The automobile industry in India accounts for 22% of GDP and produces over 17.5 million vehicles annually, making it the 7th largest producer globally. Passenger vehicles saw the fastest growth at 12.9% CAGR. The industry is dominated by a few major players, with Maruti Suzuki having the largest market share of 42%. While most companies are profitable, some like General Motors and Tata Motors struggled with losses due to product recalls and increased expenses. Nissan has been successful through high exports. Overall, the industry is expected to grow at a 10-11% CAGR through 2021.

1. • The automobile industry accounts for 22% of the country's gross
domestic product (GDP).
• India is currently the 7th largest automobiles producer in the world
with an average annual production of 17.5 million vehicles.
• The industry has attracted FDI worth US$ 11,351.26 million during
the period April 2000 to November 2014.
• Passenger vehicles was the fastest growing segment, representing a
CAGR of 12.9%.
INDUSTRY OVERVIEW
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
09-10 10-11 11-12 12-13 13-14
15.48
17.36 17.79 18.42
12.30
Figures in Mn
INDIAN AUTOMOBILE INDUSTRY
INDUSTRY SEGMENTATION
Automobile
Two Wheelers
Mopeds
Scooters
Motorcycles
Electric two-
wheelers
Passenger Vehicles
Passenger cars
Utility vehicles
Multi-purpose
vehicles
Commercial
Vehicles
Light Vehicles
Heavy Vehicles
Three Wheelers
Passenger carriers
Goods carriers
REVENUE (In Million)
MARKET SHARE BY VOLUME (FY 13)
77%
15%
4% 4%
2 Wheelers
Passenger Vehicles
Commercial Vehicles
Three Wheelers

2. MARUTI SUZUKI – AN OVERVIEW
INTRODUCTION & OVERVIEW
• Maruti Udyog Limited (MUL) : established in February 1981, though the actual
production commenced in 1983 with the Maruti 800, based on Suzuki alto.
• Maruti Udyog Limited was renamed as Maruti Suzuki India Limited (17th
September 2007).
• The Company was awarded the highest financial credit rating of AAA/ stable
(long term) and A1+ (short term) on its bank facilities by CRISIL.
• Originally, 74% of the company was owned by the Indian Govt, and 26% by Suzuki of
Japan. As of May 2007, the government of India sold its complete share to Indian
financial institutions and no longer has any stake in Maruti Udyog.
• As of 31 March 2014 Maruti Suzuki has 933 dealerships across 666 towns and cities in
all states and union territories of India.
1,155,041 Vehicles Sold in
2013-14.
16% Growth in Rural
Sales.
1000+ Vehicles operating
& providing door to door
service.
4 out of 5 top selling
models in India are from
Maruti Suzuki.
ACHIEVEMENTS IN PRESTECTIVE (2013-14)
MARUTI SUZUKI – MAJOR CAR PORTFOLIO
1984
1999
2005 2008
Omni
WagonR
Swift
Swift DZire

3. Competitive
Rivalry
(High)
Threat of New
Entrants
(Low)
Substitute
Products
(Moderate)
Bargaining
Power of
Suppliers
(Low)
Bargaining
Power of
Customers
(High)
PORTER’S FIVE FORCE ANALYSIS – MARUTI SUZUKI
Competitive Rivalry
• The competition has become very intense with the entry of foreign players like
Volkswagen, Renault in low-priced hatchback segment.
• Foreign players have increased the competition by catering to Indian needs.
Threat Of New Entrants
• The threat of new entrants is low
because of the capital intensity of
business is very high.
• Brand equity.
Substitute Products
• The threat of substitute product is
moderate because the public
transportation is still
underdeveloped in major cities.
• Two wheelers are the major
substitute products available in the
market.
Bargaining Power of Suppliers
• The bargaining power of the seller
is low as most car manufacturers
are specialized in a particular
segment.
• Other players provide various
other features.
Bargaining Power of Customers
• In a market like India the
bargaining power of the buyer is
very high, as there are different
options available with the buyer
for variety of products available
in the same price range.

