The early signs of recovery in India’s automobile industry are good news for India’s leading automobile maker, Maruti Suzuki which has enjoyed a pre-eminent position for several years. The company now hopes to create a new segment with its new premium crossover, ‘S-Cross.’ In an interaction with The Hindu, R. S. Kalsi, Executive Director, Marketing & Sales, Maruti Suzuki (India) spoke about the product, the market and issues confronting the industry. Edited excerpts:

Maruti Suzuki has plans to reach two million unit sales by 2020. What are the likely constituents of this growth and what will be your portfolio by then?

Our plans to reach two million vehicles sales by 2020 depend on how the macro-economic factors play out. Certainly India’s automobile story is intact and our estimate and experts feel the market should reach four million by then. Our current market share is 46 per cent and we expect to hold on to or gain market share by then.

In terms of portfolio, our pipeline at the engineering and R&D level is full. We will enter the commercial channel, the sports utility vehicle (SUV) segment and premium hatchbacks but what and when we cannot disclose.

There is a scope for all the segments from entry level models to aspirational models as the Indian market is highly under-served. Given the low automobile penetration level of 18 per thousand in India compared to 450 and above levels in the US and Europe, there is tremendous scope in all segments and we will continue in all segments.

Is there anything that the industry expects from the government in terms of policy that may facilitate a faster recovery?

The government had given excise duty concessions which were subsequently withdrawn. No doubt infrastructure support in terms of roads should be improved which is important for the industry.

Although the Reserve Bank of India has taken steps in terms of interest rate reduction, banks have not adequately passed this on. If interest rates are further softened, it acts as a big driver for growth in the automobile industry.

Earlier, the petrol-diesel price differential was large but the government has taken a call to offer market rates. We expect the gap to remain constant so that automobile manufacturers can plan long terms in terms of technology and production. Consistency allows manufacturers to decide their portfolio for the long run and allows easier anticipation of the market.

The industry may be showing early signs of recovery but during the downturn, the SUV segment was the lone bright spot which you plan to enter with the S-Cross. What is the scenario today for SUVs?

In the last three years, the SUV market has grown at 24 per cent per annum. The Indian automobile industry has to be seen in context of India being an evolving market. As the market is maturing, so is the customer and we have been creating new segments and markets.

We created Maruti 800, Zen, Swift and Swift D’Zire which was an A3 minus segment and was miniscule but today we are doing more than 20,000 units per month in that segment. Likewise, we introduced the MUV segment with the Ertiga.

As the market evolves, we have to provide more premium products in a systematic way and the premium crossover is the need of the hour now. There were certain gaps in our portfolio and S-Cross is the next step for us in our quest towards having a complete portfolio of products in passenger vehicles.

S-Cross is a new segment in a way, a premium cross-over and with it we are looking to create market disruption.

The S-Cross will be coming off an all-new platform. How much you have invested in this and what sort of ‘tweaking’ has been done to suit Indian road conditions?

The S-Cross is on a totally new platform and it is for cross-over and SUV sort of products. The possibilities are immense. What is important for India is the tuning for Indian road conditions as also the engine tuning for the BSIV engine norms and calibrations.

We are manufacturing the S-Cross at Gurgaon and have a dedicated line for this. Along with our suppliers, we invested around Rs. 600 crore on it.

Between our plants in Gurgaon and Manesar, we make 11 models with a 1.5 million unit per annum capacity which is flexible and can easily meet any demand based on market response.

Of the two engine options, the 1.6 litre diesel engine is sourced from Fiat and a lot of R&D has been done in Japan with our engineers being associated with it throughout. The 1.3 litre diesel engine is made by us and we have a power train plant for it. The localisation of the 1.6 litre engine would depend on the market, the numbers and feasibility.

Given that the S-Cross will be entering a crowded market in SUVs and one that is likely to get even more crowded with newer models from competitors lined up, what is the unique selling proposition (USP) of the S-Cross?

There are compact cross-overs and luxury cross-overs in the market but there are no premium cross-overs. Based on our research, there is a set of customers for whom there is no product in the market and we will be offering that.

We are looking at creating a new segment and positioning S-Cross as a crossover. It will give the flexibility and performance like an SUV but with styling and features that are premium and found only in premium SUVs. This is coupled with our new retailing channel ‘Nexa’ which takes retailing experience to a new level.

What are the plans for ‘Nexa’? Also, the ‘Used car’ market has been growing at a fast clip and you have a presence through ‘True Value.’ What are the plans for it?

The ‘Nexa’ channel is a new premium experience for our premium products and S-Cross is the first product that will be retailed only through Nexa. Other premium products will follow. We plan to set up 100 outlets in the first year in the top 30 cities from where three-fourth of our sales emanates. At the same time, we have a network of 1,600 existing channels which will complement Nexa. We will follow a dealer-centric model and our investment is not significant. We have recruited 700 people and should reach 2,000 by end-fiscal.

Our used car business through the `True Value’ brand has been doing exceedingly well and is a good option for those customers who want to upgrade. We provide the comfort and transparency in price to the seller.

We have an almost 30 per cent exchange penetration where people come with an old car and buy a new one resulting in business expansion for us. Today we are selling four lakh cars per annum through ‘True Value’ channel which grew 28 per cent last year. The Nexa channel will also focus on these customers.

ramnathsubbu.r@thehindu.co.in

(This article first appeared in The Hindu dated July 6, 2015)

Related Topics