PGDM 2018-2020

Marketing Research

(BM-MK-02)

A Project Report on

“Economic slowdown Impact on Maruti Suzuki Company in Delhi NCR

Region.”

Submitted to: - Submitted by: -

Dr. Vishal Shukla Shivanga Gupta (BM-018300)
Shobhit Shukla (BM-018304)
Vaibhavi Sharma (BM-018311)
Sudhanshu Kumar (BM-018331)
Sumit Kumar Jha (BM-018332)
Tushar Tiwari (BM-018341)
Introduction: -

Maruti Udyog Limited was founded by the Government of India in 1981, only to merge with
the Japanese automobile company Suzuki in October 1982. The first manufacturing factory
of Maruti was established in Gurgaon, Haryana, in the same year.
Further, Maruti Udyog Ltd was incorporated through the efforts of Dr. V. Krishnamurthy.
In 1982, a license and joint venture agreement signed between Maruti Udyog Ltd, and Suzuki
of Japan. At first Maruti Suzuki was mainly importer of cars. In India’s closed market, Maruti
received the right to import 40,000 fully built-up Suzuki in the first two years, and even after
that the early goal was to use only 33% indigenous parts. This upset the local manufacturers
considerably. There was some also concern that the Indian market was too small to absorb the
comparatively large production planned by Maruti Suzuki, with the government even
considering adjusting the petrol tax and lowering the excise duty in order to boost sales.
Local production commenced in December 1983.
In 2000, Maruti became the first car company in India to launch a Call Centre for internal and
customer services. In 2001, Maruti True Value, selling and buying used cars was launched.
Relationship between the Government of India, under the United Front coalition and Suzuki
Motor Corporation over the joint venture was a point of heated debate in the Indian media
until Suzuki Motor Corporation gained the controlling stake.
Maruti Suzuki has three manufacturing facilities in India. All manufacturing facilities have a
combined production capacity of 1,700,000 vehicles annually. The Gurgaon manufacturing
facility has three fully integrated manufacturing plants and is spread over 300 acres.
Research Question: -

 Name

 Gender

 Age

 Income

1. Have you purchased Maruti Suzuki 4-wheeler in past?

 Yes

 No

2. What encourage you to buy Maruti Suzuki cars?

 Fuel Efficiency

 Service Centers

 Spare Parts Availability

 Resale Value

 Advertisement

3. How many members are there in your family?

4. How much is your usual run per month (in Km.)?

5. How long from now are you planning to purchase the vehicle (in months)?

6. How are you planning to purchase your vehicle?

 Full Cash Payment

 Full Finance (without down payment)
 Partial Finance

7. Which segment are you planning to buy your car?

 Petrol Variant
 Diesel Variant

 CNG/ Petrol Variant

 Electric Variant
Objective: -

 To study the stressed Maruti Suzuki automobile sector in Delhi NCR region.
 Also understand why Maruti Suzuki has decided to shut down production of
passenger vehicles for two days in its Gurugram and Manesar plants?

Need of the study: -

 To analyze the impact of government policies and norms on the company so that the
company could get a good escape from the stressed state.
 This study will also provide ample amount of information to the company to come up
with some strategies to dominant its growth rate from that of its competitive threat
like Ola and Uber.
 What are the impact of economic slowdown on Maruti Suzuki production at
Gurugram & Manesar plants?
Literature Review: -

