Financial Daily from THE HINDU group of publications
Friday, Jan 31, 2003
Maruti eyes 60 pc market share
Vipin V. Nair
NEW DELHI, Jan 30
MARUTI Udyog Ltd, which is preparing for an initial public offer in March this year, has set a target of wresting a 60 per cent market share in the country's car market in the next three years by introducing new vehicles, improving quality of the existing ones and sprucing up its countrywide dealer network.
Company sources said a business plan envisaging such a dominant position for Maruti, a joint venture between the Government and Japan's Suzuki Motor Corporation, is now being charted ahead of the IPO, tentatively slated for March 17.
The sources indicated that two new models that are likely to debut in India in 2003-04 are the Ignis, a compact car, and Liana, a mid-size sedan.
While the Ignis can add muscle to Maruti's B segment range comprising the Zen, WagonR and Alto, the Liana would boost its sales in the C segment, the Achilles' heel for Maruti today.
The company also seeks to reduce costs of production by 30 per cent per vehicle in the period, they said.
Maruti currently has a market share of nearly 50 per cent, down from over 80 per cent in the past due to severe competition from companies such as Hyundai Motor and Tata Engineering.
Analysts tracking the automobile industry, nevertheless, doubted whether Maruti would be able to achieve the targeted 60 per cent market share in view of the competition in the market.
"This is a difficult task... I don't think it is very possible given the market conditions and number of players," said an analyst with a consulting firm, pointing out that in no open market a player enjoys such a market share.
But Maruti is hopeful that it can strike back at competition with its strategies. Recent marketing initiatives and price cuts on its volume car, the 800, have helped the company perk up sales.
Meanwhile, Maruti is going all out to improve its relationship with dealers, numbering about 180. Company Managing Director, Mr Jagdish Khattar, is visiting almost all dealers across the country to pep them up.
The company's association with dealers suffered some setbacks in the recent past as Maruti's fortunes waned. Some dealers even closed down. Now Mr Khattar wants to convey to the dealers that the company will stand by the performers.
As part of this step, Maruti has now decided to bear some part of the interest cost the dealer incurs while lifting cars from the factory on credit. Its new businesses such as car financing, insurance and used car sales plus extended warranties would ensure more revenues on a continuous basis to the dealers.
Another incentive is a trip to the US in February for some 30-odd dealers who have performed well.
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