NEW DELHI: For the first 35 years of Independence, there was barely any significant progress made in India’s automobile sector. Owing to India’s first Prime Minister Jawaharlal Nehru's closed economic policies, India’s automobile industry moved at a snail pace and stood nowhere close to giant strides made by the American, Japanese and German automakers.
The indigenous four-wheeler industry was kickstarted in the 1940s with the establishment of Hindustan Motors and Premier Automobiles Limited who garnered most of the market share till 1970s, along with minor stake held by Telco, Ashok Leyland and Mahindra & Mahindra (M&M).
It was only in the early 1980s that the Government of India realised the need to establish a robust domestic industry to cater to the growing demand for efficient machines and allowed foreign carmakers’ entry via minority shareholding with a local partner.
The Indira Gandhi-led government in February 1981 incorporated Maruti Udyog Limited, a brainchild of her late son Sanjay Gandhi, under the provisions of the Indian companies act, 1956. The government in the early 1980s invited foreign automakers to collaborate with this newly-formed public sector enterprise.
Japan’s Suzuki Motor Corporation, under the leadership of charismatic Osamu Suzuki, then managed to outdo other global players to form an alliance with Maruti Udyog, which arguably brought the biggest change in India’s automobile history.
According to industry veterans, there could have been no better choice than trusting Osamu Suzuki as he had mastered the art of making small cars and succeeding in markets whose potential was not realised by other big auto companies.
At first, Maruti Udyog was formed as a government company, with Suzuki as a minor partner. In October 1982, the company signed a licence and joint venture agreement with Suzuki Motor and in 1983, the company started their productions and launched the highly successful Maruti 800.
In the years to follow, Maruti strengthened its portfolio by launching Maruti Omni, Maruti Gypsy and Maruti 1000. In the year 1987, the company entered the foreign market by exporting the first lot of 500 cars to Hungary.
It witnessed minor competition from other players in 1980s and even when India opened its economy in the historic budget of 1991, which paved the way for global automakers such as Ford and Hyundai to manufacture and sell cars here, it remained the undisputed leader.During the course, Suzuki Motor became an equal partner in 1992 and increased its share to over 54% in 2002.
In the two-wheeler space too, a similar collaboration was forme. Around the same time when Maruti started changing India’s car market, Hero Group and Japanese auto giant Honda Motor Company (HMC) came together to form a partnership that would make India a two-wheeler powerhouse.
Hero Group and HMC came together and formed Hero Honda Motors (HHM) in 1984. While Hero Group, which was then one of world’s largest cycle manufacturers, wanted to dent Bajaj Auto’s dominance in the two-wheeler space, Honda was all keen to establish itself in a promising market that in future would become its biggest two-wheeler market.
Hero started manufacturing its first product, the CD-100, just one year after the merger and tasted big success as it was the first four-stroke engine motorcycle and was highly fuel efficient. The company kept facing tough competition from the other players amid slow progress in product development. However, everything for Hero Honda changed with the arrival of Splendor in mid-90s.
The model went on to become the world’s largest selling motorcycle. In the years to follow, Hero Honda tasted many successes as its other models such as Street, Passion and Glamour became widely popular in India. While the alliance between Maruti and Suzuki remained intact to this very date, Hero Group and Honda decided to split its 26-year-old partnership in March 2011.
The impact of these two partnerships can be gauged to the fact that total vehicle manufacturing in India skyrocketed from nearly 4,00,000 units in 1980 to nearly 3.10 crore in FY2019. Post covid, it fell to 2.3 crore in FY22.
India is now the world’s fourth-largest passenger vehicle market and Maruti Suzuki’s market share has remained in the range of 40-50% in the past one decade even as competition from home-grown firms like Tata Motors and Mahindra & Mahindra is on the rise. It also faces stiff competition from Korean companies - Hyundai and Kia India.
India is now world’s largest two-wheeler market and despite facing cut-throat competition from home-grown biggies such as TVS Motor, Bajaj Auto and Royal Enfield, the two erstwhile partners Hero Motocorp and Honda (HMSI) - continues to control 65-70% of the two-wheeler market.
