By Avik Chattopadhyay
New Delhi: It was on December 14, 1983, that the first Maruti 800 rolled out from the Gurgaon plant and its keys were handed over by Indira Gandhi, the then Prime Minister of India, to Harpal Singh (The first customer of the Maruti 800…Mrs. Gandhi handed over the key to him on 14th December 1983).
A fortnight ago in this 37th anniversary year of that memorable event, one of my close friends, who runs cutting-edge market research and analytics outfit, called me up to share some “disturbing trends”. He was doing a research dipstick on customer advocacy for car brands in India. Across a sample of around 1,100 respondents, only 51% of Maruti-Suzuki owners wanted to recommend the brand to others!
While one can argue that this is merely a dipstick and therefore not to be taken at face value, the numbers came as a shock to me. Maruti Udyog / Maruti Suzuki is my alma mater…I have done two stints in the organisation and a more significant part of what I am today is due to what I learnt and experienced there.
For me, the Maruti / Maruti Suzuki brand is more than just a market leader in passenger cars…it is a symbol of all that is progressive, positive and purposeful about India, to the world. Along with Hero, Bajaj, and Tata, it stands for the democratisation of mobility.
Many will also use the numbers in Maruti Suzuki’s favour. Sure, the numbers tell the story of clear market leadership, more so during this pandemic, but they are the result and not the reason. The reasons behind the results are the strategic decisions and actions taken about 18-24 months ago. This is the way of the automobile industry, with a minimum gestation period. The numbers today are not an indication of the situation in the next 18-24 months. That will be an outcome of decisions and actions taken today.
I spent the week after his call chatting with people I know across fields about Maruti Suzuki as a brand and organisation. I did not restrict myself to the automobile industry and journalists as they would always give me biased views. I went across industries and professions, across age groups, men and women, from mechanics to bureaucrats. The general takeaway from the chats threw up some perceptions of Maruti Suzuki, of definite concern.
I have attempted to organise them under five areas or aspects of the business.
Readers should be clear that we are talking about perceptions based on narratives and actions. Leadership resides in the mind and not on XL sheets and data charts.
Loses ‘technology edge’
Once a revolutionary, then an also-ran, Maruti Suzuki India Ltd (MSIL) is now seen as a laggard in technology. There is nothing from the brand in terms of product or solution that either sets a new benchmark in technology or leads the agenda in the areas of green energy, safety, recycling, connectivity, or customer engagement.
Take the case of BS-VI diesel. While competition brought in vehicles meeting these emission norms, MSIL just withdrew from the segment altogether. Analysts talk about the huge shift away from diesel to petrol which is evident if the brand that commands close to 50% market share does not offer one.
In the case of electric vehicles, having announced in 2017 that the brand would enter the segment in 2020, it has now done a volte-face. One might have ten reasons not to do something, but one good reason for demonstrating leadership is good enough.
Hyundai’s announcement of a new electric platform may not impact immediate sales but certainly impacts brand perception as a leader and disruptor. Tata has just sold its 2,000th Nexon EV.
Maruti could have even taken the cause of the hybrid, but that is yet to happen. For a market leader, it is important to be seen at the forefront rather than justify non-participation, even if each initiative may not lead to numbers and revenues. These are strategic investments in building perception.
So, the perception is that Maruti Suzuki will provide you with economical vehicles but not with the latest technology!
Safety ratings fiasco
If the narrative on technology was lost due to withdrawal symptoms, the one on vehicle safety has been lost due to insensitivity, I daresay. On November 11, 2020, when the Global NCAP crash test report was out on the S-presso getting zero stars for adult occupant protection, the reaction from MSIL was as ‘expected’.
The brand could have taken this as a perfect platform to share the active and passive safety standards that are met in India and how they are on par with those in Europe. A simple fact that the frontal crash test in India is at 56 kmph while that in Europe is at 50 kmph [as per the 2020 Euro NCAP’ Full-Width Rigid Barrier’ test] and that by Global NCAP is at 64 kmph is not clear to most readers. This was the time to educate and create awareness.
Nevertheless, the fact that there were competitor vehicles, albeit in other categories, that scored up to five stars is definitely not good tidings for the brand. Try explaining to the S-presso owner that because it is cheaper, the seat belts do not have pre-tensioners and it should be tested at 64 kmph by “any self-proclaimed party”!!
