Maruti Suzuki has to figure out what makes customers accept the Kwid: Kenichi Ayukawa
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Two things are top-of-mind for Maruti Suzuki India Ltd managing director Kenichi Ayukawa: the Renault Kwid and production constraints at his firm’s plants in Haryana that may see some customers moving away to other brands.
Ayukawa thinks that in Kwid, Renault India Pvt. Ltd has a design that is better than Maruti Suzuki’s small cars. He says with Suzuki’s Gujarat plant going on stream, a lot of the capacity issues ought to get sorted.
In an interview, Ayukawa also forecasts India becoming a 10-million car market in a decade.
What is your take on the Kwid?
It is a very interesting model. We’ve to figure out what makes customers accept it and use that in the development of our products.
Do you see any differentiator between your small cars and the Kwid?
I think the concepts are different.
How would you explain that?
Design-wise, they have opted for an SUV-like vehicle. That is better than ours. We have to see how we are going to manage our product design and other features. Also, the size (of the Kwid) is a little larger. With the new 1,000cc engine, the price is very competitive.
But how they are going to manage their business based on that…we have to study that.
Production constraints must be a worry...
In order to retain double-digit growth, we have tried to increase our sales volume by 1.5 lakh units every year. It is quite a huge number. We are starting the Gujarat project. Factory construction is almost complete and we have already started the installation of machines. Most probably, by the end of the year, we will start production of prototypes and by the beginning of next year, around February, we will start actual production.
With the Gujarat facility, we will have an additional 2.5 lakh in capacity. I think in the next two years, we can add additional volumes. Also, we will try and improve our Haryana factories… improve their productivity. We will try to achieve a 5% improvement in productivity. (By doing that) we can get 70,000-80,000 more units. Unfortunately, we still have backlog for the Brezza and the Baleno. So we will have to increase production and make deliveries of cars.
Do you think you will be able to hold on to your customers for so long?
That’s why we have to recognize that (waiting period) is not good for customers. Even if we produce 10,000 more, new orders are coming. That’s why the total volume backlog is so much.
Gradually, we are delivering the vehicles.
Your efforts to reduce the order backlog for Brezza and Baleno has led to an increase in waiting period for models such as the Ciaz.
Balance is very important.
Every model has a little bit of waiting time. Not only Baleno, but Ciaz and Dzire…we have to keep watching the stock.
We monitor dealers. If someone has a big stock and someone does not, then we try and make deliveries accordingly.
Do you see space for 20 manufacturers in a country like India?
It is a big number for just a three-million (car) market.
For this kind of a market, it is too many players. But the market itself is expanding. May be it will reach five million by the end of this decade and 10 million in a decade. That’s why all the players are interested in this market.
Do we see a scope for consolidation or may be contract manufacturing taking root?
The point is manufacturing is different for different companies. For example, Maruti is based on Suzuki’s production system.
Honda and Toyota follow the production systems of their parent. At Tata Motors, too, it is different.
Your agreement with Fiat in India for manufacture of engines endures.
We are still purchasing some engines. That is because we have limited capacity.
Is the demand for your diesel cars intact?
We are producing about 4 lakh diesel engines. So, there is still demand in some areas. In some areas, demand has come down.
In the context of the stigma around diesel, do you see your tie-up with Fiat lasting in the medium to long term?
Yes, as long as we use their engine (Fiat SpA and Suzuki Motor Corp. have a licensing agreement under which the Japanese company buys 1.3-litre and 1.6-litre diesel engines from the Italian firm). As long as we retain that engine, we want to keep that collaboration.
What is the update on your own family of diesel engines? Apart from the 800cc engine, there were a couple of other engines in the works.
We are planning that. Sooner or later, we will bring those here. But, the situation has changed a bit here in the last two years. We have to carefully watch the market situation and demand.
The response to the 800cc engine has not been encouraging...
It is because the environment for diesel has changed totally. People are not opting for diesel cars to the extent they were earlier as the fuel cost benefit is reducing.
People have misconceptions about diesel engines. We have to change that mindset. All diesel vehicles are facing those kind of difficulties.