RC Bhargava, Chairman of Maruti Suzuki India, is of the view that it is too early to make a forecast for anything beyond three months as the market still faces some uncertainties.
Bhargava, who started as early as in 1983 and understands the pulse of the Indian market, was recently appointed by the Haryana government as the chairman of a committee to attract investments from global companies in the State.
BusinessLine caught up with Bhargava for his views on the market conditions with the festival season round the corner, and supply chain issues post Covid-19, among others. Excerpts:
Post unlock how do you see the market panning out? Do you see growth coming in?
At this stage I am really not able to make a forecast for anything beyond the next three months because the uncertain factors are still very much there. And, we have pent-up demand from the past. Besides, last year was also bad because car prices went up sharply due to the financial crisis. All these had impacted the market. This year, in normal circumstances, things should have improved, but the pandemic came along and we are still not quite out of it. So it is very difficult to visualise how the next…let’s say two years…are going to be.
Two years is a long time in today’s circumstances. But, immediately, I think, the market situation is not bad, largely because of the pent-up demand. Sales are pretty good, bookings are pretty good and enquiries have become more digital than earlier. Physical walk-ins are a little down but digital enquiries have gone up two-fold. So things are changing. Having said that, Covid has brought down the GDP growth, therefore it will bring down people’s per capita income and that is why we are not forecasting anything.
How this will impact in the longer term once this pent-up demand factor is over, is difficult to say. The government is also looking at various kinds of incentive packages. How these will work out, what they will be, what impact they will have on the economy and on car demand — that also we don’t know. So, our view today is better to keep your vision limited to three months at a time and see how things go.
With the festival season coming in and a lot of new launches in the offing, do you expect better sales than last year?
How much is actual demand and how much is pent-up demand is very difficult to distinguish. The new launches were planned a long time ago and many of them might have been delayed because of Covid-19. I know some of our launches got delayed because of Covid.
On offers and discounts — I don’t know at this stage how the market conditions will be because these are largely a question of supply and demand.
Will there be price hikes because of the increase in cost of production?
None that I know of at the moment.
You recently said there are some concerns around the supply chain. Has it improved?
Supply chain is now working all right. Wherever there is some sort of red zone or lockdown, people have now found ways of working/managing around it. Most of the dealer outlets are also working, so sales is also not a problem during the shutdown.
What is the update on the new land from the Haryana government to shift your plants?
We are still in discussions with the government. The only thing that is certain is that we would like to shift from the Gurugram site and we are pursuing with the government on land. We are not going too far from where we are, so the supply chain will mostly remain intact. The workers, too, will not be inconvenienced. It has to be somewhere between Gurugram and Manesar. We don’t want to be in the same situation as today and go where there is a lot of habitation. But they have not finalised anything yet. We have to discuss the land and the prices, and finalise all the conditions.
What about your electric car plan?
At the moment, there is no plan for its launch. It is not shelved, but the market is hardly appropriate for small electric cars being sold in large numbers because ultimately it depends on the customers. Yes, there are government subsidies and incentives and all that, but still we have to have customers who will buy. So that judgment is always required; be it concessions or lower GST, will it be a saleable product or not?
But large EVs such as those in the SUV segments are selling…
I have no idea at this point. More expensive vehicles have a bigger market because rich people buy them. The small cars are not for the rich people…small EVs have to be bought by small car buyers. So whether he can or will buy a car at a higher price is still not clear.
Infrastructure is also an issue for smaller cars. In the case of bigger cars…if I am a rich guy, I have a house, have a garage, a driveway, I can park the car and charge it. But if I am a small car owner and park the car on the roadside, how do I charge it? Also, big car owners have multiple cars — petrol or diesel — so they can have an electric car also. A lot of small car owners have only one vehicle.
Maruti Suzuki has no BS-VI diesel engine yet…
At the moment, the market is moving towards petrol cars. There is nothing further to what we have said in the past. We will look at how the market behaves and decide accordingly.
You have been appointed as the chairman of a committee by the Haryana government. Can you share some details?
The Haryana government has set up a number of committees for different areas of the economy. I am chairing one on manufacturing and information technology. Sunil Kant Munjal is the co-chairman. We have to make recommendations to the government on how to make Haryana more competitive, how to attract more industries and investments. There are several members on the committee including from local industry associations. We are trying to create conditions to attract investments.