As Confucius might have said, when you bump into a hard object, it knocks some sense into you. The object in question is the market and the beneficiary Maruti Udyog Limited (MUL). To judge by the important business cleared by the MUL board last week, the long, bitter and essentially self-defeating battles of the last year between the Government of India and Suzuki Motor Corporation (SMC) might never have happened. At any rate, even though differences over the appointment of R.S.S.L.N. Bhaskarudu as managing director have not been formally buried as yet, they are, as it were, noises off-stage. For MUL it is just as well that the partnership shows signs of working again. These are tough times in India, in Japan and in Asia generally and MUL and SMC know it. In India the automobile market has not proved to be as huge as many thought it was only three years ago. Even so, with market entry hurdles less daunting, competition in the small and medium-car segments has grown rapidly. So, everyone will be fightingharder for a share of the limited market.Any lingering complacency within MUL would have disappeared at the last Auto Show where the unmistakable message from Telco, Daewoo and Hyundai was, Watch Out Number One. Maruti's headstart and enviable all-India distribution network are advantages which will ensure it stays on top for a long time but not necessarily in good shape for all that time. Even modest nibbles into its market share in each segment will begin to put pressure on MUL's profit margins. The economic downturn in India as well as Asia has created many uncertainties about the future. Daewoo, responding to conditions back home in South Korea and in India, provided the first signal for a price-cutting war. Cheaper credit, indeed, no-interest loans being offered by some distributors are further signs of which way the wind is blowing. And if there is one lesson automobile manufacturers can learn from the chastened consumer goods sector, it is about the major part played by the price factor inIndia.The board of directors of MUL has recommended the resumption of royalty payments to Suzuki for the Maruti 800 and Omni models. SMC, in turn, has agreed to transfer technology and claims to have submitted its project report on gearbox technology. Considering how many years the partners have been jamming the gears in that particular box, this counts as definite progress. But they are not out of the woods as yet. What emerges so far is that both sides have agreed to try and agree around the terms of the 1994 deal. Corporate plans for technology upgradation, research and development and human resources have been discussed. But there is no word on new capital investment or on Suzuki position on that issue today. There is also the attitude of the next Union Industry Ministry to consider. With or without a Murasoli Maran, that is where some of the best laid plans come undone. For the moment some good sense has broken out at MUL and that is plenty to cheer about.
