New Delhi: When the first Maruti 800 rolled out in 1983 from its factory in Gurgaon, then a sleepy and largely rural suburb of New Delhi, the only things Indian about the small car were the carpet, the battery and the tray on which it rested. Around 25 years on, 99% of the parts that go into the 800 are made in India.
On Friday, Maruti Suzuki India Ltd will lay the foundation stone for a 700-acre, state-of- the-art research and development (R&D) facility in Rohtak, Haryana. The company plans to spend Rs1,200-1,500 crore on setting up facilities including testing tracks, collision test areas, emission labs and a wind tunnel testing facility.
Graphics: Jayachandran / Mint
Behind this R&D investment is an ambitious objective: To design and build from scratch a car in India by 2012—the first for a foreign car maker.
From assembling a car that was almost wholly imported to developing one in India—albeit on an already existing platform—has been a long journey for Maruti. It is a story of steady incremental progress made by its engineers over the years; from localization to preparing cars for Indian conditions by changing suspension and air conditioning systems; and from effecting minor design changes to collaborating with their Japanese counterparts on designing entirely new vehicles.
Still, had it not been for an unexpected event in 1999, Suzuki Motor Corp. might never have started trusting Maruti’s engineers.
In April that year, when the Supreme Court decided to advance the implementation of Euro I emission norms, Maruti was caught by surprise. In a couple of months, it had to make sure that all its cars sold in New Delhi were Euro I compatible. At that time, New Delhi accounted for nearly one-fourth of the company’s sales.
Suzuki was unwilling to believe that Maruti’s engineers could modify the engines to launch the cars with the required technology. For Suzuki, it was an open and shut case; the company had never made Euro I-compliant cars without using fuel injection technology. Maruti, however, believed that it would be possible to do this with carburettor technology itself.
I.V. Rao, managing executive officer for engineering at Maruti, recalls how the company’s engineers rushed almost overnight to Japan. “We had a very tough meeting with our counterparts there,” says Rao. Tempers rose as both sides argued their case. Over the previous decade, Maruti had been collecting emission data from the 800, Esteem and Zen models, and on the basis of that it was able to convince Suzuki that it would be able to meet the requirements before deadline.
After three days of discussions, Suzuki agreed to allow Maruti to make the changes. This marked a turning point. “In research and development, people only believe in your capability once you actually do something,” says Rao.
But R.C. Bhargava, chairman and former managing director of Maruti, recalls: “Suzuki was never convinced we could do this. They kept checking the cars periodically.”
The early years
Almost immediately after starting operations in 1983, Maruti realized it had to aggressively work towards getting more parts made in India. Strict foreign exchange controls meant that the company had to run to the government for approvals every time it imported components.
It taught Indian vendors to make parts, but quickly realized that Indian component makers lacked the ability to meet delivery schedules or stick to quality specifications. “There wasn’t much of a supplier base in India then,” says Rao.
For instance, wheel rims in India were sent to car makers in the so-called primer painted condition with just the anti-rust paint on them.
Maruti was the first to insist that they be sent in a finished painted condition.
But when the vendors started doing this, the rims would reach the plant with a lot of scratches and defects. Similarly, the company faced problems with parts such as wire harnesses, glass for the windshields and windows and lamps.
Maruti’s prime task in those years was to increase the localization levels of the cars it made. The engineering team focused primarily on vendor development. Designs were sent from Japan, the drawings modified to suit Indian conditions and the plans sent to vendors. The company’s engineers would regularly visit vendors; many were often stationed in their factories and worked with vendors to improve the quality of their parts.
Then, in February 1984, Maruti faced a serious problem. It hadn’t met the deadlines on some parts that should have been localized and had to airlift them. A rather embarrassed company had to explain to the government why it needed the extra foreign exchange.
Litmus test: Maruti’s managing executive for engineering I.V. Rao says that in research and development, people only believe in your capability once you actually do something. Harikrishna Katragadda / Mint
This was when Maruti began taking small stakes in its suppliers. Along the way, new companies such as Asahi India Glass Ltd were set up after the only supplier of automobile glass, Hindustan Safety Glass, which serviced both Premier Automobiles Ltd and Hindustan Motors Ltd, had initially refused to supply to Maruti.
Maruti still has 11.1% stake in Asahi India and in doing so, has followed the Japanese model in which car makers hold shares in their large suppliers.