4. INDIAN AUTOMOBILE INDUSTRY– PASSENGER SEGMENT
• India’s passenger car market shrank for the first time in 11 years during 2013-14.
KEY HIGHLIGHTS
• The auto industry is oligopolistic in nature. HHI of 0.22 is not a true reflection of the
intense rivalry in the sector.
Exports
Domestic Sales
Production
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
3.4
4.5
4.4
5.1
5.6
5.9
16 20
25
26 27
25
18
24
30 31
32
31
Passenger Vehicle
Volumes
• The auto industry is capital intensive with high amount of raw material, depreciation
expenses and as well high selling and distribution expenses due to intense rivalry in the
industry.
• Indian share in the global passenger vehicle market to double to 8 per cent from 4 per
cent over 2010–11.; Passenger vehicle sales to increase from 3.2 million in FY2013 to 8.6
million in FY2021E as per SIAM.
• Word-of-mouth is the most influential source of information for the Indian buyer.
• The industry is not very profitable. Margins are low. Reducing fixed cost per unit by
boosting sales is the key to profitability as it leads to Economies of Scale.
• The Indian Passenger Vehicle (PV) industry recorded volumes of 2.3 million units in 11m
2013-14, a decline of 6.0% Y-o-Y. Sluggishness in PV demand over the last 3 years are
due to high inflation, elevated interest rates and rising fuel prices that have exerted
pressure on disposable income of consumers
• The prevailing weakness in domestic PV demand has meant a relatively prolonged
period of heavy discounts offered by Original Equipment Manufacturers (OEMs) on PV
models across segments.
• Overall though, the industry trend in favour of ‘push-sales’ through discounting rather
than ‘pull-sales’ through advertisements and brand building seems to have got further
entrenched during the current period of slowdown. .
• The PV industry is expected to revert to a volume CAGR of 10-11% (domestic +exports) over the medium
term. The profitability metrics of industry participants too are unlikely to have any meaningful respite over
the near term in view of
• (a) Increase in expenses related to launch of new models, (b) Increase in employee costs as several OEMs
have announced substantial wage hikes, (c) Likely sustenance of discounts-led sales push, (d) Restricted
pricing power in the wake of intense competition and (e) Currency headwinds.
• Market share in the domestic PV industry still remains concentrated in the hands of few players, reflected
in the fact that top four players account for 75% of industry volumes. This implies that profitability
pressures on the relatively low volume players may be even higher resulting in sustained external
financing dependence to fund losses and CAPEX requirements.

5. INDIAN AUTOMOBILE INDUSTRY– PASSENGER SEGMENT – PEER COMPARISON
MARKET SHARE – 14 COMPANIES – FY 2014
Maruti Suzuki,
42.0%
Hyundai, 15.5%
M&M, 9.5%
Tata Motors,
5.7%
Honda, 5.5%
Toyota
Kirloskar, 5.3%
Volkswagen,
2.5%
Ford, 3.3%
Fiat, 0.75%
Nissan,
3.5%
General
Motors, 3.2%
Ranault, 1.0%
Skoda, 2.0%
Mitsubishi,
0.3%
Market Leader – Maruti Suzuki
PROFIT / LOSS – FY 13 AND FY 14
269
-420
76
-1142 -1109
1025
311
2392
216
-597
420
-3812
-479
1108
410
2783
-4000
-3000
-2000
-1000
0
1000
2000
3000
FY 13 FY 14
FFiat
FFord
FGM
FHyundai
FNissan
FMaruti
Suzuki
FVolkswagen FHonda
Figures in crores
KEY HIGHLIGHTS
• Maruti Suzuki further strengthened its dominant position. Market share increased by 2% in
FY14
• Exporting is a significant chunk of production to other markets from India and stepping up
domestic production of spare parts is key to run a profitable business in India for foreign MNC’s
• General Motors struggled with corporate fraud and product recalls (Cheverlot Tavera -1.26 L
units recalled).
• Volkswagen sales dropped to 52K units in FY14 from 75K in FY13; Yet their net profits nearly
sextupled. Every 2nd car was exported in FY14 compared to only 1 in 5 in FY13. Domestically
made spare parts increased to 70% from 40%; Shared resourcing with its sister firm Skoda
increased Economies of Scale.
• Nissan’s exports grew 17% in FY14 and overtook Maruti as the 2nd largest exporter. 60% of its
products are exported. Micra constitutes 70% of its exports. A whopping 80% of its products are
manufactured in India. Increase in the number of dealerships to 300 from 128 would help it to
utilize its full capacity of 4.8L units by FY16. This could boost its market share to 10% by FY18.
Despite its entry in the late 2000’s it has broken even quickly and is a profitable business unlike
some its peers.

