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BUSINESS: MARUTI UDYOG
Tapping The Third Component
In developed markets,
the purchase price of a car is only a third of the total consumer spend
during the ownership cycle of the vehicle. A third is accounted for by
fuel. The rest goes into support services like vehicle insurance, auto
finance, corporate lease and fleet management. It is this third component
that MUL wants to tap under the brand name True Value. On its agenda is
a slew of partnerships with corporates, banks and insurance companies
to get into auto leasing, fleet management, finance and insurance. There
are plans of getting into the used-car business as well. Two teams of
dealers have already been sent to the US and Japan to study the second
car markets. "All services under one roof will bring us the revenue
and provide our customers the ease of transaction," says Khattar.
Spares alone had brought in Rs 440 crore to the MUL kitty in 2000-01.
"Growth
in sales is okay but at what cost? One has to look at the bottom
line also."
Rajiv Dube,
General Manager
(Commercial), Telco
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Besides, the company is working to boost its
customer service and after-sales support through more and better managed
service stations. Says Khattar: "It is the services which will keep
customers coming back to us." It has hired consulting firm Accenture
to rate Maruti dealers every six months.
The company is also adding layers to the two-tier
services network. The dealers (who sell cars, spares and service) and
mass (Maruti Authorised Service Station) network apart, MUL in a joint
venture with Sumitomo will have a middle tier of Maruti Service Master
outlets which will deal with used cars and provide spares and services.
This will be a mix of company-owned and franchise operations. "We
will have a model company outlet in major cities which will act as benchmark
for our franchisees," says Khattar. Delhi already has the first company-owned
Okhla Service Master which will serve as the benchmark for other franchisees
across the country.
Under the brand name Express Highway, Maruti
is planning to provide company authorised service stations along eight
major highways of the country in 2001-2. To buttress this network further,
MUL plans to have authorised neighbourhood mechanic shops for odd repairs.
Trial runs have already begun with two repair shops in Delhi.
The rejuvenation plan also seeks to shake up
the company's complacent culture. Managers and departmental heads have
been reshuffled for the first time to allow for cross-functional exposure.
From April, pay packets of all executives and managers have been linked
to their performance. Much of the success of the strategy will depend
on the days to come. With Suzuki Motors declining to pick up the Indian
Government's stake, things still look uncertain for MUL on the disinvestment
front. But if all goes well, the company hopes it will regain its grip
on Indian roads.
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