“The company has played a vital role in making vendors improve the parts they send to us car makers,” concedes the head of a rival car maker. This made its entry into India a lot smoother than it would have otherwise been, he added. Asahi, for instance, is now a Rs1,363 crore company that supplies to every car maker in the country except Mitsubishi Motor Corp.
Exports and the Omni
Having surpassed the initial quality glitches with suppliers Maruti’s engineering team received its first major task in 1986. The Maruti Van, which was used as a cargo vehicle in Japan, was launched in India for the passenger market. With its poor seating, a black interior and rough suspension, the car failed to impress Indian buyers.
The van was then redesigned and relaunched as the Omni, which went on to become a huge success in the Indian market. “It still has the same seat we designed,” says a visibly proud C.V. Raman, chief general manager of the engineering team.
By then, about 50% of the parts used in the 800 were made locally and Bhargava wanted the car to be exported. His rationale was simple: The quality level of Indian cars could only be tested when a model was exported.
Exports began in 1987, initially to Communist bloc eastern European countries and then to Italy and France.
People in India had never known what quality to expect and so if Maruti cars proved to be better than the Ambassadors and Fiats that were its only local competitors, they were satisfied, says Bhargava. “Getting critical customer feedback was important to us,” he says.
While European customers were satisfied with the performance of the 800, they complained about minor dents, defects in the paint jobs, the gap between the door and the body, the placement of the mats—the entire fitment was analysed and improved upon.
As a result, when the Zen was launched in 1993, the car was exported under the Alto badge to Europe from Day 1.
“Suzuki stipulated that all components (for the Zen) must be sent to Japan for testing as the specifications were very stringent,” says Krishna Kumar, Maruti’s former director of engineering. Just as the 800 and Omni were a generation ahead of cars in the Indian market, the Zen was a generation ahead of Maruti’s other cars, its engineers say.
Ironically, it was Suzuki’s tussle with the government that gave another boost to research work. The 1990s were not a happy period for what had then become a 50:50 joint venture between Suzuki and the government of India. The two sparred on a number of issues.
The conflict began with Suzuki wanting to raise money for expanding capacity by 100,000 units and ended with the government appointing R.S.S.L.N. Bhaskarudu as managing director, a choice bitterly opposed by Suzuki. The government had also alleged that Suzuki was deliberately going slow on transferring technology.
It was during this time, partly to overcome government criticism, that Maruti decided to send engineers to Japan on extended two-year terms. Since then, engineers have been sent there every year, allowing them to take part in the development of a vehicle from start to finish. This proved crucial in bolstering their capabilities and, more importantly, it taught them how to design cars.
In 2000, a design laboratory was set up in Gurgaon that allowed the India team to make clay models of products and Maruti’s engineers moved to make what the industry terms minor changes to models.
Since then, Osamu Suzuki, the company’s chairman, has said he plans to make Maruti a hub for research and development of small cars with an engine capacity less than 1,200cc. India also houses the only research centre the company has outside Japan. Maruti, which has been doubling its research team every year for the last two years, says it is on track to have a 1,000-strong team by next year, which would be half the size of the team in Japan.
“Perhaps the most important thing is that the recent research and development portfolio is aligned to the (Indian) ecosystem,” says Arun Jaura of Eton Technologies Group Ltd, who previously headed research activities for Mahindra and Mahindra Ltd.
According to Jaura, Maruti has done a superb job of understanding the type of cars Indians want and he sees this as key to the company continuing to come up with products relevant to the Indian market.
In 2002, the India team modified the front and rear portions—primarily the lights and bumpers—of the Zen. This was the first time a Suzuki car had been partly designed outside Japan.
Since then, it has been a smoother ride for the Indian subsidiary. Minor changes have been carried out on the Wagon-R and Zen Estilo (next week, Maruti plans to launch a new version of the Estilo). Teams of Indian engineers worked with their Japanese counterparts on designing the Swift in a process known as collaborative design.
During this time, Suzuki also veered away from its traditional car designs. Hirotaka Ono, Osamu Suzuki’s son-in-law, who died in 2007, led the company’s drive towards more sporty, sleeker designs. The Swift, launched in 2004, was the first manifestation of this. The car has been a runaway success in Europe and Asia.
Now on Maruti’s agenda is to make a new car locally on an existing platform. The planning for this has begun, but company officials are tight-lipped about the project which is expected to deliver results by 2015.