 "I see possibility of 100 per cent product development in India: Maruti Suzuki MD and CEO")
Maruti Suzuki can boast of having a major share in the domestic market. It may, however, face a capacity constraint later this year. Kenichi Ayukawa, managing director and CEO, discusses with Ajay Modi the rising competition in the entry-level segment and the error in S Cross pricing among others. Edited excerpts:
Your sales continue to grow at double digit, while the Gujarat plant is a year away. Any apprehension that you may run out of capacity before Gujarat plant becomes operational?
We have some room to produce more from the existing capacity of 1.5 million units by improving productivity and minor fine-tuning. We are reaching the summit of capacity utilisation. Model-wise, some shortage may happen but we won’t lose volume.
Competition is turning aggressive. How does Maruti plan to protect market share?
We are not here to just maintain market share. Our focus is to keep on expanding. We are charging to get additional market share. Over 50 per cent buyers are not our customers. That is why we brought Nexa, to increase volumes.
Nexa sells two products. One (Baleno) has a waiting period, while for the other (S Cross) you offer high discounts. What went wrong? The contribution of the 1.6-litre variant of S Cross is tiny. Will you look at phasing it out?
The price positioning was not correct. That is why we have revised it. We have to consider whether we need to keep producing S Cross with a 1.6-litre engine. If the demand remains small, we need to think about it.
Vitara Brezza has been locally developed and conceptualised. What will be the role of the Indian R&D?
The upcoming Rohtak research & development (R&D) centre will focus on developing more products faster. We needed development facilities closer to Indian market. Testing products in Japan takes lot of time, and that can be reduced. It is not easy to develop locally or globally. Both India and Japan has to chip in. Some part will be done in India and some in Japan. But in future, I see 100 per cent development work being done in India.
How is Maruti preparing to meet BS-VI norms by 2020?
It is possible, given the availability of technology. But the time to prepare for this change is less. We need components. We need to make model-wise adjustments. European and Indian market conditions are different and local adjustment is required before replicating the European norms. Component suppliers will be facing difficulties, as they need to cater not just to Maruti but to other players as well.
Alto continues to do decent volumes. But, competition is rising. Does it need a change in strategy?
Alto is an important model and the segment is critical for us. We need to continuously develop new products in that segment, even though competition is rising.
We have to bring products in that segment.
What is the status of the launch of light commercial vehicle?
The market condition for LCVs is not good and we have slightly delayed. But we hope that sometime this year, we will kick off. We are not expecting an immediate nationwide launch. We do not have enough knowledge. We will experiment in select areas and then expand.
Cars are being blamed for pollution and there has been events like odd even experiment and Supreme Court ban on some diesel vehicles. How do you see these?
Even though the banning is being done, older diesel vehicle continue to run. Older vehicles are much more polluting. BS-II, III vehicles emit high particulate matter. We need to also look at pollution from commercial vehicles and two wheelers to tackle the issue.
Your sales continue to grow at double digit, while the Gujarat plant is a year away. Any apprehension that you may run out of capacity before Gujarat plant becomes operational?
We have some room to produce more from the existing capacity of 1.5 million units by improving productivity and minor fine-tuning. We are reaching the summit of capacity utilisation. Model-wise, some shortage may happen but we won’t lose volume.
Competition is turning aggressive. How does Maruti plan to protect market share?
We are not here to just maintain market share. Our focus is to keep on expanding. We are charging to get additional market share. Over 50 per cent buyers are not our customers. That is why we brought Nexa, to increase volumes.
Nexa sells two products. One (Baleno) has a waiting period, while for the other (S Cross) you offer high discounts. What went wrong? The contribution of the 1.6-litre variant of S Cross is tiny. Will you look at phasing it out?
The price positioning was not correct. That is why we have revised it. We have to consider whether we need to keep producing S Cross with a 1.6-litre engine. If the demand remains small, we need to think about it.
Vitara Brezza has been locally developed and conceptualised. What will be the role of the Indian R&D?
The upcoming Rohtak research & development (R&D) centre will focus on developing more products faster. We needed development facilities closer to Indian market. Testing products in Japan takes lot of time, and that can be reduced. It is not easy to develop locally or globally. Both India and Japan has to chip in. Some part will be done in India and some in Japan. But in future, I see 100 per cent development work being done in India.
How is Maruti preparing to meet BS-VI norms by 2020?
It is possible, given the availability of technology. But the time to prepare for this change is less. We need components. We need to make model-wise adjustments. European and Indian market conditions are different and local adjustment is required before replicating the European norms. Component suppliers will be facing difficulties, as they need to cater not just to Maruti but to other players as well.
Alto continues to do decent volumes. But, competition is rising. Does it need a change in strategy?
Alto is an important model and the segment is critical for us. We need to continuously develop new products in that segment, even though competition is rising.
We have to bring products in that segment.
What is the status of the launch of light commercial vehicle?
The market condition for LCVs is not good and we have slightly delayed. But we hope that sometime this year, we will kick off. We are not expecting an immediate nationwide launch. We do not have enough knowledge. We will experiment in select areas and then expand.
Cars are being blamed for pollution and there has been events like odd even experiment and Supreme Court ban on some diesel vehicles. How do you see these?
Even though the banning is being done, older diesel vehicle continue to run. Older vehicles are much more polluting. BS-II, III vehicles emit high particulate matter. We need to also look at pollution from commercial vehicles and two wheelers to tackle the issue.