The story
Founded by Government of India in 1981, in Gurgaon.1
Pre-Suzuki affiliation
The Maruti name can be traced back to a previous company that was established by the third Indian Prime Minister Indira Gandhi's son, Sanjay Gandhi. In the early 1970s, the Indian government initiated the search for a small car manufacturer. At that time, India had already been manufacturing cars for several years, and the idea of a more affordable "people's car" had been discussed since the 1950s.
Sanjay Gandhi, known for his passion for cars, apprenticed with Rolls-Royce in Crewe of UK for three years. Upon his return in 1968, he recognized the potential of small car production in the private sector. Both the government and the Planning Commission endorsed the concept. Sanjay Gandhi subsequently initiated his automotive project, establishing operations in a rented garage near Roshanara Bagh in Old Delhi.
The government issued a letter of intent in September 1970, with plan to produce up to 50,000 cars in a year. In August 1971, Maruti Motors Limited was established with Sanjay Gandhi becoming its first managing director. He acquired 297 acres of land in Gurgaon at a cost of approximately Rs 12,000 per acre to establish his Maruti factory. Initially, plans were laid out to manufacture an indigenous car priced at around Rs 8,000. However, the cost of the vehicle escalated to approximately Rs 16,500 (ex-showroom) and about Rs 21,000 on the road in Haryana. Despite the increase in price, the Maruti car remained competitively priced, being Rs 5,000-10,000 cheaper than its counterparts.
The first prototype of the Maruti car was completed in 1972, with production anticipated to commence by April 1973, as promised by Sanjay Gandhi. He made the chassis by himself at his workshop, and a Triumph motorcycle engine was used to propel the car. the prototype car underwent a feasibility test by the Vehicle Research & Development Establishment in Ahmednagar. The prototype failed the test, being deemed unsuitable for road use. Nonetheless, in July 1974, Maruti was granted an industrial license to produce 50,000 cars. However, the actual production output at Sanjay Gandhi's factory fell short of the initial target. Despite the projection to commence production at a rate of 12-20 units per month and escalate to 200 units per day, only 21 units were manufactured by 31 March 1976.
Sanjay Gandhi's involvement in politics during the Emergency further complicated the project's progress. Following Indira Gandhi's defeat in the 1977 election and a court order for Maruti's dissolution in 1978, the project faced uncertain prospects. With Indira's return to office in 1980 and Sanjay's death in a plane crash, the Government of India intervened and assumed control of Maruti through legislative measures.
Tie-up with Suzuki
Following Sanjay's death, his mother Indira tasked Arun Nehru with evaluating the feasibility of resurrecting her son's vision to develop India's affordable car. Nehru acknowledged the project's potential but emphasized the need for expertise from an experienced manufacturer. Subsequently, a team was assembled to explore potential collaborations with manufacturers globally. The Indian government started engaging in negotiations with Suzuki in April 1982. Following several months of preparations, Suzuki of Japan and Maruti Udyog Ltd. signed a license and joint venture agreement in October 1982. Initially, Suzuki acquired a modest 26 percent stake in the joint venture, owing to their constrained capital and perceived risks, despite the Indian government's preference for Suzuki to take a 40 percent foreign equity share. Both parties reached a consensus, stipulating that Suzuki would increase its stake to 40 percent after five years. Both the venture partners also entered into an agreement to nominate their candidate for the post of managing director and every managing director would have a tenure of five years. Suzuki later increased its equity to 50% in 1992, and further to 56.21% as of 2013.
Maruti was granted permission to import two Suzuki vehicles that were completely assembled in the first two years of India's closed market, with an initial target of using just 33% domestic components. This greatly displeased the nearby manufacturers. There were some concerns that the Indian market would not support Maruti Suzuki's relatively high production levels, and the government even considered changing the petrol tariff and decreasing the excise fee to increase sales.
Local production commenced in December 1983 with the introduction of the SS30/SS40 Suzuki Fronte/Alto-based Maruti 800. In 1984, the Maruti Van with the same three-cylinder engine as the 800 was released. Maruti targeted annual production of 20,000 cars in the first year, and 40,000 in the second year at the Gurgaon plant. However, the rapid success of Maruti exceeded expectations of Suzuki. Within the first year, the company received an 120,000 bookings, much to Suzuki's surprise. Despite facing overwhelming demand, Maruti encountered challenges in meeting orders due to capacity limitations. The surge in demand necessitated a complete overhaul of its production strategy, by adjusting the ratio between the 800 and the van.
