New Delhi: Maruti Udyog Ltd, the country’s largest car maker sells one in every two cars sold in India’s 1.4 million passenger car market. It has built its business largely selling small cars such as the ‘800’ and Alto which offer more miles per litre of petrol, in a country obsessed by value rides. Still, Maruti’s customers, who, for nearly two decades, turned to the Suzuki-owned car maker to meet their needs, will soon have a raft of choices from other marquees such as Honda, Toyota and even the indigenous Tata Motors Ltd, which plans a small car at half the price of Maruti’s cheapest. In an interview with Mint, Jagdish Khattar, managing director of Maruti, talks of the changing marketplace and the company’s future. He was, however, stoically mum on the issue of succession. Khattar’s current contract expires in December this year and it is unclear whether he will be asked to stay on. Edited excerpts:
You’ve been in this business for a while now. How have user preferences changed?
I’ve been in this industry for 14 years. When I joined, there were only three to four models in the country; it was a very different market then—people had to book and wait for their cars. A combination of things has changed—most of all, the arrival of new players, and a large number of them in a short span of time.
If you look at it, most of them came in a period of three-four years in the market. And they have got different products and the customer has also changed with the products. What is very interesting is that if you look back today, some of the products which were launched even before the cars were made had bookings of a couple of lakhs. Some of these were models that were discontinued in other countries. And then, too, the response was so good. Today, most of the manufacturers are bringing models to India at the same time they are introducing them in their respective countries or other markets. Doesn’t that indicate a change? And even despite them being contemporary, all are not doing well. Along with transition of time, the coming of new players, the developing economy, more purchasing power, and getting more globalized the scene in the marketplace is not what it was five-seven years back. Customers have become more discerning, they are very knowledgeable about what is happening, they do a lot of research before buying.
In fact, at times our sales executives are not able to answer their questions because some of them are so knowledgeable. And having said that, every market player has to really balance the product and all the characteristics of the value-conscious Indian customers.
By value-conscious, you mean predominantly fuel efficiency for Indians?
Fuel efficiency or cost of running. I’ll answer that question by saying 80% of the Mercedes being sold are diesel cars. I’ve never understood the relationship between the two.
When you look at how your customers are demanding cutting edge products, where is that stretching you as a company?
This also varies from segment to segment. For many people, a car is an aspiration. About 65-70% of the car market—I am not saying they are not looking for those things, but—their requirements, expectations are different. Technology they won’t compromise, along with that they want good styling—comfort, more space, better air conditioning etc., more value. Personally, I always say the customer and the car have a life cycle, be it seven or eight years. As a manufacturer, if you want to win customers and retain their loyalty you have to be in touch with them throughout the life cycle. It’s not just one thing. More than important is to be with them. Obviously, there are challenges.
All said and done, Indian customers still say Maurti is tested, tried and tested. We have to further reinforce that; there is no substitute for that. They (rivals) can offer cars that cost less, but this thing has to be earned. Having said that, we will have a new product line-up and Suzuki is working very hard to see that the image of these new products is different. Look at Swift and SX4. The product line-up has to be fresh, cutting-edge technology. We’ll bring new models... so the process has started.
In the sedan, SX4, that’s the first you’ve introduced after a gap of nearly eight years. And in the meantime, Honda and the rest have taken leadership from you.
Please understand that there are five players; each one concentrates on one segment. Maruti cannot fight with all five. Maruti will select its own segment and also do something in its own segment. No. 1 doesn’t mean you have to be No. 1 in all segments.
Isn’t it a good aspiration for a company to have?
That is happening now. I think we will become a leader in this segment with the SX4.
With just this?
For the time being. For the future, we will bring more... we have plans for the next four to five years.
What do you think of the Tata plan to bring out a car for Rs1 lakh?
It’s good for the country. I think it will help the manufacturing sector and create best practices.
And that’s a space you want to compete in?
We don’t propose to be in that space. It is our view that those today who are two- wheeler riders and want to upgrade, most of those who can, from Rs40,000 to Rs2 lakh, will continue to do so. But, those who cannot upgrade to Rs2 lakh will upgrade to the Rs1 lakh car.
After a couple of years, we will be the beneficiary, because there will be people upgrading from Rs1 lakh to Rs2 lakh—the gap will Rs1 lakh, instead of Rs1.6 lakh. It will help in what I call motorization mobility.