By when do you expect a full recovery in rural market demand?
That is a very tough question. As you know, car is a discretionary product. It is also a very large-item product; it is probably the second largest purchase people make in their lifetime in India. So future demand depends on the economy in general — the per capita income growth and also the sentiment.
Per capita income grow is expected around 10-15% as RBI had indicated, lower than the budget figure which was indicated around 14% or so. After the second wave there has been a lowering down of expectations of economic growth.
Rural sentiment is a little more negative at this time of the year compared to the last year. But the fundamentals of the economy in the rural area is still strong. So there can be a good bounceback. Human sentiment is quite transient.
But the thing is that OEMs are a little apprehensive of making forward projections at this time because of all this uncertainty. People are talking of a third wave. But unless the sentiment related to Covid becomes negative, there can still be a bounceback.
Are you wary of a possible third wave’s impact on Maruti?
Of course we have to be cautious. This pandemic has taught us that nothing can be taken as a given. The virus seems to have a capacity to surprise almost all experts.
So I am not going to make predictions about whether the wave will be there or not, or the extent of it. But in our plants we are taking into account the possibility of another wave.
Can you give us a picture of the inquiry level coming in from new customers and inventory level in the system?
Inquiry levels are getting better. Last week’s levels were almost similar to what we had in the beginning of April. That is pretty good, I would say.
Closure of outlets, because of weekend lockdowns or whatever, naturally causes a dip. Having said that, inquiries and booking seem to be coming back as more and more states are unlocking.
With fuel prices so high, how do you view CNG vehicle demand?
Cost of running and fuel efficiency are important criteria for the Indian buyer. There is substantial saving if you use CNG. Besides, the availability of CNG now is also much better. So we have had a good traction on that front.
A couple of years back, we were doing about a 100-1,000 CNG cars a year. But last year we did something like 1,58,000-1,60,000. This year we are projecting sales of almost 2,50,000 or so for CNG.
How are you progressing in the EV space? Any timelines?
I will not be able to give you a definitive timeline on future product plans. We do not generally talk about future product plans.
The percentage of electric vehicle being sold in India as well as globally is still very small. The primary reason for it is that the cost of acquisition of electric vehicles is extremely high, largely because the battery costs are very high. Then there is also the distance-per-charge limitation.
A cheaper technology is currently not available, which is one of the basic hindrances to the progress of EVs. The other major factor is the lack of charging infrastructure. We haven’t yet seen much confidence among consumers regarding EVs.
Give us some idea of your SUV plan.
Why Maruti is able to maintain a high market share of close to 50% is because we give consumers what they want. We are very focussed on consumer satisfaction and the value we offer to consumers.
In hatchbacks our market share is 65-66%, in sedans almost 50%, PVs we are more than 60% now, and in vans we are 90-95%. The one area which seems to be a weak area for us seems to be SUVs. There too, in entry level we are sitting pretty with the Brezza, the number one model there in the entry-level SUV segment.
In the mid-SUV segment where you have the Seltos and the Creta, we have the S Cross. Our numbers are not so great yet. We are quite conscious of this fact and we are watching this SUV segment very closely.
How much is your plant utilisation at the current level? Can you please update us on the semiconductor shortage issue?
I think we are in a better situation this year than last year. Last year the demand was chasing the supply; this time I would say supply and demand are roughly matching.
After April’s plant shutdown owing to the oxygen issue, we restarted production on May 17. We brought forward the maintenance shutdown from June to May. Since the restart, we have been ramping up rapidly. Our utilisation is pretty strong at the moment.
About semiconductors, there is a global shortage. That Maruti has been able to manage production well is largely because we have the advantage of a large portfolio — different vehicles using different levels of semiconductors. If semi conductors are not available of a particular type in a particular variant, we then go and produce more of the other. This is a luxury not many manufacturers in India have.
While supply-chain guys would be the best people to comment on it, I am told that semiconductor supply is a global issue and should be sorted out in a few months from now. So we are just hoping that in the situation would normalise in a while.
