Turning affordable Cars into EVs is a big challenge: RC Bhargava, Maruti Suzuki

It is hard to predict the market at present and we will have to see the kind of impact that government and industry decisions will have on sales that are declining at present, says Ravindra Chandra Bhargava, Chairman, Maruti Suzuki. In an interview with Swati Khandelwal, Zee Business, Mr. Bhargava said, “India is a market of small cars and electrifying them is a challenge with technology that is available with us at present as it will just double this cost. Edited Excerpts:

Maruti Suzuki has seen the sharpest drop in sales of 36% since 2001. What is your outlook for the upcoming festive season? 
Predicting the market at this moment is a hard task because we will have to wait for the outcome of the steps taken or to be taken by the government and the industry on the ongoing downturn. However, I think, if the sales, which is falling at present, reverse itself in the festive season and brings back growth then it will be a good thing for the industry. But I will not be able to predict the kind of growth it will bring with it.

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Rural demand has 39% volume-wise contribution to your company. What are your expectation from the rural area and any prediction for recovery?
Rains have been good this year and the forecast suggests that it will remain normal in this month as well as September 2019. Such a situation gives a boost to the rural demand and that’s why I think that the rains will have a positive impact on the falling rural demand in the next few months. It will bring a positive feeling to the rural demand that has been falling like urban demand.

What is your inventory level currently and do you see it reducing, if yes, by when?
If talk in terms of normal sales, then we have an inventory of a month but falling sales have increased it to 40 days. Production has been adjusted in the factory to bring down the inventory levels to make sure that we are forced to go for a distress sale. Maruti doesn’t have distress sales in its policy but inventory management is in our hands. Besides, you all talk about production cut, then what is production cut? It is an adjustment under which the inventory is maintained to the levels that are good for that particular time.

What is your pipeline for new product portfolio for the year and name the products that can be launched by the festive season?
See, we don’t announce new models but the petrol version of Maruti Brezza will be launched by the end of the financial year. Besides, XL6, which is a derivative of Ertiga and is sportier, will be launched this month itself. BSVI models will keep coming.

What are your plans for electric vehicles (EVs) and by when we will be able to see an EV from Maruti?
Lot of people are confused about an electric vehicle, but the reality is that the Indian market is a market for small cars, where 70-75% vehicles belong to the same category which ranges up to Rs6 lakh. Electrifying all those vehicles with existing technology, especially for private use, is a challenging task because the cost for these small vehicles will turn up be more than double.

Do you think that there is a need for GST cut for the auto sector and the government should do it?
It is unlikely that the government will reduce the GST rates in the auto sector after looking at its finances. Such an event will likely create a new problem from other sectors that are under pressure or are witnessing a slowdown at present, like Housing and Real Estate. They may come with similar demand and that’s why the government will have to think about it.