Indian Auto Industry

Auto is a growing sector with total annual domestic sales by the auto industry having crossed 10 million units mark in 2006-07. This translated into a compounded annual growth of over 15% during the last five years.

Almost all major international car manufacturers, from across the world are present in India ' and those that are not here have made announcement to this effect. The passenger vehicle market is dominated by compact cars and the rest of the market is fragmented, with about 12-13 manufacturers fighting for one-third of the market space.
Another characteristic of the Indian market is our low car penetration of 8 cars per thousand people (much less than other developing countries)' which indicates the scope for growth.

No doubt the demand is projected to grow over two-fold in the next few years expecting which various manufacturers have started / announced their plans to increase the production capacity. Compiling all the announcements, the total figure will exceed 4 million.

The growth in sales volumes has been in line with industry during financial year ending Mar'07, the growth has been convincingly above competitors in first half this year even after taking into account the fact that we have a limited presence in the Diesel market which constitute nearly a quarter of the total.

Following a decentralised sales network in the company has enabled us to give tailor made solution to take care of various regional challenges. The whole country has been divided in to 4 zones and further into 16 ROs and 15 AOs.

Opportunity

We believe that there are millions of Indians who can afford a car but for various reasons are not buying one. With focussed marketing efforts, many of these people can be persuaded to buy a car. This is amply clear from the success of our Special Schemes for certain sections of society like government employees etc.

When the market softened in early part of this year, we launched Employee referral scheme where each employee was veiled as sales man. Dealer and vendor scheme are some other examples.

In India, a large proportion of cars ' about 75% are sold via finance. Our exclusive tie ups with chosen financers have helped increase our share of the pie.

Our efforts to manage costs through various VA/VE activities, improvements in yield, productivity and quality have shown positive results for us and have enabled us to take care of margins in the environment of increasing costs.

Our Material to Net sales ratio, which has improved by 15% over a period of 6 year is an example to substantiate above point.

Our new initiatives of Pre-Owned cars, Maruti Finance, Maruti Insurance, Extended Warranty, loyalty program AutoCard are all targeted to provide a superior experience to the Customer.

The fact that these improve the viability of our dealer is an added advantage. This is an extension of the concept of 'Customers for Life' and will act as a potent weapon for customer retention.

These are the announcement that were made by Mr. O Suzuki, Chairman SMC who was recently in India. Vision is to increase the role for Indian managers in steering the company and to improve Indian R&D facilities to equal that in SMC Japan, both of which substantiate Suzuki's commitment towards Maruti.

Consequently, additional investment in the areas of R&D and Marketing & Customer interface has been announced. The same are in the process of quantification. Though some part will over lap with the current investment plan, but most of it will be additional.