6. • Fiat wrote off accumulated loss of 406cr. Despite making quality cars Fiat has struggled to
increased its market share, owing to poor quality after sales service. Fiat sells its 1.3 Multijet
small diesel engines to number of car makers in India. The diesel variants of Maruti Swift, Ritz,
Desire, Tata Manza, Indica Vista, Cheverlot Beat, etc run on the Multijet.. Reduction in engine
purchases by Maruti to about 45% of FY13 in FY14 resulted in the decline in revenues and profits
to Fiat.
• After 5 years of recurring losses, Honda pulled itself together by the bootstraps in FY14. Losses
dipped by a substantial 57%. The introduction of diesel variants and many Indian centric cars
such as Brio, Mobilio, Amaze etc have increased volumes (Economies of Scale) and boosted
revenues by 83% and 43% in FY13 and FY14 respectively. With the launch of new models in the
MUV and the compact SUV segment in the near future Honda would be catering to 50% of the
overall passenger car market as against 10% in FY14. Investment of 3800cr (Rajasthan plant) to
localise body panels and engine components to reduce costs in the years to come.
0
50
100
150
200
250
Alto Swift
Dzire
Swift
Wagonr
Grand
i10
Bolero Eon City Omni Celerio
242
194 185
147
96 92
74 71 68 63
Top 10 SELLING CARS [JANUARY 2014 – NOVEMBER 2014]
6 out of 10 are Maruti Suzuki cars. Maruti Omni is at the end of its life cycle.
The budget hatchback segment is the largest contributor in the
overall car sales forming more than 25% of the total sales.
• Hyundai is the only completely foreign-owned carmaker to consistently report profits in India.
With 60 variants across nine car models, HMIL’s strong performance has come on the back of a
string of successful product launches like the Grand i10, Xcent and most recently, the new i20.
With plans to enter the compact SUV and MPV segments in the next two years, HMIL aims to
gain a market share percentage every year. The India unit was the first successful venture for
Hyundai overseas, and soon turned into an export hub for small cars going to 120 countries.40
new rural outlets by 2014, to take the tally to 320.Rural sales constituted 20% of the total sales
as against 8% in 2012.
Figures in thousands
• Mahindra & Mahindra gets 65% of its total passenger car revenues from its 2 most popular
models Scorpio and Bolero. It is yet to venture into compact SUV segment. Its market share in
the SUV segment declined to 48% in FY2013 from 56% in FY14 owing to intense completion and
lack of new products from M&M. It entered the compact segment with the launch of Verito Vibe.
The sale of passenger vehiles declined by 6% in FY14 as against FY13.
• Tata’s passenger vehicle division recorded sales of 13,767 units, up 21.56 percent compared to
11,325 units sold in February 2014. The trend of growth in passenger vehicles continued with
strong sales of the Zest sedan and a good market response to the Bolt hatchback. However
below industry standard after sales service is key deterrent for its progress
• Renault has a joint manufacturing unit with Nissan in Chennai. The Renault DeSign Studio in
Mumbai is one of the 5 satellite global design studios for monitoring customer trends and
helping customize global products for India. Despite its relatively new entry in the Indian market
it posted a net profits of 15cr in FY13.
• Toyota Kirloskar incurred a loss of Rs.180cr in FY14 marking a dubious first in the
Japanese auto maker’s 15-year history in India. The loss was largely on account of a
recent focus on the small-car Liva and the entry-level sedan Etios for a company that
has always made money in India on the back of a focus on workhorse-like utility
vehicles—the iconic Qualis first, and then the Innova—and up-market sedans such as
the popular Corolla. Sales of the Liva declined 20% during last fiscal and 13.27% in the
five months to August this fiscal year. Sales of the Etios sedan declined 19.44% and
15.5% during the same periods, respectively.
• Ford first started selling cars in India during 1996. Since then, six CEOs have led Ford
India, which has sunk in $2 billion in investments and launched nine models. 18 years
later, all that Ford has to show is a market share of less than 3 per cent, a plant that
was working at half its capacity (2012-13) and 2360cr in accumulated losses.
• Skoda is one of the fringe players, with all its key products in premium sedan
segment. It offers 4 variants in the above segment. Production of the Škoda Fabia
ended in 2013 due to low sales and high assembly cost

