As India aims to achieve 40 per cent of new car sales to be electric by 2030, Maruti Suzuki is planning to shift most of its existing cars to hybrid by then. Kenichi Ayukawa, MD and CEO of Maruti Suzuki India Limited, told Indian Express that the company will have to improve efficiency and technology for non-electric cars and hybrid is one solutions they are looking at. While Maruti clocked a growth of around 15 per cent in 2017, he said that the industry may grow between 8-10 per cent in 2018.
Electric vehicles are widely in discussion, including from the government side. How realistic is the aim to have 40 per cent of new car sales as electric cars by 2030?
It’s a very challenging one. There are too many unknown factors and we have to fix them one by one. Also, for India, price will be a big constraint. It’s a global development and we have to carefully watch the movement on it. We have already announced that in 2020 we will start production here. Right now we don’t have a vehicle and we have to prepare it.
Even if 40 per cent of the cars sold are electric, the remaining will still be on internal combustion engines. What is your strategy?
We have to improve efficiency and technology for our non-electric cars. Hybrid is one of the solutions we are looking to adopt. Not many alternatives are available. We are thinking partial electrification (Hybrid) of all our cars on IC (internal combustion) engine by 2030. Even as the government is targeting at developing EVs, there are cost concerns and we have not found any solution to reduce it as of now. So, for people who can’t buy electric cars, we have to see how we can reduce fuel consumption and make them environmentally friendly. We have to encourage hybrid and alternative fuel system.
When do we see the big movement towards hybrid by Maruti Suzuki?
The regulation is tighter and we have to comply with them. Maybe we have to improve further efficiency and also make cars environmentally friendly and that’s why we have to try to implement Hybrid system to some other cars. We will do it gradually in a car. It takes 3-4 years to implement it in a car. In case of small cars the price will be a limiting factor. If we add a new technology, the cost goes up and it is not easy to add the cost to the consumer. For that we have to find a solution and so for smaller cars it will take time. The viability is better for bigger cars and so we will be doing it first in them.
Does limited supply of Lithium concern you as current battery technology depends largely on it?
It is an issue. The countries that are producing it is limited and the production is also limited. Unfortunately India does not produce such material and so we have to import. If the commodity prices go up globally, unless we can find some alternative solution, electric cars will be a costly affair. We have to see if some alternative solution is also developed.
While 2017 has been a good year for you, how do you see growth to be in 2018?
In 2016, demonetisation happened and 2017 the implementation of GST happened. So, a lot of changes have happened and that led to some impact on demand. I feel that if the economy does well and demand becomes stronger, the industry will grow at 8-10 per cent. Every year we plan to bring out new product and this year we will be showing at auto expo. We expect a rise in customer demand as a result of such events.
Job creation is critical for fresh demand. Does it bother you that job creation is not happening at a good pace?
It is an important point. As far as our industry is concerned we are expanding and providing new opportunities to young generation and thus we are generating the kind of cycle that is very important. But if negative factors come in and change this cycle, that is my concern. We need to create opportunity for people so that they earn and then spend, that kind of cycle is important. For example, in case of automobile sector, if the companies are expanding production, we need more people and it also happens at the level of component manufacturers.
While the government is talking of ‘Make in India’ and ‘Ease of Doing Business’, could you point at some major reforms that have benefitted the manufacturing sector in India?
In the long-term, GST implementation will contribute to the development of industry and that holds true. While there is a lot of difficulty and issues at the implementation stage, in the long-term the GST system will contribute to the development. The concept is very important, we have to keep that system and keep developing it. How do you see the impact of rising crude oil price on sales? This year it is going up gradually. If fuel price goes up, the natural trend is that the demand for cars goes down. The thing to look out for is how we can increase the efficiency of the cars. As of now there has not been an impact but if it continues to go up gradually, it will have an impact on sales. Shifting to hybrid will help.