Maruti Suzuki, the country’s biggest car maker with over 47 per cent share, had its best performance in FY17. It is geared for a strong performance in FY18 as demand remains strong for many models. Kenichi Ayukawa, managing director, tells Ajay Modi that it is hoping to perform better than the industry in FY18. He talks about completion, plans for entry segment and premium focus of the company. Excerpts from the interaction:
FY17 was the best year for Maruti Suzuki in sales and profitability. What factors helped the performance?
Yes, it is a record high. We had launched products in last couple of years that have been well accepted by customers. Fortunately, production is operating at 100 per cent. The performance came in spite of the difficulties and challenges we saw in form of disruption of component supplies and demonetisation. Our business partners — suppliers and dealers— made a lot of efforts. The collaboration delivered.
What is helping the profitability grow consistently?
Through Nexa network, we could provide higher priced products and that proved helpful in turnover and profit. The average value of cars is going up. We took measures to further improve efficiencies in operations.
What is the outlook for FY18 for Maruti and the overall market?
The market has recovered from the impact of demonetisation. Looking at the current market situation, we hope that the industry will grow at 8-9 per cent during the current financial year. We will try to achieve a growth better than that. Operations at the Gujarat plant have started and production constraint is gone. That could help in increasing production and sales.
How do you wish to approach the entry segment in future where rivals have managed to introduce some interesting cars?
I am often asked about the good products introduced by our competition in this segment. Of course, we are preparing but it takes time. In the meanwhile, we try to bring modification to the existing products, and are preparing a new product for the future.
How will the company’s focus on premium segment evolve?
The customer expectation is increasing and we will try to bring several such products for our premium buyers. We feel apologetic that customers still have to wait for some products. We are trying to increase production and our first priority is to bring down the waiting period.
What is your view of the Indian car market? We have more than a dozen of players and more (PSA, SAIC and Kia, etc) are planning to enter. Is there room?
This only shows that people see potential in the Indian market. It also means we have an opportunity to grow further. Competition is very very important for the existing players in the market. That drives us to keep improving our vehicles. Being number one can bring complacency at times and that is not good. Any competition can only make us emerge stronger as we need to develop a better product to compete.
Can you tell us about the automation at your plants? Is there scope for greater automation?
In the case of automobile companies, pressing and wielding has a lot of robots. The same is the case with the paint shop. But assembly constitutes manpower and we have opportunities to do more at assembly operations to avoid defects. We have to go for such improvements.
What are the things you are watching out for as far as the economy is concerned?
The big development is going to be goods and service tax (GST). We expect it to simplify the way business is done later this year. The current Indian tax system is a bit complicated. We are preparing for the BSVI emission norms and safety standards as per the stipulated timeframe.