Maruti Suzuki, the country's biggest car maker (47 per cent market share), had its best performance in FY17. It is geared for another year of strong performance, as demand remains strong for many models, KENICHI AYUKAWA, managing director and chief executive officer, tells Ajay Modi. Edited excerpts of a talk on plans and focus:
FY17 was the best year for you in sales and profit. What factors helped?
Yes, a record high. We launched products in the past couple of years that have been well accepted. Fortunately, production is operating at 100 per cent (of capacity). The performance came in spite of the difficulties and challenges we saw in the form of disruption of component supplies and demonetisation. We made efforts to overcome these. Our business partners -- suppliers and dealers — made a lot of efforts. The collaboration delivered.
What is helping profitability to grow consistently?
Through the Nexa (its premium dealership chain) network, we succeeded in providing higher priced products. That proved helpful in turnover and profit. The average value of the cars we sell is going up. We also 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. We hope the industry will grow eight to nine per cent in the current financial year. We will try to achieve more than that. Operations at the Gujarat plant have started; the production constraint is gone.
How do you wish to approach the entry segment in future, where rivals have introduced some interesting cars?
I am often asked about the good products introduced by our competition in this segment. We are preparing but it takes time. Meanwhile, we try to bring modifications to the existing products, while preparing new ones for the future.
How will the company's focus on the premium segment evolve?
Customer expectation is increasing and we will try to bring more such products for premium buyers. We feel very sorry that customers still have to face a lot of waiting for some of our products. We are trying to increase production; our first priority is to bring down the wait period.
What is your view of the Indian car market? We have more than a dozen existing players and more (PSA, SAIC, Kia) plan to enter. Is there room? How does it impact you?
This only shows that people see a lot of potential in the Indian market. It also means we have an opportunity to grow further. Competition is very important for existing players; it 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.
Tell us about automation at your plants. Is there scope for more?
In the case of automobile companies, pressing and wielding functions have a lot of robots. The paint shop, too. But, assembly has a lot of manpower. 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 in the economy?
The big development is going to be GST (the coming goods and services tax). We expect it to change the way business is done. Business becomes simpler; the current Indian tax system is a bit complicated. We are also preparing for the BS-VI emission norms (compulsory from April 2020) and safety standards as per the stipulated timeframe.