How the project for a people’s car took off.
On January 18, 2014, a firebrick red Maruti 800 rolled out of the Gurgaon assembly line of the country’s largest carmaker, Maruti Suzuki — the last of the bestselling car that revolutionised road transport for millions of Indians.
When the first 800 got ready to hit the streets on December 14, 1983, it was a culmination of an initiative taken more than a decade earlier.
The concept of a “people’s car” came up in the early Seventies. Subsequently, Prime Minister Indira Gandhi’s Cabinet proposed the production of a fuel-efficient, indigenous automobile that middle-class Indians could afford. Gandhi’s son Sanjay was entrusted with the venture and was handed out the contract and the exclusive production licence. In June 1971, a company called Maruti Ltd was incorporated under the Companies Act with Sanjay Gandhi as its first managing director.
Sanjay had first contacted Volkswagen AG for a possible collaboration and joint production of the Indian version of the original people’s car, the Beetle. However, this company went into liquidation in 1977. The government salvaged the Maruti project in the early 1980s and started scouting for an active foreign collaborator. Japan’s Suzuki Motor Corporation was eventually chosen.
Shinzo Nakanishi, the former managing director and CEO of Maruti Suzuki India Ltd, was one of the first Suzuki representatives to come to India in 1981 to evaluate its investment opportunity. Last year, Nakanishi, a close confidante of Osamu Suzuki, recounted his initial mission. Though the Japanese firm “didn’t know India at all”, after he visited India, Nakanishi said he felt confident about the prospects of the venture. “First, I felt India was promising. Second, we had a feeling that the government was a good partner,” Nakanishi said in his last press briefing as the MD and CEO of Maruti Suzuki in March 2013.
Maruti Udyog Ltd was formed as a result of the Nakanishi report, following which a joint venture agreement was signed between the Hamamatsu-based small car-maker and the government of India in 1982. Suzuki acquired a 26 per cent stake in the venture, with an option to increase it to 40 per cent.
To begin with, Maruti had 883 employees on its roll. The factory was set up in Gurgaon and the Maruti 800 was launched in December 1983, followed by India’s first mini van – the Omni. The original 800 was based on the Suzuki Fronte SS80, and had a three-cylinder 800cc engine, hence the moniker.
Few were willing to give the compact car a chance against the Ambassador and the Premier Padmini when it launched, but in the early 1990s, Maruti was forced to institute a “priority queue” or PQ because of the great demand. According to former MD Jagdish Khattar, “the PQ was for only a select few: major generals and higher-ups in the army, and joint secretaries and above in the government. Over time, it became broad-based and more people could jump the queue. Ministers and MPs wrote in to seek PQ allotments for their supporters and friends”.
During the last 30 years, about 2.87 million 800s were produced, of which about 2.66 million were sold in India itself. The Indian passenger car segment has come a long way since the launch of the 800, from a car penetration of 2-3 per 1,000 people in 1984 to 12-13 today. To meet the needs of Maruti, a total of 110 joint ventures and technical collaborations were inked for the 800 in the initial days. With over 350 direct suppliers now — and around three times that number of second and third tier vendors — Maruti has gone on to become the posterboy of India’s automobile sector.
The foundation for this was provided by the diminutive car that Maruti, ironically, did not even bother to christen.