Interview. We plan to strengthen the portfolio of SUVs significantly: Maruti’s Srivastava

We are at 95 to 96 per cent of the planned production as the situation with the semiconductor issue has gotten better in the last 12 months. We do not know when it will become 100 per cent. There are approximately 8,00,000 bookings of vehicles in the industry but, at the same time, production of certain vehicles and models is not as per the demand. Going ahead, the challenge will be on how much production we can do as per the demands pattern.

Fundamentally, automobile demand is correlated with GDP growth. We will have to watch for the growth rate in the economy, inflation, and interest rate. Prices of CNG and fuel prices also continue to remain high. 80 per cent of the industry volumes are through finances. There are pending bookings and if the production happens accordingly then we may not witness a sharp drop.

Maruti Suzuki’s non-SUV market share is 63 per cent, which is high but when you combine it with the SUV market share, it then falls to less than 45 per cent. In the SUV space, our market share is poor and is 10 to 11 per cent. We plan to strengthen the portfolio of SUVs significantly and have introduced Grand Vitara in mid-SUV, which should get us volume in the market share. As we still have to increase our presence in the SUV sector in order to increase market share, we plan to do so by bringing in two more SUVs this financial year. 

We are getting 8,000 to 9,000 inquiries every month and sales have also started going up. Maruti Suzuki Baleno and Maruti Ertiga are the top sellers. With the subscription business, we are able to appeal to customers who prefer asset-light usage of vehicles as they have to pay only monthly charges and all other aspects are taken care of. The service is available in 20 cities with more than 2,000 vehicles, and we are going to expand it to five more cities this year.

The focus of consumers for automobiles in the past was price, quality, and brand, and there has been a shift where consumers are looking for the latest technology and features as well. We have incorporated the latest technologies and features, including Suzuki connect, and ventilated seats in our cars. 

Though the commodity prices are softening when we compare it to two years, it is still high. For an automobile, Original Equipment Manufacturer (OEM) commodity prices are extremely important to track as they affect the material cost and the material cost impacts the component cost. In an OEM, the cost structure is 75 to 80 per cent material cost. Any change in material and commodity impacts profitability. OEM has increased the prices but the increase is not sufficient to cover the increased material cost. The profitability of the OEM has been impacted negatively in the last two and half years. The reason why OEM did not increase the price as in covid times we were conscious that it would have an adverse impact on demand. Manufacturers will have to increase prices when the demand stabilizes. 

For India, especially 13 to 15 per cent EV penetration by 2030 is predicted. The penetration of EVs is low across the globe primarily because the cost of acquisition is high, which is dependent on battery technology and the battery costs are still high. Consumers are anxious about how many kilometres will the vehicle charge last because of the charging infrastructure in the country. Maruti Suzuki is for customer convenience over optics and we are trying to build a structure and bring the cost down for consumers when it comes to EVs. We also believe that the road will be through electrification and are slowly building up and will introduce our first EV in 2024-2025.