 India has enjoyed higher growth during the last two decades. Growth accelerated
from an average of 5.8% in the 1990s to 6.9% in the 2000s and was still at 6.6%
between 2010 and 2013. The GDP per capita also grew at a faster pace, from 3.8%
in the 1990s to 5.3% in the 2000s. At this pace, the GDP per capita doubles every 14
years, which, for the huge size of the Indian population (1.25 billion of individuals
in 2013), is an important achievement. As a consequence, the share of absolute poor
has declined significantly from 53.6% in 1988 to 24.7% in 2011, and household
final consumption expenditure increased 2.6 times from 1990 to 2013. The middle
class has expanded in big cities and in smaller ones and enlarged the market for
durable consumption goods. It represents less than 10% of the Indian population, or
around 70 million people (Meyer and Birdsall, 2012; Dadush and Ali, 2012). This
means that the Indian middle class has, for now, a smaller share of the population
than in other emerging economies and might expect to expand in the near future,
provided that the growth rate remains high.
 Maruti Suzuki Ltd. was incorporated on Feb’24,1981 as Maruti Udyog Ltd Over the
years the company product range was widened and ownership was also expanded,
Oct’2,1982 company signed with Suzuki Motor Corp. Japan. In 1983, company
started production with Maruti 800.
 Maruti Suzuki Ltd is India’s largest passenger car company accounting for over 50%
of domestic car market. Japanese car market held 55.21% stake in M.S. as on
31/12/2017.Company is engaged in manufacturing, purchasing and sales of motor
vehicles & spare parts.
 According to Society of Indian Automobile Manufacturers (SIAM), Automobile
sector’s worst sales performance with 35% decline was in the year 2000. In addition,
year 2008-09 and 2013-14 also faced slowdown in the Automobile sector in India. At
present, factors causing slowdown in automobile sector has the most impact in one of
the major automobile firm i.e. Maruti Suzuki.
 Maruti Suzuki Product
range at present

Nexa Arena True Value Commercial

Alto K10
S-cross Wagon R Super CARRY
Ciaz Celerio Eeco CARGO
Baleno Celerio X
Ignis Swift
XL6 Dzire
Eeco

 According to Maruti Suzuki MD Kenichhi Ayukawa, some support from the

government would help revive demand in the domestic automobile market, which had
reeling under deep slowdown for the past one year. In the past recessions, tax
deductions had helped encourage the market. He urged the government to reduce GST
on new vehicles to 18% from the current 28% at least temporarily, announce a vehicle
scrappage policy, and easy credit availability to the sector to boost demand. Strict RBI
norms are holding NBFCs from providing loans to end users through PSU banks.
About 275 NBFC lenders are under tight scrutiny of RBI particularly on their
interlinkages with commercial banks. Together these NBFCs account for 85% of the
total assets in the sector, and are at the forefront of ensuring last mile credit to Indians
buying vehicles.

 Also, customs department wants the auto-industries to pay 28% GST on imported
plastic goods and other auto parts. At present it is 18% for auto-industries and other
industries. But the customs department has sent notice to various auto-companies,
asking them to pay a higher tax on imports, a decision not favorable for companies
already going through stress. Also, the GST on pre-owned car market is 18% as
compared to new cars. The Pre-owned car market also grows at a higher pace than the
 new cars. Used car sales surpassed the 4-million-unit mark in 2018-19 i.e. 1.2 times
the size of new car market. However, in India it is not regulated and monitored as it is
done other countries like USA where out of 4 people buying cars only 1 buy a new
car and 3 buy pre-owned vehicles.

 Maruti Suzuki India operated for the past few decades. Political compulsions and
management dictates eroded the very fabric of organizational society in which the
workers were operating. The greed of the management resulted in implementation of
HR policies which were diametrically opposite to conducive labour-management
relations. Seven strikes in the last 16 years (1995-2011) -- that is the picture we get of
Maruti Suzuki India at their Manesar plant. This case study highlights the practices
which were adopted by the management at the Maruti plant at Manesar and the
repeated rejection of the same by the educated workers of the plant. In spite of the
repeated strikes by the workers, the management was firm on implementing some of
the measures, which ultimately led to serious consequences.

 At present, factors causing slowdown in automobile sector has the most impact in one
of the major automobile firm i.e. Maruti Suzuki. The passenger car sales are down by
42% at 65993 units vs 1.14 lakh units. It is the lowest fall in 19 years.

Hypothesis: -

Ho = Govt. Policies and GST is impacting on the slowdown sales of Maruti Suzuki
H1 = Govt. Policies and GST is not impacting on the slowdown sales of Maruti Suzuki
Research Design: -

A research is a framework or blueprint for conducting the marketing research project. It

details the procedures necessary for obtaining the required information, and its purpose is to
design a study that will test the hypothesis of interest, determine possible answers to the
research questions, and provide the information needed for decision making. Conducting
exploratory research, precisely defining the variables, and designing appropriate scales to
measure them are also a part of the research design. The issue of how the data should be
opened from the respondents must be addressed. It is necessary to design a questionnaire and
a sampling plan to select respondents for the study.

