Zen continued to be a strong product till the entry of new players and more

Zen continued to be a strong product till the entry

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pump in the fuel tank and a suction resonator. Zen continued to be a strong product till the entry of new players and more choice in the compact car segment.In the second half of 1994, Maruti launched the 1300 cc Maruti Esteem. It was the first Indian car with that engine capacity- eventually it replaced the older Maruti 1000 car. The Esteem was targeted
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6 at the luxury car segment and was priced at Rs. 398,00014. It soon became popular due to its fuel efficiency and good pickup. Entering International MarketsMaruti started to plan for an entry into new international markets to build its credibility in the home Indian market. In 1987, it exported the first lot of 500 cars to Hungary15. The cars became very popular and hence became easier to sell cars in Czechoslovakia and Yugoslavia. Later it entered the Western European market which was a testament to its production of high quality components. In 1989, the Maruti 800 landed in France as the Alto. Maruti used SMC’s dealernetwork in Italy and it continued to be a good market till 2004. The sale of Maruti cars was discontinued in Italy after 2004 since the cars could not meet new regulations in Europe relating to emissions and safety16. Over the next few years it entered all continents except North America. In 1989 Gypsy sales picked up in Australia and in several West African countries. The Maruti 800 was a common sight in Nepal, Bangladesh, Sri Lanka, Bhutan and Mauritius. In 1992 Maruti entered the South American market, debuting in Chile. Outcome By 1990/1991 Maruti-Suzuki had about 60%domestic market share, leaving 13.9% to Hindustan Motors and 23.7% to Premier Automobiles (See Exhibit 1 for the evolution of market share during Phase 1). By the end of the 1980s, Maruti-Suzuki had achieved its projected annual production output of 100,000 cars per annum. At the time of Maruti’s inception in 1983 the only production plant was located at Gurgaon with a production capacity of 40,000 cars. However, the actual production in 1984-85 was only 22,085 vehicles. From 1986 onwards, Maruti had been the largest manufacturer in the Indian passenger car industry and by 1991 the installed capacity was 130,000 vehicles per year (see Exhibit 2 for the evolution of Maruti’s production capacity over time). In 1992, the Suzuki stake was raised to 50% and Maruti ceased to be a public sector undertaking. Phase 2: Liberalisation of the Indian Car Industry 1994-2004 Following the economic policy reforms of the early 1990s, in 1994, the Government of India de-licensed domestic car production and allowed foreign companies to invest 100% equity in car manufacturing companies in India. Several foreign companies entered the Indian market. Daewoo Motors of South Korea tied up with DCM and launched the ‘Cielo’ in 1995 followed by the ‘Matiz’ a few years later; the French firm Peugeot tied up with Premier Automobiles in 1994 to make Peugeot cars; Hindustan Motors entered into a technical collaboration with Mitsubishi Motors of Japan for the manufacture of Mitsubishi-Lancer cars; Ford tied up with Mahindra and Mahindra while Hyundai of South Korea and General Motors chose to set up a wholly owned subsidiaries. General
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