Maruti eyes 1 mn sales by 2010, bigger role in Suzuki’s global operations

Yes, you are right that Maruti Suzuki is on a high in terms of sales growth and market share, and also in customer satisfaction. As for my main targets for the future, firstly, we will stay focused on the goal of achieving 1 million sales by 2010. This will require capacity expansion and upgradation of manufacturing facilities, for which we have already announced an investment of Rs 9,000 crore. The expansion of our sales and service network is underway for the 1 million target. Maruti Suzuki has also set ambitious targets for productivity, quality, safety and cost, in line with the 1 million sales target, and our teams in these areas will continue to focus on them.

At the same time, I believe that Maruti Suzuki is ready to play a much bigger role in Suzuki’s global operations, and my task will be to make that happen. Maruti Suzuki’s manufacturing capability has reached a level where we want to make small cars exclusively in India for export to Europe! Maruti Suzuki’s R&D has shown tremendous potential through its contribution to the Swift and Concept A-Star. The R&D at Maruti Suzuki will strengthen in the next 3-5 years, both in terms of infrastructure and capability.

Of the 3 million cars that Suzuki wants to sell worldwide, almost 30 per cent have to come from Maruti Suzuki India. Maruti Suzuki has also started to share its good sales and service practices with other Suzuki companies worldwide, and I expect this flow to gain momentum in the next few years.

We have lined up certain critical initiatives that will better the experience of our customers and partners, and I will keep a close watch on them. We have an aggressive plan for new model launches. Besides, after our capital investment of Rs 9,000 crore in manufacturing and engine facilities, we want to invest substantial amounts in marketing infrastructure as well.

• This seems to be a fresh start for a two-decade-old company that has been an outperformer right from the start. What are the changes in manufacturing, R&D, product mix or branding that we may expect at Maruti?

I cannot give specifics at this stage. But the medium-term vision is that the R&D Centre at Maruti Suzuki will be at par with the Suzuki R&D facilities. I have also said that Maruti Suzuki is ready to play a much bigger role in Suzuki’s global operations. About product mix and branding in times to come, let me give you a complete picture.

First, the key points of Suzuki’s worldwide strategy with regard to models. Suzuki Motor Corporation has chosen a strategy of “World Strategic Models” to drive long term growth.

As part of this strategy, we have been developing global models which are European in overall styling and design, and carefully modified to suit local markets. What this means is that Indian customers get international levels of quality and design, at the same time as customers in other key markets.

Swift, which was launched worldwide in 2005, was the first model to emerge out of this strategy. Since then, Suzuki has launched the Grand Vitara, SX4 and Splash as part of the World Strategic Model approach.

Another key point is that Suzuki is expanding its image from that of a maker of minicars and small cars, to a company that offers the full range of models. While continuing to offer value to customers, there is a conscious effort to introduce contemporary design, style and premiumness. You will agree with me that with the launch of models like Swift and SX4, Maruti Suzuki has successfully “expanded” its brand image in India.

Suzuki is also widening the range of models on offer. An indication of this was provided at the Frankfurt Motor Show and again in Tokyo where Suzuki displayed the Concept Kizashi.

Specifically on India, Splash and A-Star will be introduced as part of the World Strategic Model approach. We have launched five new models in the last two years. As I said, we have an aggressive plan for new model launches going forward as well.

• There have been a number of strategic alliances and tie-ups in the auto industry recently and more seem to be in the offing. Can we expect Maruti to join the bandwagon as well?

There are no such plans at this juncture.

• Exports has been one area where Maruti has quite inexplicably been lagging behind rivals Hyundai and Tata. With your tie up with Nissan, do we expect things to change?

Exports have always been a focus, even when there was a long waitlist in the domestic market. Besides, we have always had a common assembly line for exports and the domestic market. Yes, in case of Europe, there was a brief halt to exports, which I would call a transition period. In that period, we have built up significant volumes in non-Europe markets.

What is significant, though, is that we now have a new world-class facility at Manesar. Maruti’s manufacturing capability has reached a level where Suzuki wants to make small cars for Europe exclusively in India. We have a target of 1 lakh unit exports of this model to Europe under the Suzuki badge. This will obviously bring a major change.

As for the export tie-up with Nissan, you will appreciate that it it will not be proper for me to comment on the numbers on behalf of Nissan.

• The interest rate spike has had a prolonged and continuing impact on the auto industry. What is your outlook for the Indian industry vis a vis the global scenario?

Looking at the medium term, I believe India offers tremendous opportunity. Apart from the large base of two-wheeler owners, there are nearly 8-9 million people who own cars and are looking to upgrade. There are new entrants in the job market every year…. If the China experience is an indication, we should see a major spurt in demand for cars in India in the medium term.

• With a spate of ultra low-cost cars led by Tata’s much talked about Rs 1 lakh car in the horizon, Maruti may soon lose out the privilege of having the only true people’s car. Studies indicate that Tata may also trump Maruti to the numero uno spot. How do you plan to react to the competition?

Maruti has always been very serious to all competition. As far as Tata’s Rs 1 lakh car is concerned, we have read reports that it will be launched some time in 2008. So far, we have not seen the car. There is no clarity yet on important aspects of the model like features, performance, safety, emission and others. You will appreciate that it is not possible to comment on a model or likely competition until some of these aspects are clear.

• Indian cars are still perceived to be one of the most unsafe in the world. Should crash testing be made compulsory to address the issue and is the industry ready for it?

My understanding is that there is a set of safety norms that have been worked out by the Government in consultation with the industry and regulating agencies. Only cars which meet those norms are allowed to ply. Manufacturers are, of course, free to provide additional safety features in their cars, like we have done.

Those entail a higher cost and many customers are willing to pay for them.