited's aggregate sales for the fiscal 1999-2000 stood at 75,661 units, registering a 329 per cent sales growth over 17,647 units sold in 1998-99.
The Accent notched up its highest ever sales in March, touching 2,007 units and 6,209 units for the year. In January, Santro had claimed the number one slot, followed by Zen and then Indica, which had prompted doomsayers to write off Maruti.
So how did the turnaround take place?
Maruti was having a tough time with its rivals breathing down its neck. The competition has lined up an impressive arsenal: advertising blitzes, promotional campaigns, star endorsements, incentives, new products, et al. So what got Maruti back in the game?
According to sources, the company clocked impressive sales in March, primarily because buyers anticipated a price hike in April. Maruti increased the prices of its Euro-compliant models by Rs 20,000.
They also believe that the price-hike will see Maruti's sales drop in April.
However, Jagdish Khattar, managing director, MUL, said, "There was much speculation that Maruti has met its nemesis in the Koreans when our market share fell. But even as our market shares were falling, our unit sales were increasing."
"It works this way: when there are more players in the market there will be competition. When there is competition, the market expands and the consumer base increases. Which means there will be more number of unit sales," he said, explaining the inconsistency.
"For instance, in January, our market share fell to 51 per cent. But our sale of each of our models was increasing. In the first ten months of current fiscal, April 1999 to January 2000, sales of Maruti 800 had grown by 22 per cent, that of Omni by 48 per cent and that of the Zen by 22 per cent over the corresponding period last fiscal," Khattar said.
Hyundai Motor India Ltd, on the other hand, maintains that it lost out to Maruti and Telco because of some 'production problems'.
Said an official, "Our offtake would have been better but for some production constraints. Actually we are making an effort to boost production of our new mid-size car, the Accent. It rolls out of the same assembly lines as the Santro. So there have been some hitches in the Santro production-line."
Meanwhile, sources in the auto industry say that some manufacturers have managed to increase sale numbers by offering dealers credit sales.
"We are very proactive in our approach. We know that when there are more players, there is more choice for the consumer, and the best player wins the race. Our approach the market is community-oriented. We build brands not by just advertising, we are trying to make change," Khattar asserted.
In tune with its proactive approach, Maruti recently launched a driving school in association with the Ministry of Transport.
According to Khattar, the effort is aimed at making the average person not just aware of Maruti, but also help him become a responsible driver.
Maruti has been selling this responsible corporate citizen image for quite a while now, with launch of free pollution-checking counters at gas stations to road safety campaigns.
"The corporate citizen image works because it becomes easier for a customer to relate to the brand. It is important for Maruti to take a proactive approach because the small car segment, Maruti 800 section, is shrinking. It is the Zen segment that is going to make all the difference now, Murad Ali Baig, an automobile expert, said.
"Though Maruti 800 is a 'mass' car, the Zen segment is growing very fast because there are more players now: Maruti Zen, Hyundai Santro, Daewoo Matiz, and Tata Indica. In 1999, sales in this segment touched 232,000 units, compared to 101,000 units in 1998. Which is why it is important for Maruti Zen to beat Santro and Matiz," Baig added.
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