Posted by: John Elliott | December 14, 2008

25th anniversary of Maruti Suzuki car that transformed India’s motor industry

It will never be as famous as the Model “T” Ford, nor the Volkswagen Beetle, but the little Maruti Suzuki 8OOcc car that was first sold 25 years ago today is the most significant vehicle ever produced in India.

The Ambassador is of course India’s most iconic saloon, but it is a symbol of the manufacturing industry’s failings, whereas the Maruti has been the catalyst for India’s modern and internationally competitive auto industry.

Today is the 25th anniversary of Indira Gandhi, then the prime minister, releasing the first ten 8OOcc cars to their customers at Maruti-Suzuki’s Gurgaon factory on the outskirts of Delhi in 1983 – where she was shown (below) the factory plan by V. Krishnamurthy, the company chairman.

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I was there, as The Financial Times’ new south Asia correspondent, and the next day reported Osamu Suzuki, chairman of the Japanese company, saying: “It is difficult to have a good operation in India”. He added that it would be achieved “providing the Indians do not expect to make too many of their components too quickly”.

Demonstrating the new start that Maruti marked, the imported management style decreed “the recruitment of shop floor workers with an average age of 20 who have never worked anywhere before, wear grey overalls, do physical exercises every morning and prompt time-keeping”.

It’s obviously worked because a total of 2.7m of the 800′s have been produced and it is still being sold – for Rs215,000 ($4,500), having been launched in 1983 for Rs52,500 ( then about $5,000).

I remember people in Delhi wondering how they would fit a driver into such a small car along with their families (they did!), and complaining about how it nipped in and out of  the traffic around stodgier vehicles (similar to earlier complaints in Britain about the iconic Austin-Morris Mini)

the Maruti 800

the Maruti 800

“The 800 made India a country that is now on wheels”, R.C.Bhargava, who was managing director years in the 1980s and 1990s and is now the chairman, told me today.

Originally an  Indian government-Suzuki 50-50 joint venture, the company is now Suzuki controlled and is producing 750,000 cars of all shapes and sizes. It is the clear market leader with a 40% market share.

Bhargava worked on the launch with Krishnamurthy, the founder-chairman who had been a top bureaucrat and now, in his 80s, heads the government’s National Manufacturing Competitiveness Council. [In March 2010, Bhargava produced a book on the company's history The Maruti Story]

Krishnamurthy was told by Indira Gandhi to revive the bankrupt Maruti car venture that had been started by her late son Sanjay Gandhi, and produce a “people’s car”.

She didn’t get what she wanted because the 800 became a car for  the middle classes and  was followed by larger models. But she did get a hugely successful joint venture with Suzuki which began to unlock India’s hidden manufacturing strengths that had been bottled up by post-independence economic policies.

O.Suzuki’s remark about not making many components quickly in India stemmed from the fact that there were virtually no component suppliers that could begin to make acceptable parts. There were also no concepts of quality or production control. Maruti changed all that, sparking a revolution that is now spreading across India’s manufacturing industry, which is why today’s anniversary is so important.

“Maruti brought to India the concepts of tight cost control and process engineering,” Gautam Thapar, chairman of Avantha (BILT, Crompton Greaves etc), told me for a Fortune magazine article two years ago.  “It brought the first wave of modern component technology with the concept of Indian entrepreneurs and Japanese companies together supplying Maruti as an anchor client”.

Baba Kalyani, chairman of Bharat Forge, the world’s second-largest forging company,  agreed: “It brought in a completely new breed of component manufacturing with modern products and processes. A new culture started”.

Not only were there no adequate component suppliers in 1983, but there was no concept of partnerships between a manufacturer and its suppliers. “A supplier was treated almost like a servant,” said Bhargava

Maruti changed that with a supplier development program, taking 25% equity stakes in some companies from Japan and elsewhere. Clusters developed in three locations, one of them around Maruti’s factory in Gurgaon on the outskirts of Delhi. Workers and suppliers were sent to Japan to learn management and production techniques and this interchange continues today – Maruti design engineers worked in Japan on the Swift that was launched in 2005.

Maruti has never had the recognition it deserves as the catalyst for India’s modern motor industry, nor for its wider impact on manufacturing. Krishnamurthy and his team created something of far more lasting importance than other more famous names – you see the result on Indian roads every day.

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Responses

  1. [...] Suzuki, the 82-year-old chairman of Japan’s Suzuki Motor Corporation, which controls the Indian company, is currently visiting India and said on Sunday evening that “the cause is not clear to us”. Most [...]

  2. It is really amazing feat what Maruti did this to India… Not many had thoughts of that it bring many on wheels … but I still feel it didnt get the credit which it desreved for this revolution..

    regards

  3. thanks Humphrey – but you’re too cynical – these guys really are proud of having been a calayst for change – India could do with more. It’s just not fashionable here to say they achieved something remarkable.
    je
    see Blog roll on the right for Humphrey’s blog

  4. Your conclusion is too pessimistic. What sort of recognition does any innovative manufacturer want except high sales which is what Maruti has achieved.


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