The Auto Expo 2016 opened with the unveiling of the much-anticipated compact SUV Vitara Brezza by Maruti Suzuki. Kenichi Ayukawa, MD and CEO of Maruti Suzuki India Ltd (MSIL) told Sandeep Singh and Anil Sasi that the vehicle would be priced competitively and that he was targeting monthly sales of up to 8,000 units in the due course. As the Supreme Court-imposed ban on sale of certain category of diesel vehicles continues in Delhi, he said that banning new vehicles might not be the answer for tackling pollution. Excerpts:
How do you see the diesel ban and are there worries that the ban on diesel could get expanded to products with engine capacity of less than 2 litres?
We do have such concerns and the idea of banning the new diesel cars does worry us. Of course everyone recognises the severe pollution issues and we have to try to improve on it but I don’t know if banning of vehicle is the right solution. There should be a discussion on how to reduce pollution in Delhi and since our industry also has a responsibility, we have to take care of that ourselves. But banning of new vehicle does not help anything because old vehicles pollute more and that is more serious.
What is your expectation from the Vitara Brezza?
We are targetting a monthly sale of around 5,000 initially but we expect it to grow to around 8,000 cars. We will do the sales launch next month. As far as pricing is concerned we are targetting a very competitive pricing for the car.
While Brezza is an outcome of the efforts of the Indian R&D team, will more challenges be given to them?
A lot of opportunities will be coming because we have to develop models for future. I have earlier said that 50 new models will be coming over next five years and I think some models will be taken up by our Indian people. However, what will be given will be decided on a case to case basis.
What is the cost benefit for you if the product is fully developed by the Indian R&D team?
Definitely the cost reduces if it is developed here in India. Companies in the auto sector have a big development cost and if for some product we use outside work, we have to pay royalty and other cost. However, if it is done internally then the royalty comes down. But we have to see a balance as to which option is better. If in a particular case the cost of self development is high then we have to outsource.
You have already shipped the first consignment of Baleno to Japan, will you do that with Brezza too?
On January 30, the first batch was dispatched and it should reach Japan by mid February. Brezza is a product specifically made for the Indian market and till we don’t satisfy the Indian customers, we cannot dispatch it to other markets. So both the success of the product and capacity availability will decide if Brezza will be shipped overseas.
How concerned are you with the currency movements and appreciation of Yen?
In global trade currency movements do affect and so localisation is a crucial tool to improve on cost. The bigger concern is the raw material as they have to be imported. I would, however, like to say that the softening crude oil prices have been very helpful and costs of several oil related products have gone down That kind of trend is very acceptable to us.