Market Expansion Strategies of Maruti Udyog

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Case Details:

Case Code : MKTG113
Case Length : 21 Pages
Period : 1999 - 2005
Pub Date : 2006
Teaching Note : Available
Organization : Maruti Udyog
Industry : Automobiles
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Let's take on the world and show them what we are all about."

- Rohtas Mal, Chief General Manager, Marketing & Sales, MUL, in 1999.1

"I believe in Dr. C. K. Prahlad's concept of finding value at the bottom of the pyramid. We are trying to increase market penetration through several innovative schemes. There is still a very large segment of our population which cannot afford a car."

- Jagdish Khattar, Managing Director, MUL, in 2004.2


Maruti Udyog Limited's (MUL) share of the Indian passenger vehicle market dropped to below 50% in 2004-05 (Refer to Exhibit I for the performance of the Indian passenger vehicle industry and MUL between April 2003 and March 2005). The future of MUL's low-cost model - the Maruti 800 (M-800) - was at stake due to the entry of global automakers into India.

M-800 had dominated the Indian car market since it was launched in 1984. The introduction of new cars by competitors made the M-800 look obsolete as it had not been changed in any major way for over two decades. Apart from the increased competition, MUL also had a few other problems on its plate.

There was a delay in setting up of a plant in India for manufacturing diesel engines and transmission systems for cars. The engines for its diesel variants were imported from other countries, and there were limits on the quantities it could import. In the market, MUL's models like the Zen, Alto, WagonR, and Baleno were showing mixed results.

While Zen, Alto and WagonR were successful, Baleno failed to live up to MUL's expectations. Its utility vehicle 'Versa' met with a disastrous response from the Indian consumer. In addition, rising incomes, the growth in the used-car market, and availability of easier finance options, led customers to shift their allegiance to other models from competitors. To reduce its excessive dependence on a single model (M-800), the company had restructured the strategy for the M-800, and planned for product upgrades and new product development. In tune with changing customer preferences, the company launched its hatch-back model, 'Swift' in May 2005, to compete with Hyundai3 Getz and Fiat4 Palio.

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1] Radha Dhawan, "Khattar fights back," Businessworld, December 27, 1999.

2] Gaurav Raghuvanshi, "Maruti's many lives," The Hindu Business Line, October 28, 2004.

3] Hyundai Motor India Limited, established in 1996, was a subsidiary of Hyundai Motor Company, South Korea's leading automobile manufacturer.

4] Fiat Auto SpA, headquartered in Turin, Italy, was established in 1899.

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