Research can classify in one of three categories:

 Exploratory research
 Descriptive research
 Causal research

The classification is made according to the objective of the research. In some cases, the
research will fall into one of these categories, but in other cases different phases of the same
research project will fall into different categories.

Sampling Design: -

In sampling design, we target those area where Nexa, Arena and True Value showroom
exists, because where we target the customer and know about their buying behavior and
review about the car that he willing to purchase.
Construct: - 1.

Government Irregular Policies

S. No. Statements SD D N A SA
1. If government provide incentives such as Tax
Benefits, discounted insurance on new car that
would encourage the owners to scrap old vehicles.
2. In India, 4-wheeler is not a market for Electronic
Vehicle.

3. India plans to achieve 30% of 4 wheelers by 2030

as Electronic Vehicle is unrealistic.

4. High GST of 28% makes a strong impact on 4-

wheeler purchase decision.

Construct: - 2.

BS – 6 Emission Norms

S. No. Statements SD D N A SA
1. You would prefer to purchase BS-6 car because it
is the future.
2. It is good option to buy the diesel cars before 2020.
3. BS-6 emission norms will help to improve the air
quality of India.
4. If BS-6 was introduced 2 years later (as planned
earlier), it would affect your purchase decision.
Construct: - 3.

Pre – owned car market

S. No. Statements SD D N A SA
1. Pre-owned car offers great deal in comparison to
new cars.
2. Maruti True Value offers a reliable deal as
compared to other channels like- OLX, Cars24,
Mahindra First choice Wheels etc.
3. Given the fact that the new cars depreciate by at
least 20% in the first year, you would resell your
car’s ownership to others in 5 years.
4. Pre-owned car market is unstructured and needs to
be regulated.

Construct: - 4.

Daily Commute and Convenience

S. No. Statements SD D N A SA
1. Personal 4-wheeler is the most reliable way to
commute to your daily work place.
2. Parking space is easily available at my work place.
3. Monthly parking charges are too high that you
prefer to commute by public transport or by OLA/
UBER
Operationalization of Constructs: -
The above construct is measured with the help of few attributes:
 Perception of respondent towards government irregular policies.
 Opinion of the respondent towards BS-6 omission norms.
 Attitude of the respondent towards pre-owned car markets.
 Behavior of the respondent related to the means of commutation.

Proposed outcome of study: -

The proposed outcome of the study would be the clarity of the extent of government irregular
policies and the consequences of the same on an automobile sector specifically concentrated
to Maruti Suzuki. Also, through the study it is easy to implicate the needs and attitude of the
potential buyers towards the company so that catering their needs accordingly becomes easy.

References: -
 https://auto.economictimes.indiatimes.com
 https://www.businesstoday.in
 https://www.crisilresearch.com/#/industry/carutilveh/newsAnalysis
 https://economictimes.indiatimes.com
 Ms. Nishtha Saluja (25/08/2019) Economics Times.
 (30/08/2019, P. 4) Economics Times.
 ET Bureo (10/08/2019, P. 5) Car sales in august fall the most in 2 decades.
 Rajan Wadhera (05/09/2019, P. 16) Cut GST on automobile spare demand.
 Sarmishtha M (03/09/2019, P. 8) Maruti to roll out CNG models of all small cars.
 ET Bureo (02/09/2019, P. 5) Auto slide continues in august, but revvable steps offer
goals.
 ET Bureo (04/09/2019, P. 9) Auto dealers seek cut in GST.
 Nag, B. (2015). Slowdown of the Indian Economy and Changing Consumption
Pattern: What Is There for the Automobile Industry? In Global Automobile
Demand (pp. 136-158). Palgrave Macmillan, London
 Chakraberty, S. (2015). Capacity Building through Knowledge Management: How
Vedic Concepts Can Interpret the Occurrences at Maruti Suzuki India, Manesar.
In Promoting Socio-Economic Development through Business Integration (pp. 355-
377). IGI Global.
 CHAKRABERTY, S. (2014). IMPACT OF CHANGING SOCIO-ECONOMIC
CONTEXT ON BUSINESS: CASE STUDY ON MARUTI SUZUKI INDIA,
MANESAR. CLEAR International Journal of Research in Commerce &
Management, 5(2).