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Competition hammers Maruti

Dec 29, 1999

India's, leading auto manufacturer, Maruti Udyog Ltd (MUL) has seen its market share erode from over 80% last year to just over 65% over the period April-November 1999. Improved sales performance by TELCO, Daewoo and Hyundai is responsible for Maruti's declining market share. MUL, a joint venture between the Indian government and Suzuki Motors of Japan, has a presence in the small car segment (800, Zen), mid-sized segment (Esteem, 1000), and the utility vehicle segment (Gypsy)

Over the years, Maruti has ruled the roost in a near monopoly auto market. The company introduced models at will and did not think twice about burdening the consumer with a heavy price tag. With no competitors to worry about, the company got away with it for all these years.

But this changed dramatically as others began launching their products in the market. Maruti's days of leisure were over. Launched only last year, Hyundai (Santro), TELCO (Indica) and Daewoo (Matiz) have done exceeding well for themselves.

Hyundai has capitalised on its headstart and has grabbed 12% market share. TELCO's market share is pushing 8%, while Daewoo has mustered a share of slightly over 5%. All this has come at the expense of Maruti.

However, the company has taken steps to correct this. It began by slashing prices of its flagship models (800, Zen). It has introduced new models (Baleno. Wagon R) and has more (Alto) in the pipeline. Moreover, the company has an impressive network of service and spare parts distribution centres. This is something the competition will find most difficult to duplicate. The company has performed very well for itself over the past three months, and has sustained market share.

However, Maruti cannot rest on its distribution network alone. It will have to keep on innovating with new models at regular intervals. Else it will find its market share eroding on a sustained basis.

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