Integration with Suzuki's global R&D pays off
If Maruti Suzuki India is all set to become the global small car hub for its parent Suzuki Motor Corporation, as FE reported Wednesday, it’s for a good reason. Apart from the fact that the yen is making Suzuki’s small car exports uncompetitive—which is why others like Nissan have made India the hub for some cars—the move has been long in the making. In 2003, from a time when Maruti couldn’t 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 Maruti’s R&D with Suzuki’s. At that time, 40 of Maruti’s engineers had been seconded to Suzuki’s R&D centre in Hamamatsu, today that number is up to 250—while Maruti has ramped up its engineering department to 1,100 now to deal with the greater demand, this means most of Maruti’s older engineers (those who’ve 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 team—Maruti’s 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 Suzuki’s 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 India’s 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 2011-12—in 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 Maintenance’s Total Productive Maintenance awards, the number has nearly doubled to around 200 today. The Nano, and other examples of frugal engineering like it, aren’t that surprising given this track record.