So, the perception is that Maruti Suzuki will provide you with economical vehicles but not with the latest technology or safety standards!
Cost of acquisition à Cost of ownership à Where next?
What exactly is the new mojo for Maruti Suzuki? The brand has entered its third phase of evolution in terms of customer promise. I have a 1983 brochure of Maruti Udyog that states that its purpose is to democratise mobility in India, the demonstration of which would lie in the customer promise.
From 1983 till 2000 it was all about ‘cost of acquisition’…providing the cheapest world-class cars for Indians. In 2000 the promise evolved to ‘cost of ownership’ in tandem with an evolving customer with the introduction of “surround services” of finance, insurance, accessories, extended warranty, and resale. Combined with the huge edge in network reach and service standards, Maruti Suzuki was way ahead of others.
In 2020 the gap has been covered by competition like Hyundai, Tata, and Mahindra. Today every automaker offers more-or-less the same ownership package to prospects. A detailed study by Autocar India on Maintenance Costs over 60,000 kms released in the November 2020 issue shows that Maruti Suzukis are not necessarily the cheapest to maintain over five years! Here is a snapshot…
What is quite a shock is that not a single Maruti Suzuki has won in any segment, and in five they are actually the most expensive to maintain. One might argue that cost of acquisition, cost of running and resale value have not been considered, but this report does damage the core customer proposition of the lowest ownership cost!
The customer promise has to enter its third stage of evolution. Till now, we have not seen any clear signals of the same. Either it has been planned in 2017-2018 and will roll out any time. Otherwise, if the next stage is to be defined and planned now, it will take 2-3 years to be rolled out. And time is at a premium and competition will not rest easy.
So, the perception is that Maruti Suzuki will provide you with economical vehicles but not with the latest technology, safety standards or low maintenance costs!
Cows, dogs, questions and stars
This is about the Maruti Suzuki product portfolio, one of its twin pillars of range and reach. I will use the classic Boston Matrix here to present my case.
MSIL has too many cash cows. That is a cause of concern as large market share are in segments that are not the fastest-growing any more.
Consider the entry-level small hatchbacks – Alto, S-presso, Celerio and WagonR. They create the base and the pipeline for upgrades. This segment was the flagbearer of the growth story of the Indian automobile industry. The last 18-odd months had not been good to begin with. The pandemic hit it hard as the potential customer funnel has dried up.
Also, just like the Alto and Renault Kwid shook up the space when introduced in 2000 and 2015 respectively, no other new introduction in this segment has set sales charts on fire. Looking at the new Alto and S-presso one wonders why cheap cars have to look cheap? Celerio is neutral in looks and Wagon-R just cannot be dragged along so long in the same silhouette. The customer looks beyond mere frugality of operation and competition offers better aesthetics and feature-packages.
In the compact sedan segment, the Dzire is facing intense competition from Hyundai Aura and Honda Amaze. More so, the future of this segment lies in electric solutions. While Tata and Mahindra have their offers, MSIL has none.
In the MPV segment, the Eeco is a really old cash cow that needs a replacement or will rapidly lose out when more stringent crash test norms are in place. The Ertiga / XL-6 is a question mark.
The Ciaz is a dog…faithful and reliable but losing out to new breeds and finer pedigree. It should not lose its way as a government and taxi vehicle.
The star segments are the larger hatchbacks and compact and mid-size SUVs. MSIL has the Swift, the Ignis and Baleno as hatchbacks and the Vitara Brezza as a compact SUV. All four are promising, with the Swift enjoying cult status. Ignis needs to find its place and unlock its potential, currently being a question mark. Positioning it as a compact SUV is the silliest of tricks I have seen.
Baleno will face increasing pressure from the new Hyundai i20 and Tata Altroz. Its rebadge as a Toyota will not be sustainable in the long run as there is no tangible differentiation.
In a portfolio of 14 vehicles, the brand has two clear stars, one potential star, and six cash cows. Not a good mix at all. The brand needs a few more question marks as they, along with the stars, will secure the future.
So, the perception is that Maruti Suzuki will provide you with economical but uninspiring vehicles, not with the latest technology, safety standards or low maintenance costs!
