'The auto industry is experiencing the most severe downturn'
RC Bhargava, chairman of Maruti Suzuki India Ltd., talks about the auto slowdown, on-the-ground reality about EVs and bats for CNG cars
Aug 19, 2019
RC Bhargava, Chairman of Maruti Suzuki India Ltd., is no longer an active manager in the company he served for over 38 years. Yet, at the Maruti Suzuki office, he is a pillar of strength. Known for his deep understanding of the automobile business, he is said to 'know more about the customer than the customer himself.'
The following are edited excerpts from an interview with Ruchira Singh:
In your career span with Maruti, how would you rate this downturn in terms of both its longevity and severity?
It is still not the longest. Even in 2002, we had a three-year downturn. This one has barely gone on for a year. So, longevity is not there but the severity is probably maximum. I think this is the most severe downturn we've had in all these years.
So, how is the company biding out its time? Are there any cost-cutting measures that you are undertaking and is there any more retrenchment coming?
No, retrenchment doesn't solve much problem. The total personnel cost in Maruti is about 3 per cent of the net sales. If you take out the management part of it, the blue-collar labour cost would be 1.2-1.3 per cent or something around that figure. Even if I retrench say 10 per cent of those workmen, I would hardly save 0.1 per cent.
What about the EVs on the horizon? How will you make sure you retain your market share and even grow it once the new order comes in?
It is very early to talk of any impact in market share because of EVs. How many EVs are sold in India? The numbers are so few that they have absolutely no visible impact on market share numbers and I don't see anything in sight which will change this position at least for the next two to three years where the number of electric vehicles sold in India will actually make a visible impact on market share.
In the compact vehicle segment, there are many launches lined up. So, what is your strategy to retain your market share?
All car companies in India keep launching new models. Nothing has changed. Out of all that some market shares emerge. Market shares are never constant. They always keep changing. So, everybody works to sell as many vehicles as they can. We are doing the same. To the best of our abilities, we work towards maximising our sales. Others do the same. So, market share is the derived figure.
What in your estimation is a good time frame for futuristic cars, such as driverless cars? Do you discuss this in your meetings?
You used the right word. Futuristic. It's futuristic. Can you think of a driverless vehicle in India with the kind of unemployment we have? Do you think it makes any sense for anybody to invest money in developing such cars in India? We want to create employment not to do away with the areas of employment.
(These are excerpts from a long interview with RC Bhargava, Chairman of Maruti Suzuki India Ltd. The full interview is available to subscribers on valueresearchstocks.com)