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RC Bhargava | Maruti hasn’t lost relevance and the customer has not given us up

RC Bhargava | Maruti hasn’t lost relevance and the customer has not given us up
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First Published: Fri, Apr 09 2010. 08 37 PM IST

Toasting a partnership: The day Maruti signed the deal with Suzuki happened to be a dry day. Maruti booked a suite at Ashoka Hotel and somehow managed to get champagne to celebrate, Bhargava writes in
Toasting a partnership: The day Maruti signed the deal with Suzuki happened to be a dry day. Maruti booked a suite at Ashoka Hotel and somehow managed to get champagne to celebrate, Bhargava writes in
Updated: Fri, Apr 09 2010. 08 37 PM IST
New Delhi: It is ironical that the same week Maruti Suzuki India Ltd chairman R.C. Bhargava released his book—The Maruti Story—the company announces the near-end of the iconic Maruti 800 (it is being phased out of 13 cities). The Maruti Story is an easy-to-read, first-hand account of the birth of the country’s largest car maker. However, the subtext of the book is in the strap line of the title, how a public sector company put India on wheels. It is a forthright account of the challenges of building a profitable PSU in pre-liberalized India. Bhargava tells Mint why, despite the announcement of its end, the beginning of Maruti will always play a relevant part in the story of India.
Is this the end of Maruti 800?
Toasting a partnership: The day Maruti signed the deal with Suzuki happened to be a dry day. Maruti booked a suite at Ashoka Hotel and somehow managed to get champagne to celebrate, Bhargava writes in his book. Ramesh Pathania / Mint
The Maruti 800 has not stopped. It will not be sold in 13 cities, though these are 13 large cities. There will be an impact, but we will continue with the 800 for another two years, at least.
The partnership with Suzuki was fortuitous. Tell us how it came about.
In 1981, when we started the project, we were looking at all the different options and had written to different companies in Europe and Japan. We then went to Japan for the Tokyo auto show and we met people from Suzuki. The response we got from them was wishy-washy, lukewarm. And we came away without any kind of further talk of continuing discussion. The only company that looked serious was Daihatsu, but later on it became clear that they were going to back out. So we were left with almost nothing. This gentleman, a director of Suzuki, was on a flight from Chennai to Delhi and then back to Japan (Suzuki and TVS already had a partnership for motorbikes) when he read an article in India Today saying Daihatsu was tying up with Maruti. The moment he landed in Delhi he called Japan and asked the top management—did you guys know about it and they had no clue. The people we met in the auto show were the Suzuki overseas engineering team—whereas our request should have gone to the overseas marketing team—that was the mix-up there. So Suzuki sent us a telex saying they would like to bid if it was not too late. That was godsend—at that point we had nothing in hand. Then we had to pretend that time was running out, there were others in the reckoning, etc. The Suzuki folks were here within two days and we had a meeting. That was how the partnership began.
Like the Maruti 800 in the 1980s, do you think the Nano would now be the game changer in the Indian car market?
The Nano has been around for nine months. But I don’t hear the buzz that is associated with a hit product. My knowledge is that if you want to buy a Nano today, you can go to a dealer and in about four weeks he would give you a car and all you have to do is bear the interest cost of the guy who booked the car and is not unwilling to flog off his booking. Any car which is in hot demand has a premium. The Nano does not. So that somehow makes me believe that this car requires more work before it becomes the phenomenon that it was touted to be.
Shouldn’t the sub-lakh car have come from Maruti?
No, because we came to the conclusion that we couldn’t do it. It was not possible to make a car that would meet with the standards which we feel a car should have at that price range. Otherwise, we would have reduced the cost of the Maruti 800. But we felt that it was just not possible to do it.
With the number of choices now available, do you think that Maruti has lost its relevance with the urban, young Indian?
The income levels of a lot of young people have increased dramatically in the last few years. Whereas earlier a guy who is in his early 30s would be very happy to be able to afford a Maruti, today he looks at a Toyota Camry or Honda Accord. Still there is a large bulk of Indian consumers who are not in that income bracket. And they are looking for cheap, affordable smaller cars. And whether it is Maruti or Hyundai or Tata, they all have a relevance. There has been full competition for 15 years and we still maintain 50% market share. Maruti hasn’t lost relevance and the customer has not given us up.
How difficult is it to maintain a long-standing partnership with a company that comes from a completely different business culture than ours?
The Japanese are different from us, yet they are much easier to work with in many ways. The big difference between Western companies and the Japanese is that the Japanese work much more on personal relationships and trust, whereas the Western companies are more contract oriented. What makes the Japanese guy trust you? They only look to see whether you are genuinely committed to the company before anybody else—including yourself. If they find that your priorities are more towards your own self, they will not trust you. For them the company is mai-baap, God whatever you want to call them. So they look for that in you.
My personal chemistry with Mr (Osamu) Suzuki became better over the years. On many matters I could persuade him to change his mind, which none of the Japanese could do. That’s because he trusted me, he knew that what I was saying was going to benefit Maruti and that I had no other agendas.
In hindsight, is there anything you wish you had done differently?
I got into a lot of issues with the government, there were CBI enquiries against me. Some MPs signed a petition against me alleging wrongdoings and most of this was because I didn’t succumb to political pressure and award contracts to people who had political connections. They caused a lot of stress and harassment. I wonder what I could have done and whether I could have avoided it. That was a terrible time in my life. If I succumbed to the stress and quit that would have been taken to be an admission of guilt. So I said I’ll fight it out. And Suzuki backed me fully—even at the cost of breaking relations with the government. As a public sector employee, where did I have the means to hire good lawyers? But Suzuki came in and helped. That’s the extent of how they back people. No Western company would do that.
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First Published: Fri, Apr 09 2010. 08 37 PM IST