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Originally Posted by GTO I think you underestimate Maruti... |
Maruti's creativity in marketing their offerings as to what a typical Indian consumer "
values" is surely unparalleled. Almost genius IMO.
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For the last 10 years, people have been talking of Maruti's decline.
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Markets are dynamic, before, industry churn took 5 - 7 to 10 years, nowadays (from what I've observed) it can happen in ~3-4 years.
Tell me really, aren't we a tiny bit more informed than the lay-person about how the other companies must be planning to react ? Not just do we closely follow scoops, but our reach also makes our voices heard with auto-makers.
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Even after all the global biggies came & launched their mass market products in India....well, Maruti actually INCREASED its market share.
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Agreed, Maruti built a brilliantly managed company and grew its brand with the resources it'd been given. But those specific resources are now ageing & the value that can be derived out of them is reaching a saturating point.
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- In the last 5 years, they've launched more products than anyone else (along with Hyundai).
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Yes, they impressively maximised the leverage that could be derived out of the the brand that was built.
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Can you give us specific reasons why you think Maruti's share will decline? The way that I see it, they're pushing all the right buttons....
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In order to take on the market competition
after the next 3-4 years, they'll need to take things to the next level : Expand the dynamics of the design language, in-house (cost purposes) & ground-up development of a powerful + efficient (since
"efficiency" is synonymous to their brand) new-generation engine, supported by a superior gearbox.
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Neither has Maruti shown a major weakness and neither has the competition shown a major strength / advantage.
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Citing the
Diesel Celerio debacle would be an easy argument, but IMO they have only developed a tiny bit on their offerings. The Ciaz, although a brilliant offering in terms of "market perception", has its value limitations.
A transition from i20 to Elite i20 saw an exponential jump in value at similar price levels (or slight increases), (or even Manza to Zest for that matter) whereas Ciaz is priced significantly higher & prices almost touch D-segment levels.
So, with this serious limitation, I don't think they can add any more higher priced products & find almost no scope of
high paced growth as they've projected.
The new products which will be placed significantly higher (~14-18L) than
Brand Ciaz, must find takers who see value when compared to competition. And at that level, competition isn't going to keep quiet.
Just look at how the TUV300 is priced almost
~35% lower than the S-Cross. maybe it has design limitations (subjective), but its here on time & challenging the value of S-Cross.
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- Their brand value is only increasing. Customer trust in them has only gone up.
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But at higher levels their typical customers change. From customers who've the likes of Tata / GM among their options, the counter argument to choose Maruti was easy.
Its a long shot of Maruti trying to cater to consumers who've had very reliable options in Japanese & Korean brands (brands that have rather impressive service network that have already been catering to the premium segment).
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- Their dealership network continues to widen. Ditto with the service network.
- Maruti owners are generally a happy lot in the area of reliability and after-sales. Maruti's 'can't go wrong' reputation is stronger than ever.
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As much as their tight control over the wide service network is impressive, IMO its over-rated. Not just large multi-brand service centers, but even smaller workshops can change the occasional tie-rod or even suspension without much hassle, at a lower cost than M.A.S.S.
Couple those occasional changes with the regular maintenance of changing oils, filters etc. and the cost difference is significant enough for people to choose others.
The "can't go wrong with Maruti" has its limitations to the present segments they cater. Even in the latest report we're seeing a comparative decline in Maruti's sales despite the addition of a healthy number of S-Cross units moving.
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- They're bringing out new technologies in the mass market (e.g. AMT, SHVS).
- The Dzire beats all the newer compact sedans, the Ertiga owns the Mobilio, the Alto is undeterred by the Eons & Gos of the world etc. etc.
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They
have numbers thanks to their brand, which'll make it viable from them to customise features to provide high value, and those can come for the company over a long term with a reduced rate of return / profit margins in an extremely stable manner.
They have built a brilliantly managed company to make it a possible path,
but^2 they should have the motivation (long term investor $$) to do that.
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So, what exactly makes you say that Maruti will become weaker in the next 5 years?
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To put it more precisely, I'm not saying Maruti is going to decline massively (like to 40% of current levels), I just believe that it has reached its potential and may drop to 70-80% in the next 2-3years.
All this may be dismissed as abstract stretches of imagination, but I would go so far as to assume that this possibly is partly the reason Mayank Pareek has moved on.
(Apologies if there is an error in drafting this reply, had barely 20-25mins before the Puja.)
Happy Ganesh Chaturthi