With two incidents of labour trouble and a lack of enough diesel models, the last two years have been tough for Maruti Suzuki. Though the car-market leader has been returning to normalcy in terms of production and sales, certain imponderables for the future remain. The company is trying to make more of diesel cars as customer preference has shifted towards it due to the low pricing of the fuel compared to petrol. However, with no clarity on fuel pricing policy, whether it will be fully deregulated in the future, the dilemma before the company is how to plan the product-mix of its future plants, especially the one planned to come up in
Gujarat. In an interview with FE’s Roudra Bhattacharya and Rishi Raj, chairman RC Bhargava discusses the market, the prospects and the challenges. Excerpts:
Auto sales have not been good this fiscal. How’s the outlook for the next fiscal and what are the triggers required for sales to pick up, apart from duty cuts, which the industry keeps asking for?
So far, nothing has made sales better than what it has been in the last few months. Duty cuts will not happen. The only thing to push demand for cars is faster economic growth and nothing else. Looks like the next fiscal will also have single-digit growth and we should be more or less at the same level. Diesel cars are already slumping, though there’s a small jump in petrol car demand because of cars like the Alto. The percentage of diesel car sales has come down by around 1%.
How do you view the recent move of the government to slightly deregulate diesel pricing? The oil minister has even said that full deregulation of diesel will happen in the next two years. Does it provide clarity with regard to fuel pricing, which the industry has been asking for?
What is being done is not strictly deregulation. It’s more like regulated deregulation. Let’s see what happens to the actual implementation of policy. The diesel price hike has to happen for more than three months and we’ll have to wait till the 2014 elections and see what the new government’s policies are going to be. There is uncertainty on fuel pricing, because of which there is uncertainty on my investment mix. Our petrol engine capacity is lying idle. Where do I export the half-a-million capacity of petrol engines? To sell that much in