Kenichi Ayukawa took charge as Maruti Suzuki India?s managing director on April 1, not a very good time for the car industry that is witnessing a slowdown in demand and trying to cut production. Additionally, for Maruti, the challenge is to keep its industrial relations smooth as it witnessed a labour violence at the Manesar plant a year ago.
Ayukawa, who has worked at Suzuki?s Europe and Pakistan subsidiaries, told Roudra Bhattacharya in an interview how the company plans to adapt to rapidly changing consumer preferences by entering new product segments, improving communication with its workers to makes sure violence at its factories can be a thing of the past. Excerpts:
A lot of new segments like entry-level SUVs are growing, where you are not present today. How do you plan to protect market share going forward?
It?s true we need new products for the growing segments, but product planning takes time. We have a lot of models that we have modified, but going forward, what will be priority has to be decided. Life of models is also becoming shorter in India. Earlier, when you launched a model, it could go on for 10 years, but now, the competition is becoming harder and we have to make changes in short-term ? three, four or five years. We have about 17 models and we have to take care of them every year through refreshes. Also, some segments are developing quickly like SUVs and we have to look at them. That is very important for us.
Kizashi has not done very well in the premium segment. Would you be trying again?
Because of our capability of product development, we have been known as a people?s car maker. We provided that value-added vehicle for a lot of people, and we would like to keep that focus. Of course, there are chances to develop bigger cars in the future. Currently Kizashi is imported from Japan, but if in future, there is a chance to manufacture such a car here, we will try look at business feasibility. Bhargava (chairman) had said that 30 years ago we tried to launch the pick-up truck, but there was no feasibility so we gave up.
You only have one Fiat-sourced 1.3-litre diesel engine. Are you looking at bigger diesel-powered cars?
For installing a bigger diesel engine, we need a model first. In our group, we currently don?t have such kind of an engine. But of course if we have a chance to procure from some other company like Fiat, it may be possible. Feasibility of business is important. People are not expecting us to come with big car or a big diesel engine. That?s not us.
Are you working on a smaller diesel engine as well, for models like the WagonR and Alto?
We are studying this. We are developing various types of engines in our R&D. Whether we make them or not depends on the market requirement. We have to look at the current market situation closely. For last two years, people have preferred diesel cars, but now the price of diesel and petrol is close and diesel prices are likely to rise further. Diesel cars are also more expensive by R50,000 to R1 lakh. People do not want to pay that kind of difference in small cars. We have to carefully see this, and of course if there is a demand, we will consider this.
Maruti had said it is studying whether to launch the Japanese Kei cars in India. Have you decided on that?
Alto will continue to be the smallest car from our stable.
People are not expecting engine in the size of 600cc in cars. Also, price wise they will not be cheaper. With sluggish demand you are facing excess production capacity. Is that a worry?
After the third plant becomes available at Manesar, we will have 1.5 million capacity in all. Even if we sell about 1.2 million as last year, we will have 0.3 million more capacity. But I don?t think we will delay the capacity addition. Market conditions quickly change in developing countries like India and that?s why we have planned this capacity and also the new Gujarat plant. We are going on schedule.
The Manesar plant seems to be a jinx for Maruti with two instances of labour strikes in just six years and now demands for enhanced land compensation of R800 crore. Was it a bad idea to go there?
I have never thought it was a good idea not to go to Manesar. Of course, some problems happened, but we have a capacity of 8 lakh units and that is very important. The new Plant C will make Swift, Dzire and some new model.?
There is still no clarity on what caused the labour violence on July 18 last year that claimed life of an official. Did the company?s investigation reach a reason and how to address it?
I want to know that. Frankly, we are waiting for the police report. The only thing we can do is improve communication. Maybe some trouble happened based on a misunderstanding, which is why we are trying to increase communication. Now we are frequently meeting workers and union, and discuss their issues. I am trying to honestly explain the current situation of the company, these kind of things can help develop an understanding with each other.
Osamu Suzuki, the chairman of parent Suzuki Motor, has been coming for every board meeting recently. That has not been the case before. Why this increased focus on India?
Indian market is very important for Suzuki and the importance is growing every year. Maruti currently accounts for about half of Suzuki?s global volume and about 30-40% of net profit. This is why he has been visiting regularly. Also, he himself likes India. He has met Narendra Modi a few times as well, for the new Gujarat plant.
The government plans to launch a subsidy scheme to incentivise electric vehicles by end of the year. As a market leader in cars, are you interested?
We have the technology for such a car. If the government is bringing such a project, we will try to join it. But in the short term spreading the acceptance of such car is tough, Nissan has tried it but nobody really has been successful on a global level. It won?t be easy without creating the infrastructure. In Japan we have created some charging stations, but it still is not that popular there.
