Case Study on Maruti Swift

Maruti launched one of its biggest success stories ever, Swift, into the Indian market in May 2005. The hatchback has been brought into the market with huge buzz and wide speculation that in its first quarter, it had a booking of around 31,000 vehicles. It is very interesting to learn and know how this brand Swift has been built. Swift is Maruti's first new model built from scratch after Suzuki took charge of the Indian venture.

Objectives of Swift

• The Emerging Hatchback Customer: Maruti sensed a nascent need in the market for a hatchback with a few luxury features, and has realised that while its 800 had been its bread and butter for long, and models like Esteem and Baleno doing from just about surviving to well enough in the market, it had to concentrate on the Hatchback segment which had increasing demand.

• Huge Opportunities in Hatchback: With players like Hyundai Getz, Fiat Palio and Tata Indica doing well in the Indian market, Maruti sensed a position for itself in the segment.

• Diesel Opportunity: While Maruti’s smaller vehicles dint allow them to be made Diesel compatible because of engine requirements, Maruti sensed an opportunity in the Hatchback segment for a model that could be converted to a Diesel offering in due course of time. This could offer a foothold for Maruti in the 19% Diesel Car market in India.

• Image Makeover: Maruti has always been branded as a carmaker for fuel-efficient India, that has always gone easy on the looks and styling department of it. And here was a real chance in front of Maruti of proving those detractors wrong.

• Globalisation of Suzuki: The globalisation decision of Suzuki thus sharing its operations across all its markets, enabled Maruti to think big and design a car usable for various markets.

• Innovation: There was a requirement for innovation in the Maruti stable with most of its names aging out, and opening up avenues for competitors to dominate. All this and more was because of Maruti not being contemporary enough in styling and offering. This compelled Maruti to think towards a stylish, durable and affordable car for the Indian Market in the hatchback segment and thus, Swift was born.

Company Profile

Maruti collaborated with Suzuki of Japan to produce cars in 1983. At this time, the Indian car market had stagnated at a volume of 30,000 to 40,000 cars for the decade ending 1983. With MUL’s entry, the passenger car market saw a spurt in demand. The sector registered 18.6% CAGR growth in sales during 1981-90. The company reached a total production of one million vehicles in March 1994, becoming the first Indian company to cross that milestone. It crossed the two million mark in 1997. In 2001, it launched the new businesses вЂ" вЂ?True Value’, вЂ?Maruti Finance’, вЂ?Maruti Insurance’ and вЂ?N2N’. In 2003, the company listed on BSE & NSE after its public issue.

MUL вЂ" now Maruti Suzuki Ltd вЂ" is the leading automobile company in the passenger car segment with over 50% market share in FY 04. It has presence across many segments in automobiles. It is the leader in mini and the compact segment with brands like вЂ?800’, вЂ?Alto’, вЂ?WagonR’, вЂ?Swift’ and вЂ?Zen’. It also has presence in the mid-size segment with its вЂ?Esteem’, вЂ?Baleno’, newly launched вЂ?Swift DZire’ brands and the вЂ?Omni’, вЂ?Vitara’ and вЂ?Versa’ models.

The sales figures for Maruti in 2007-08 are as follows:

Seg

ment Models March Till March

2008 2007 % Change 2007-08 2006-07 %change

A1 M800 6353 6141 3.5% 69553 79245 -12.2%

C Omni, Versa 8041 8661 -7.2% 89729 83091 8.0%

A2 Alto, Wagon-R, Zen, Swift 41869 47068 -11.0% 499280 440375 13.4%

A3 SX4, Dzire, Esteem, Baleno 7536 2414 212.2% 49335 29697 66.1%

Total Passenger Cars 63799 64284 -0.8% 707897 632408 11.9%

MUV Grand Vitara *, Gypsy 622 272 128.7% 3921 3221 21.7%

Domestic 64421 64556 -0.2% 711818 635629 12.0%

Export 5875 7216 -18.6% 53024 39295 34.9%

Total Sales 70296 71772 -2.1% 764842 674924 13.3%

* SX4 launched in May 2007, Grand Vitara launched in July 2007, DZire launched in March 2008, Baleno figures are for 2006-07

Launch of Swift

Swift has always been targeted as a stylish, youthful vehicle for contemporary India. It was thus prudent to choose a mass medium that has never been used before to create buzz around Swift. Probably, this is what made Maruti tie up with Yash Raj Films вЂ" a premium production house in Bollywood вЂ" to tie up with their mega production of 2005 вЂ" Bunty aur Babli вЂ" to launch Swift.

Maruti Udyog inked an in-film product placement deal with Yash Chopra's Yashraj Films - the first ever by the market leader - for featuring Swift in their film Bunty aur Babli. As part of this strategy, the car maker timed the Indian debut of its World Car with the countrywide release of the Bollywood potboiler in May. The main idea was to keep the excitement high around the product introduction. The film release and the car launch happened in the same week. There were three versions of Swift at launch. All had the 1300 cc Esteem engine, suitably tuned for the hatchback version.

The pricing for the variants was as follows:

Model Price

Swift LXi Rs. 387000

Swift VXi Rs. 405000

Swift ZXi Rs. 485000

These were declared as the introductory prices, and the prices increased later. The company declared that they had received an order for 8000-odd cars before launch.

Even the top end version was priced below that of a three-box car like the Indigo. That was smart - if the Swift would cost more than an Indigo, that would have most looked good to the value conscious Indian.

The