Indian auto industry should aim for higher quality: Maruti Suzuki's Ayukawa

It should 'localise smallest of the components' and invest in new technology, says business leader

The Indian auto industry has gained scale and it should focus on higher quality for sustainable growth, said Kenichi Ayukawa, Maruti Suzuki India's executive vice chairman, on Wednesday.

The industry is going through a unique phase as some segments recover after the pandemic and others struggle, said Ayukawa, who is also president of Society of Indian Automobile Manufacturers (SIAM).

"For example, mass segments like entry-level cars and two-wheelers are facing a huge reduction in demand owing to significant increase in the acquisition cost."

Two-wheeler sales in the world’s largest market have been slow for more than two years amid poor demand. Volumes are looking up for the past 3-4 months, but they are below levels the industry clocked before the pandemic.

Retail sales of two-wheelers in August rose 8.5 per cent year on year to 1,074,266 units, but contracted 16 per cent compared to August 2019, said the Federation of Automobile Dealers Association (FADA) earlier this month.

Ayukawa said that segments, other than entry-level cars and two-wheelers, are seeing good demand but there are supply side challenges due to a semiconductor shortage.

Due to these challenges, all segments are still below the industry’s peak of 2018-19. The Indian auto industry should focus on increasing localisation and investing in new technologies. "We have to go much deeper and find ways to localise the smallest of the components including raw material, wherever possible," Ayukawa said.

Indian auto industry has gained a large scale, both in the domestic market and exports. With around $120 billion in turnover, the industry contributes about 6 per cent to India’s GDP and 35 per cent to the manufacturing output.

"At this big scale, quality holds a very high significance. Any small mistake can be harmful not only for the industry but for the brand Make in India. To ensure long term sustainable growth, the industry should focus on improving and sustaining higher levels of quality."

The auto industry, he said, should focus on re-investing the core business. "I always tell my supplier partners at Maruti Suzuki, that re-investing in the core business is very important. It not only strengthens your financials but also improves your ability to deal with challenges."