7. Internal
External
Strengths
1. Strong business network - Established
distribution and after sales network.
2. Cost effectiveness – due to economies of
scale
3. Loyal customer base – strong brand image
4. Broad product portfolio
5. Good Infrastructure and labour base
6. Largest market share in the PV segment –
42%
7. USP - fuel efficient cars – first to launch
cars with ethanol(mixed fuel) as per govt
regulations.
Weaknesses
1. Contemporary technology
2. Low quality interiors
3. Lack of products in mid size car –sedan
and utility vehicle segment
4. Image stuck on small cars
5. Inferior diesel engines – noisy
6. Manufacturing defects – resulted in a high
product recall of 30,000 altos to fix door
assembly.
7. Low geographic concentration
8. Poor safety features – Poor build quality,
failed crash test
Opportunities
1. Growing potential in emerging markets –
UVs and electric cars. Maruti did launch
an LPG version of wagon R
1. Increasing demand for fuel efficient cars -
- re-launch of Dzire in February 2015,
pegged as India’s most fuel efficient car.
SO strategy
Using their infrastructure and technical
know how, Maruti should reach out to
wider segments in the market by
investing more into R&D for electric cars.
M&M has already ventured into this
segment.
WO strategy
With the recent strategic move to re-
launch Dzire, Maruti can rebuild its
image from inferior engines,
manufacturing defects and from small
car image to mid-sized fuel efficient
cars.
Threats
1. Ever changing customer’s tastes and
purchasing power
2. Global players – Price wars
3. Intense competition
4. Brand loyalists switching to different
brands - Youth favoring foreign
brands/make
5. Global economic slowdown
ST strategy
Leveraging on maruti’s brand image and
reliability, maruti should invest in R&D in
order to develop better and new technology
and market its products well in order to beat
competition from global players.
WT strategy
Maruti should overcome some weaknesses
such as manufacturing defects, inferior
quality of engines and interiors by
implementing better quality check practices
so that the threat of brand loyalists
switching is minimized and maruti can
retain its customer base.
MARUTI SUZUKI INDIA LIMITED – COMPANY ANALYSIS
Swift
Swift Dezire
Zen Estillo
SX4
Grand Vitara
Ritz
A-Star
Alto
WagonR
Omni
Versa
BCG Matrix
Market share
Marketgrowth
High
High
Low
Low

8. GE
MATRIX INDUSTRY ATTRACTIVENESS
BUSINESSSTRENGTH
HIGH MEDIUM LOW
HIGH Investment
and growth -
SWIFT
Investment
and growth –
ALTO
Selectivity/e
arnings – A-
STAR
MEDIUM Investment
and growth –
SWIFT Dzire
Selectivity/ea
rnings – SX4
Harvest –
ECO
LOW Selectivity/ea
rnings –
WAGON R
Harvest –
VERSA
Harvest –
OMNI
COMPANY ANALYSIS AND CORE COMPETENCIES
CORE COMPETENCIESGE MATRIX
• Alliances with
suppliers
• Alliances with
dealers
FORWARD AND BACKWARD
INTEGRATION
• Most extensive
network in India
• Greater customer
satisfaction
STRONG DISTRIBUTOR
NETWORK
• Lean manufacturing
• PMS
• Quality control
MANUFACTURING
EXCELLENCE
• True value
• Anytime Maruti
• Authorized service
centres
• Insurance
OTHER CRM INITIATIVES
CAPABILITIES OF MARUTI
• Manufacturing and production technology
• Understanding customer needs
• Developing new designs and models of car which are fuel efficient
• Quality focus
• Prompt service and customer satisfaction

9. INDUSTRY CSF MARUTI
SUZUKI
HYUNDAI TATA MOTORS
Brand Equity High Low Medium
Productivity High Low Medium
Quality Low High Medium
Strong Dealer Network High Low Medium
Range Of Models High Low Medium
Product Mix Width Medium Low High
Advertising and Brand Recall High Low Medium
Price competitiveness High Low Medium
Efficient Manufacturing Low High Medium
After Sales Service High Medium Low
Engine technology Low High Medium
Styling and Features Low High Medium
R&D spending Low High Medium
Innovation Low Medium High
COMPARATIVE ANALYSIS USING CRITICAL SUCCESS FACTORS – COMPETITIVE ADVANTAGE
The above study shows that Maruti Suzuki has an advantage over its competitors in the Indian Market.
• The Brand Recall coupled with the Strong Dealer network makes it a household name.
• Their high price competitiveness and the after sales service gives them a cost advantage.
• Maruti caters to the needs of the Indian Market. Even though its products mix width is medium, they have managed to maintain and continually increase their market share.
• They have only improvised on existing products and have not really ventured into new emerging segments and this is why they lose out on having a differentiation advantage.
• Based on these and other CSFs we can say that Maruti Suzuki has a Cost Advantage and not a differentiation advantage.
COMPETITIVE ADVANTAGE
Cost Leadership
Maruti
Tata Motors
Differentiation
Audi
Volkswagon
Focus Cost Leadership
Hyundai
Focus Differentiation
Honda
Toyota
Integrated Cost
Leadership/
Differentiation
COMPETITIVE ADVANTAGE
Cost Uniqueness
COMPETITIVESCOPE
NarrowTargetBroadTarget

