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Passport to the New India: India’s Manufacturing Industry Competing on Quality

Suzuki defends its market share from competitors

In an effort to defend its market leadership position from foreign automakers, Maruti Suzuki India Ltd. plans to add a direct rail link to its Manesar plant, spend up to US$4.5 billion on land for new dealerships and launch its first sport utility vehicle. Investing in India is a lucrative proposition, and more major automakers are building plants in destination like India, China, and other Asian nations.

The home of all major manufacturers

“We are in a highly competitive environment. All the major manufacturers are now in India,” P.K. Roy, the head of the plant told Canadian financial advisors on the fourth day of a due diligence tour hosted by Birla Sun Life and Excel Funds. Maruti Suzuki dominates India’s domestic market with a 45 percent share, producing more than 2 million vehicles annually from its three manufacturing plants. The scale of Maruti Suzuki’s business is enormous. The company makes more vehicles in a single year than Canadians buy annually. A car rolls off each of the three Manesar plant lines every 60 seconds, with an average selling price of about US$15,000. On a tour of its Manesar plant, 45 km southwest of New Delhi, company officials showcased some of the many processes employed to reduce costs, right down to trimming unnecessary threads off screws. The plant relies on natural day light and gravity-assisted supply lines to help it contain energy costs and offers employees financial awards for coming up with small ways to improve efficiencies.

“When we lump the improvements together, they become huge,” Mr. Roy said.

But it is not just the size and efficiency of Maruti Suzuki that impressed the Canadian financial advisors.

“I would not hesitate about buying a car from that factory after seeing the quality of the work,” one of the advisors commented.

High-tech savvy

The company, which is 56 percent owned by Suzuki Motor Corp. of Japan, has invested heavily in precision manufacturing and quality controls, using thousands of advanced robots to perform all the welding at its three factories. Manual tasks, such as the tightening of bolts, are monitored by computers that ensure correct positioning and pressure applied. Maruti Suzuki has built its own power supply onsite using turbines powered by gas, diesel or steam to ensure critical power is not disrupted.

The attention to detail has paid off, with the company receiving top rankings in the J.D. Power customer satisfaction index for the last 16 consecutive years, Mr. Roy noted.

A growing middle class

India’s growing middle class is pushing automakers to update their product lines, and Maruti Suzuki says the Manesar plant will soon begin production of the company’s first SUV for the domestic market. The company also wants to expand its dealership network across the country to reach more potential buyers. Existing dealerships are independent owned, but the company plans to buy retail space across India that it will leaseback to dealers, thereby reducing some of the independent’s financial risk, Mr. Roy said.

The Maruti Suzuki brands include the Swift, Dzire and Alto models. At the moment, 95 percent of all the automobiles it makes are shipped to market by truck and only 5 percent by train. But Mr. Roy said that train shipments will rise significantly once the plant adds a planned direct rail link.

Many foreign companies are investing in India, and yours could be too. With a growing middle class, educated workforce, and business friendly prices, this is the place in the world to put your money.

Maruti Suzuki built its own 116 MW power plant at its Manesar Plant outside New Delhi to ensure uninterrupted electricity.

116 MW power plant outside New Delhi

passport to india

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