FE Editorial : Marutiís long drive

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SummaryIf Maruti Suzuki India is all set to become the global small car hub for its parent Suzuki Motor Corporation, as FE reported Wednesday, itís for a good reason.

If Maruti Suzuki India is all set to become the global small car hub for its parent Suzuki Motor Corporation, as FE reported Wednesday, itís for a good reason. Apart from the fact that the yen is making Suzukiís small car exports uncompetitiveówhich is why others like Nissan have made India the hub for some carsóthe move has been long in the making. In 2003, from a time when Maruti couldnít even change the grill on a car without Suzuki engineers getting involved, it actually designed the new-look Zen, and at a cost that was around a third lower than what it would have cost were Suzuki to be involved. While that looks like a small move today, in retrospect it was the start of a deeper integration of Marutiís R&D with Suzukiís. At that time, 40 of Marutiís engineers had been seconded to Suzukiís R&D centre in Hamamatsu, today that number is up to 250ówhile Maruti has ramped up its engineering department to 1,100 now to deal with the greater demand, this means most of Marutiís older engineers (those whoíve been around for 4-5 years) have served in the global R&D centre for anywhere between six months to two years. The new Suzuki R&D centre in Haryana, complete with a test track, was part of this process. With this integration, by the time the global Swift was being designed, it had Maruti engineers who were part of the teamóMarutiís design chief is part of the unified global R&D team for all cars today. By 2005, partly as a result of the booming Indian market, Maruti was producing more cars in India than were being produced in Japan for the home market and, by 2006, Suzuki was bringing in 3,000 of its dealers and sub-dealers to study the way Maruti was being run and how its dealerships were structured. Today, Maruti accounts for around a fifth of Suzukiís global sales and around 40% of profits if you include what Maruti pays by way of royalties and other payments like the kits that are imported (30% if you exclude these).

While Maruti has benefited from the extensive vendor base that Suzuki helped set up right from the time it entered the Indian market in the mid-1980s, the larger upgradation of Indiaís technical skills has played a major role. Which is why engineering exports rose from 15% of total exports in 2000-01 to around 22% in 2011-12óin terms of value, they grew 10 times. That again, is not surprising given the dramatic jump in quality levels. India has around 30 companies who have the prestigious Deming quality award today as compared to around a tenth a decade ago. In terms of the Japan Institute of Plant Maintenanceís Total Productive Maintenance awards, the number has nearly doubled to around 200 today. The Nano, and other examples of frugal engineering like it, arenít that surprising given this track record.

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