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The Suzuki SJ410-based Gypsy, a 970 cc 4-wheel drive off-road vehicle, was introduced in 1985. The 100,000th car manufactured by the firm was the 796 cc hatchback Suzuki Alto (SS80), which succeeded the original 800 in 1986. In 1987, the company started exporting to western markets, when a lot of 500 cars were sent to Hungary. By 1988, the capacity of the Gurgaon plant was increased to 100,000 units per annum.
Until 1992–1993, Maruti faced constraints in increasing capacity due to the need for foreign exchange. Moreover, securing funding for expansion was challenging, especially during the Indian economic crisis of 1991. The Indian government stipulated that expansion could only proceed with foreign loans to cover costs. Eventually, Maruti secured aid from Axiom Bank in Japan, allowing them to finance the foreign exchange component of their expansion. This enabled Maruti to establish a new production line in the Gurgaon plant, addressing the persistent issue of shortages.
In 1989, the Maruti 1000 was introduced and the 970 cc, three-box was India's first contemporary sedan. By 1991, 65 percent of the components, for all vehicles produced, were indigenized. After the liberalization of the Indian economy in 1991, Suzuki increased its stake in Maruti to 50 percent, making the company a 50-50 joint venture with the government of India as the other stakeholder.
In 1993, the Zen, a 993 cc engine hatchback was launched, and in 1994 the 1,298 cc Esteem sedan was introduced. Maruti produced its 1 millionth vehicle since the commencement of production in 1994. Maruti's second plant was opened with an annual capacity reaching 200,000 units. Maruti launched a 24-hour emergency on-road vehicle service. In 1998, the new Maruti 800 was released, being the first change in design since 1986. Zen D, a 1,527 cc diesel hatchback, Maruti's first diesel vehicle, and a redesigned Omni were introduced. In 1999, the 1.6-litre Maruti Baleno three-box sedan and Wagon R were also launched.
In 2000, Maruti became the first car company in India to launch a call center for internal and customer services. The new Alto model was released. In 2001, Maruti True Value, selling and buying used cars was launched. In October of the same year, the Maruti Versa was launched. In 2002, Esteem Diesel was introduced. Two new subsidiaries were also started: Maruti Insurance Distributor Services and Maruti Insurance Brokers Limited. Suzuki Motor Corporation increased its stake in Maruti to 54.2 percent.
In 2003, the new Suzuki Grand Vitara XL-7 was introduced while the Zen and the Wagon R were upgraded and redesigned. The four millionth Maruti vehicle was built and they entered into a partnership with the State Bank of India. Maruti Udyog Ltd. was listed on BSE and NSE after a public issue, which was oversubscribed tenfold. In 2004, the Alto became India's best-selling car overtaking the Maruti 800 after nearly two decades. The five-seater Versa 5-seater, a new variant, was created while the Esteem was re-launched. Maruti Udyog closed the financial year 2003–04 with an annual sale of 472,122 units, the highest ever since the company began operations, and the fiftieth lakh (5 millionth) car rolled out in April 2005. The 1.3-litre Suzuki Swift five-door hatchback was introduced in 2005.
In 2006, Suzuki and Maruti set up another joint venture called Maruti Suzuki Automobiles India to build two new manufacturing plants, one for vehicles and one for engines. Cleaner cars were also introduced, with several new models meeting the new Bharat Stage III emission standards. In February 2012, Maruti Suzuki sold its ten millionth vehicle in India. In July 2014 it had a market share of more than 45%. In May 2015, the company produced its fifteen millionth vehicle in India, a Swift Dzire.
On 25 April 2019, Maruti Suzuki announced that it would phase out production of diesel cars by 1 April 2020, when the Bharat Stage VI emission standards come into effect. The new standards would require a significant investment from the company to upgrade its existing diesel engines to comply with the more stringent emission standards. Chairman R.C. Bhargava stated, "We have taken this decision so that in 2022 we are able to meet the corporate average fuel efficiency (CAFE) norms and a higher share of CNG vehicles will help us comply with the norms. I hope the union government's policies will help grow the market for CNG vehicles." At that time, diesel cars accounted for about 23 percent of Maruti Suzuki's annual sales.
The company planned to launch its first electric car in the second half of 2021, the Maruti Suzuki Wagon R Electric, before cancelling its plan.
The company now produces the eVitara (unveiled in Milan and based on eVX concept shown in 2023) since 2025.
From Wikipedia’s article on Maruti Suzuki, shared under CC BY-SA 4.0.4