Too much brand stretch – Maruti and Suzuki
This is the last and most interesting aspect as it is beyond reports, ratings, numbers and ratios. It is about the brand. It was most encouraging when almost everyone I chatted with had a strong opinion on the Maruti Suzuki brand. For they could not put a finger on where it exactly is headed!
The previous two phases were clear…the brand was all about ease of running, service reach and frugality. Therefore, we had memorable pieces of communication like “Kancha”, “The Sardar Kid” and “Kitna Deti Hai”. I daresay that MSIL has created some of the best corporate brand campaigns and some of the worst product advertising.
The over-arching communication about the “Maruti” / “Maruti Suzuki” promise covered all products and gave the brand next-door personality that a majority of India associated with. Today there is none. Maybe it is an outcome of the organisation itself not clear about what it really wants to be.
That is the paradox. One the one hand it caters to the first-time buyer and gets its volumes [and profits] from there but yearns to be recognised as a ‘premium’ brand. The “Arena” and “Nexa” experiment is a clear demonstration of this split personality. I call this an experiment as it is yet to be proven successful. The fact that even after 5 years of operation, the network invested in Nexa does not see a clear future proves my point. Diluting the intended “premium” position by shifting volume vehicles like Baleno and Ciaz from the Arena to the Nexa network again proves my point.
Maruti / Maruti Suzuki is NOT about creating classes and strata in customers. Its ethos lies in delivering the same world-class standard of service and solutions to each and every customer, from the Alto to the S-cross. If it wishes to be recognised as a premium brand, then its success lies in delivering a premium experience to all and not just a chosen few. That is actually showing disrespect to the core purpose of the brand. Guess the top bosses need to go through that 1983 brochure once again!
So, the perception is that Maruti Suzuki will provide you with economical but uninspiring vehicles, not with the latest technology, safety standards or low maintenance costs while being unclear of what its core proposition is!
Twenty years after…
In 2000 [then] Maruti Udyog Limited had gone through a similar existential crisis when it was vulnerable.
By a Supreme Court ruling Bharat Stage 2 emission norms were to be introduced in 4 cities from April 2000 and Maruti was caught napping. Competitions like Hyundai, Daewoo, Honda, Toyota and GM were ready. This was a loss of image of Maruti as the pioneer of new technology in India.
The Baleno sedan and Wagon-R [the largest selling car in Japan then] launched in 1999 did not take off. The former was seen as too expensive and the Maruti brand trying to stretch itself into the territory of a Honda or GM. The latter was seen as a follower to the Hyundai Santro that had cleverly taken away the “tall-boy” crown.
And then the company had its first worker strike, crippling operations for a significant period.
The market leader was suddenly vulnerable on all fronts – image, product portfolio, employee harmony and morale.
What happened over the next three years is the stuff legends are made of. Alto launch. Call centre. Versa launch. Tie-up with SBI. Maruti True Value. Maruti Finance. Maruti Insurance. Extended Warranty. Maruti Genuine Accessories. Refreshed Zen. Esteem Diesel. IPO. The evolution of the promise from “Lowest Cost of Acquisition” to “Lowest Cost of Ownership” had happened in 36 months. The entire organisation worked as one to make it happen, and how!
The brand and organisation are in a similar existential vacuum right now. And it needs to turn itself around just like it did 20 years ago. And there are things going for it. The push for digital interfaces in the experience and purchasing process and “Maruti Suzuki Subscribe” are clear signals that feathers have been ruffled.
The customer has evolved much faster than most market leaders. It requires significant revision, restructuring and reorientation of strategy and investments.
I had seen a poster many years ago saying, “Elephants can’t dance!” That is true of most organisations that become too large to remain nimble in mind and action. A lot of convention and routine gets built into operations and financials not allowing for planned disruption. Maybe MSIL needs organisation and network restructuring to allow for that feared and revered nimbleness to return. That will ensure relevance, sustainability, and profits.
The purpose of the Maruti Suzuki brand is the democratisation of MOBILITY in India.
No more time to stick to only motors!
(The author is co-creator of Expereal India. Also, he is former head of marketing, product planning and PR at Volkswagen India.)
(DISCLAIMER: The views expressed are solely of the author and ETAuto.com does not necessarily subscribe to it. ETAuto.com shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