10. P
O
L
I
T
I
C
A
L
Automatic approval for foreign
equity investment up to 100%, no
minimum investment criteria.
Encourage R&D by offering rebates
on R&D expenditure.
Dept of Heavy Industries & Public
Enterprises have worked towards
reduction of excise duty on small cars
& increase budgetary allocation for
R&D.
Relaxation of excise duty on small
cars from 12 to 18 % bound to help
the sector in the long run.
Maruti Suzuki’s R&D Centre & test
course at Rohtak , Haryana, is a state-
of-the-art facility, comparable to the
best in the world. It is SMC’s first
global R&D Centre outside Japan.
Political
Economical
Socio Culture
Technological

11. E
C
O
N
O
M
I
C
A
L
 GDP Per capita has grown from USD
1,432.25 IN 2010 To USD 1,500.76 in 2012,
and is expected to reach USD 1,869.34 by
2018.
 Apart from the impact of rising incomes,
widening of the consumer base will also be
aided by expansion of the middle class,
increasing urbanization and changing
lifestyle.
A young population is boosting demand
for cars.
Greater access to credit eases the
purchase of passenger and commercial
vehicles.
7.7
9.3
13.2 12.9
11.7
0
2
4
6
8
10
12
14
FY 09 FY 10 FY 11 FY 12 FY 13
Car industry sales volume (mn)
Car Finance industry (USD bn)
Indian car finance market size
1 3 7
12
25
2935
40
32
50
26
15
0
20
40
60
80
100
120
2008 2020 2030
Seekers(3682.5 - 9206.4)
Deprived (<1657)
Aspirers (1657 - 3682.5)
Strivers(9206.4 - 18412.8)
Globals (>18412.8)
Changing Income Dynamics of India’s population

12. S
O
C
I
O
C
U
L
T
U
R
E
Maruti Mobile support (MMS) vehicles
operating and providing door-step
service to customers.
Maruti Suzuki has set up driving
schools for training people in safe
driving.
Good exchange options, encourages
customers to buy new car in exchange of
old car for good exchange value.
Expanded network, besides urban
outlets, they have developed emerging
market outlets and recruited and
groomed nearly 8000 local youth as
resident dealer sales executive to offer
comfort and assurance to first time
buyers in small town and rural areas.
T
E
C
H
N
O
L
O
G
Y
The Company has introduced India’s first
passenger car with shift technology in Celerio.
Projector Headlamp has been introduced in
Stingray. Projector headlamp provides focused
beam output which helps in better visibility on
the road.
Introduction of Kimekomi ( Fabric & leather
insertion technology) in door trims to provide
superior fit and finish.
The company achieved 3 to 15 per cent
increase in fuel efficiency during the year 13-14
across all the models among various fuel options
by working on different technologies and areas
like optimisation of crank and intake system, new
low viscosity oil, use of new technologies for
rolling resistance reduction on tyres,etc.

13. • The Indian passenger car segment is expected to grow by over four-
fold to 93 lakh units in 2020 to become the world’s third largest car
market.
• The presence of global players, introduction of global
platforms/technologies and stricter emission norms indicate that the
market is gradually attaining maturity.
• A buoyant economic growth, growing middle class population, rising
disposable income levels, relatively low penetration of cars and
adequate availability of financing are likely to provide an ideal
backdrop for a sustained long term demand growth for the sector.
• Increasing interest from foreign players, competitive intensity is likely
to become a key challenge for manufacturers in this segment..
• With most major markets facing excess capacity and demand
saturation, the Indian market is likely to remain a key destination for
global majors over the medium term.
• With most of the international players eyeing the small car market,
we expect the competitive intensity to increase in this segment
resulting in greater fragmentation of market share over the next 5
years.
• Competition, the rising quality expectations and tightening
regulatory norms on emission and safety are likely to push up cost
pressures.
0
1000
2000
3000
4000
5000
6000
FY14 FY20E
in'000s
Vans
UV
premium
executive
midsize
super compact
compact
mini
micro
2.5 2.7
3
3.3
3.7
4.2
4.9
0
1
2
3
4
5
6
2014 2015E 2016E 2017E 2018E 2019E 2020E
inmn
PASSENGER VEHICLE SEGMENT OUTLOOK
PASSENGER VEHICLE SEGMENT FORECAST (CAGR 11.87%)
SEGMENT WISE DISTRIBUTION

