NEW DELHI: RC Bhargava, Chairman of Maruti Suzuki India Ltd (MSIL) on Monday said tough competition in a highly crowded market is the primary reason for the slew of exits (by global auto manufacturers) from India and it is not appropriate to blame the government policies and high tax structure.
“Competition pushes out the weak. We have about 19 carmakers in India, higher than in the United States. Now see what the volume is here and what the volume is in the US. How can we make them all viable and profitable? The simple thing is India has far way too many carmakers and many companies could not meet the cut. They had to fall out,” said Bhargava while speaking at The New Indian Express Delhi Dialogues.
In less than a decade, automakers such as Ford and General Motors decided to suspend operations in India after reporting huge losses and poor sales.
Currently, MG Motor is scouting for an Indian partner while half a dozen carmakers continue to command market share in the low single digit. Bhargava did not rule out the possibility of more exits and consolidation as he believes that the local market cannot support so many carmakers.
When asked about the entry of US electric carmaker Tesla in India, Bhargava said that they are welcome but there should be a level playing field for everyone. Bhargava, who has been handling affairs at Maruti Suzuki for over 4 decades, believes that MSIL is not late in the electric vehicle market even as rival carmaker- Tata Motors - has taken a big lead.
“We had developed an electric Wagon R a few years ago but the cost was too high. The Indian car market is price sensitive given per capita GDP is about $2,000 as against Europe ($45,000) and the USA ($68,000). Then there is a lot of talk about changing battery technology which impacts investment decisions. Also, we wanted to check the challenges initial EVs would face in India,” he said.
Maruti is all set to launch its maiden electric car- eVX SUV (jointly developed with Toyota) - in 2025.
Commenting on the long success of MSIL, Bhargava said that their management style where blue-collar workers are highly valued, coupled with the right launches and rapid expansion in rural India (including smaller towns), helped them to become a giant of this size.
He added that Maruti is working towards regaining the 50% market share in the domestic market and increasing their sales in the Sports utility vehicle (SUV) segment. When asked if he feels that the Indian auto market can become as big as China or the US, Bhargava said, “I don’t think that we can overtake China and probably not the US. China is also way ahead of us in terms of infrastructure. I don’t think politically India can do what China did in rebuilding Infrastructure which includes relocating huge population.”