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Maruti Udyog Limited (MUL) has been the largest passenger car manufacturer in India since 1986. In FY02, the company sold of 339,964 cars, which is 58.6% of the Indian passenger car market, more than three times the share of the manufacturer ranked second.
The company has a diverse product range that includes ten basic models with over 50 variants, of which nine models are manufactured by the company itself and one is imported from Suzuki, with prices ranging from approx. Rs 0.2 m to Rs 1.8 m.
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MUL manufactures cars for most segments of the Indian passenger car market, and is the market leader for passenger car sales in India.
|Segment Volumes (Nos.)||FY02||Market share|
|Segment A (below Rs 0.3 m)||206,350||100%|
|Segment B (Rs 0.3 m - Rs 0.5 m)||118,021||40.3%|
|Segment C (Rs 0.5 m - Rs 1 m)||14,255||19.6%|
The entry of Maruti expanded the overall demand for passenger cars in India, leading to the industry growing at a CAGR of approximately 25% between fiscal 1984 and fiscal 1990.
Maruti Suzuki India Ltd. (IPO)
During 1986 to 1997, Maruti was a principal car manufacturer in India. In order to facilitate development of the car industry, GoI has substantially lowered the rates of import duties levied on cars and components.
Suzuki Motor Corporation (Japan) and GoI are the joint promoters of the company. With 54.2% stake, Suzuki has management control of MUL's operations.
GoI's stake will reduce to 20.8% after this offer. Even post this offer, GoI has the right to sell the remainder of its shareholding.
Suzuki is the largest manufacturer of mini cars in Japan since FY74, in terms of sales volumes, with a market share of 31.6% in 2002. The company was ranked as the 11th largest vehicle manufacturer globally in terms of volumes in 2000 by Automotive Intelligence. In 2002, Suzuki had a 22% share of the Asian market for vehicles exported from Japan, as per the Japan Automobile Manufacturers Association.
The passenger car industry in India grew at a nominal CAGR of approximately 3.6% during the 1960s and the 1970s.
Sales of passenger cars were limited by supply.
There were only two manufacturers in the market, Hindustan Motors and Premier Automobiles, and they had limited production capacities. The import of passenger cars was restricted to the State Trading Corporation (STC) and foreign diplomats. There were quantitative restrictions on imports. The rate of customs duty levied on cars was 225%.
In mid-1993, GoI delicensed the passenger car industry in India. Overseas entities were permitted to set up automobile manufacturing facilities in India through joint ventures with Indian entities. The overseas entities were permitted to own up to 51% of the equity of such joint ventures until 1995 and more than 51% after 1995.
As a result, overseas manufacturers such as General Motors, Ford, Daimler-Chrysler, Peugeot, Fiat and Daewoo Motors entered the passenger car and utility vehicles market in India. Most of the new car manufacturers introduced cars in the mid or large car segments.
Premier Automobiles Limited and Maruti were the only manufacturers in the entry-level small car segment, during this period. Between fiscal 1993 and fiscal 1997, demand for passenger cars increased at a CAGR of 24%.
In FY00, the Indian passenger car market grew sharply by 59.7% over the previous year primarily due to the entry of new car manufacturers such as Hyundai and Telco.
They introduced new models such as the Matiz, the Indica and the Accent.
Futures & Options Analysis of Maruti Suzuki India (MARUTI)
In FY01, there was a correction in demand with a negative growth rate of 6.8%. In FY02, the market stabilized and grew by 0.9%.