The country’s largest car maker Maruti Suzuki is sitting pretty with a 47% market share. It may, however, face a capacity constraint later this year. Kenichi Ayukawa, managing director and chief executive officer, talks to Ajay Modi about the rising competition in entry level segment, the error in S Cross pricing and the growing role of Indian set up in future product development.
Your sales continue to grow at double digit, while the Gujarat plant is over a year away. Any apprehension that you may run out of capacity before Gujarat 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 summit of capacity utilisation. Model wise, some shortage may happen but we won’t lose volume.
The competition is turning aggressive. What does Maruti plan to protect market share?
We are not here to just maintain share. Our stance is to keep on expanding share. If we try to protect share, it means we are losing some. We are charging to get additional share. Over 50% 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 the other (S Cross) you need to offer high discounts. What went wrong? The 1.6-litre variant of S Cross contribution 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 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 Indian R&D set up going ahead?
The upcoming Rohtak R&D centre will focus on developing more products in a shorter time. We needed development facilities closer to the 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% 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 supplier will be facing difficulty as they need to cater not just to Maruti but to other players as well. We need a reasonable working time.
Alto continues to do volumes. But competition is rising in that segment. 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.