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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

Who Needs an Asian Car?

India’s top automaker opts to go without


THE CHIEF EXECUTIVE OF India’s major car manufacturer doesn’t think much of efforts to produce a pan- Asian family automobile. In fact, 62-year-old R.C. Bhargava is willing to bet the future of his company, Maruti Udyog Ltd. (MUL), on the probability that success is no further away than his own backyard. “The Asian car is just a dream,” he says. “Almost all the major automobile manufacturers have tried making one, but up to now no one has succeeded.”

Bhargava sees no reason to change a successful formula at Maruti. He already holds a lucrative lock on a key market segment. Three of every four cars bought in India today are made by the company, a joint venture between Suzuki of Japan and the Indian government. More than 170,000 Indians last year bought MUL’s best-seller, the Maruti 800, even though the basic design of the $3,540 minicar is not much changed since its launch in 1983.

Fortunately for Bhargava, Maruti’s competition is even more stale. Hindustan Motors’ Ambassador began rolling off the line in the 1950s. The Padmini of Premier Automobile is of similar vintage. “The Maruti 800 has no competition,” says Dr. Sripad Bhatt, analyst for the Association of Indian Automobile Manufacturers.

In fact, the tiny Maruti hatchback, with an 800-cc engine, has been blessed from the outset. It benefited in the late 1970s from the powerful patronage of Sanjay Gandhi, son of former Indian Prime Minister Indira Gandhi. Sanjay named the car after a winged Hindu deity. Provided with free land on which to build, government loans and generous tax breaks, MUL took flight after Suzuki signed on and helped produce the first -- and only -- design for the subcompact. Today, versions of the car are available in Korea, Japan, Pakistan, and Europe under different names and built by different manufacturers.

MUL enjoys less dominance with its larger, pricier cars. Ford, Peugeot, Opel and Daewoo all have factories in India, though Bhatt says the overall market share of larger autos there is shrinking. The Maruti, at least, keeps motoring along -- sales are expected to rise 6% this year. Inevitably, challengers are lining up. Premier Automobiles is manufacturing the Fiat Uno, but the company faces labor problems. Indian conglomerate Tata expects to unveil early next year its Maruti-killer --the “Indicar.” It is said to be an indigenous design tailored for locals.

Should Bhargava be worried? For the moment, probably not. Government backing over the past 10 years has given Maruti a $335 million head start over competitors, says Lloyd’s Securities analyst V. Srinivas Reddy. Investment in plant and equipment has long ago been fully depreciated and “every rupee made is pure profit.” Says Bhargava: “Those who come cannot match us” in terms of costs.

Such profitability comes in handy. Last month, when heavily polluted Delhi threatened to stop fuel sales to cars failing emissions standards, Maruti owners were treated by the company to free tune-ups and emissions tests. “It was part of fulfilling our responsibility to society,” Bhargava said. It didn’t hurt Maruti’s popularity, either. -- by Jim Erickson and Arjuna Ranawana


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