14. • Hybrid vehicles are those that use two or more distinct power sources
to move the vehicle.
• The term most commonly refers to hybrid electric vehicles (HEV) or
Electric/hybrid cars (XeV), which combine an internal combustion
engine and one or more electric motors.
• Could become attractive option for Maruti Suzuki with the Centre
planning to offer fairly large subsidies with a view to push demand for
the nascent segment.
• This will result in India becoming a manufacturing and research base
for vehicles running on alternative/eco-friendly fuels.
• The global penetration of hybrid cars is expected to increase
exponentially in the near term.
• Imperative for Maruti Suzuki to concentrate on this sector in order to
continue its dominant position in the passenger vehicles segment.
• SUVs have been preferred choices for most of the car lovers across the
country. Many prefer their off-road capability as well as masculine
looks .
• The SUV segment in India is expected to triple in volume by 2020.
• It accounted for 21% of the overall passenger vehicle sales in 2014
and is expected to account for 29% of the sales by 2020.
45
61
70
2
5
10
0
2
4
6
8
10
12
0
10
20
30
40
50
60
70
80
2010 2015E 2020E
Penetrationin(%)oftotalsales
inmnunits
• Ford EcoSport and Renault Duster created a whole new category
of compact SUVs in 2013.
• People want a car that looks like a Sports Utility Vehicle and
carries a low price tag and all these wishes get settled down to a
compact SUV.
• Its one of the fastest growing and promising segments where
Maruti Suzuki needs to enter and make its presence felt in order
to maintain or increase its market share.
STRATEGIC OUTLOOK
XeV SALES IN THE WORLD

15. • Fiat Chrysler automobiles is the seventh largest automaker in
the world.
• But in India, its subsidiary has a market share of meagre 0.5 %
in the passenger vehicle segment.
• The engine-making unit of Fiat, Fiat Powertrain Technologies
SpA, has so far supplied close to 200,000 diesel powerplants to
Maruti. which powers various models of Maruti Suzuki
including the Swift and Dzire.
• The company expects demand for diesel cars to remain robust
and believes it might not be able to fulfil need on its own.
• Maruti produces 300,000 engines in Manesar. It has also set up
a diesel engine plant in Gurgaon, which will make additional
150,000 units of Maruti’s indigenously developed 800cc diesel
engine, which is likely to power the company’s latest Celerio
model and a mini-truck to be introduced in early 2015.
• Demand for diesel cars has fallen, but if you look at the
demand for Maruti’s diesel cars, it does not have its own
capacity to meet that requirement.
• Maruti sold as many 340,000 diesel cars, 33% of total sales,
during year ended 31 March.
• The production at the Gurgaon plant is for a different set of
engines, which are yet to hit the market.
• Even if one takes a very conservative growth for the industry,
Maruti will require lot more diesel engines..
• The sourcing from Fiat is based on the assumption that Maruti
will be selling more diesel cars in future as it moves closer to the
industry’s ratio of the diesel and petrol engines—48:52.
• Diesel cars will continue to be in favour, given the price gap with
petrol and better fuel efficiency.
• Moreover, given the demand swings, it makes better sense for
Maruti to source the engines rather than invest in creating its
own capacity.
• It would be much more beneficial for Maruti Suzuki to work on
a joint venture with Fiat India with respect to the production of
Diesel cars.
• Maruti will have the benefit of getting the diesel engines at a
cheaper rate which will boost its profit margin.
• Also there would be a lot of savings on the capital expenditure
front.
• Also, Fiat India is not its fiercest competitor in the segment due
to its meagre market share.
• Also since Maruti has recently entered into the SUV segment,
the requirement of Diesel engines for Maruti will increase as it
will try to increase its presence in this fast growing segment.
STRATEGIC OUTLOOK