Maruti President RC Bhargava The country’s largest carmaker will launch new models and SUVs to increase its market share and meet the demand for passenger vehicles.
Bhargava told TOI in an interview that the company is working on new launches and bigger cars, many of which are through a partnership between its parent Suzuki and Japanese auto major Toyota.
He also expresses concern over the increasing cases of accidents and road deaths, and says that there is a need to provide fitness certificates for vehicles, adequate driver training and driver licences, and efforts to enforce traffic laws.
Full text of interview:
TOI: What are your thoughts on vehicle safety
Bhargava: Safety is definitely very important for Maruti Suzuki. Road safety should include all, including two wheelers and pedestrians. Pedestrians and those on two wheelers account for the maximum number of deaths on the roads. Data from the Ministry of Transport shows that two-wheeler fatalities account for 43 per cent and pedestrians 18 per cent. Reducing these deaths should be a priority.
TOI: Why is the number of road accidents high in India?
Bhargava: There are two main reasons for this. Drivers are not properly educated about driving, and do not know the rules of the road before obtaining a licence. Improper driving causes death. Traffic rules are not being followed. Private cars meet high standards of safety when produced but undergo no inspection for fitness for the next twenty years. Have you ever got a fitness certificate for your car? There is no law in India that requires a private car to undergo periodic fitness tests and be certified safe to drive. There is such a certification for commercial vehicles, but I am not sure of their effectiveness.
You have a lot of vehicles on the roads that don’t fit with respect to safety requirements. A large number of accidents and deaths occur due to the failure of safety systems in cars and commercial vehicles. Two wheelers are also not checked for fitness. This is the reason why two-wheeler riders and passers-by get killed.
TOI: What are your views on the proposal to install six airbags in cars? Will this reduce road accidents?
Bhargava: Will we reduce deaths by installing six airbags? A study was conducted which showed that additional airbags would reduce road deaths by only half a percent. Moreover, seat belt usage in India is also less than 30%. Airbags without seat belts are a danger in themselves. The death toll among pedestrians and two-wheelers is around 60 per cent. People don’t know how to drive, laws don’t apply, vehicles are not safe. So, what should be the priority?
TOI: What are Maruti’s views on having extra airbags in cars?
Bhargava: Why do you think car makers don’t want vehicles to be safe? With additional airbags, vehicles would become more expensive and production and sales would drop. The benefits of having extra airbags are questionable, especially if seat belt use is so minimal. Now what is the category of buyers who will not be able to buy a car due to higher prices? This is the low end of the market. They will be forced to buy less safe two wheelers. Rich people will continue to buy cars because they have money. Low production of cars will affect employment.
After the introduction of BS6, there was a 28% drop in sales of hatchbacks, which are low priced cars, as prices went up. Increase in prices will further impact sales.
It is a wrong idea that we (Maruti Suzuki) cannot make profit if the sales of small cars are low. We can still make money by making bigger cars. Suzuki and Toyota have the technology. But I believe that making smaller, cheaper cars affordable to many people will be bad for the economy and the growth of the car market.
What if the lower strata of the society will not buy the car? Then buy a two wheeler. Will this increase road safety, or rather, reduce it further? As the prices go up, people in the lower echelons will have to buy two-wheelers. They are less secure.
TOI: What about the market share of Maruti and the decline seen recently. Could a decline in small cars see a further drop in market share?
Bhargava: This is a shallow analysis. We can make a lot of bigger cars. We are currently introducing the new SUV. We will regain market share. Our intention is to take care of the lower end of the market but we also have to make profits. So, there may be a change in the product mix. Remember we regained our market share after the fall after 2011.
If sales of small cars as a category decline, I worry about people who may have to buy other vehicles, such as two-wheelers, instead of relatively safe small cars.
Our profits are not dependent on small cars. People have a misconception. If you look at models like Alto, we sell them almost without profit.
But the question we need to ask is whether it is a good thing for the country if low-cost cars disappear from the market.
As far as Maruti is concerned, we can compete in bigger cars. Suzuki and Toyota are partners today. Do you think we have a problem making big cars? If the policy becomes such that small cars are no longer viable, we will discontinue them. But then the car industry would slow down. There will be less employment in the auto sector. Is this okay?
We can still run the company (Maruti Suzuki) in profit. It is absolutely wrong analysis that if small cars go down then Maruti will go down.
TOI: But your market share has declined in the last two years
Bhargava: Our market share had gone down to below 40% earlier as well. I think it was around 2011-12 when the sale of diesel became big, as the difference in fuel prices of petrol and diesel was around Rs 32 per litre. At that time there was a huge decline in petrol cars. We had slipped below 40% in market share. But then we went up and reached 51% share again.
We have been running as a company for the past 40 years, and a two year drop in market share is not a fair assessment to make any decisions on our future business.
TOI: What are your thoughts on the India NCAP?
It gives the option to the customers to decide what they want in the car with regards to the safety features and how much they are willing to pay. If the customer wants a 5-star rating and is willing to pay, the manufacturer will provide the vehicle. But India NCAP is not statutory. It gives the option to the customers to choose from.
I have nothing against it. Customers should have choice, and manufacturers should follow the customer’s choice.
If a customer demands a star-rated vehicle, we will provide.
But you are assuming that every customer will want a 5-star vehicle.
Take a look at the figures for the last two years. Which buyers are looking at which star rating? India is not just a category of buyers. Let’s see what messages customers give us.
I firmly believe that manufacturers should do what the customers want. Unlike in the past, we shouldn’t force customers to buy something they don’t want or can’t afford.
Today a customer decides what needs to be built. It is not the manufacturer who decides.
In the end, it is the customer who makes the decision. If you do not comply with the wishes of the customer, you will lose the market and profits. This is the general management principle all over the world. Customer is king.
TOI: Government looks serious on implementing additional safeguards and India NCAP rating
Bhargava: They need to do that. But are they also not working on ensuring fitness certificates for private cars and proper licenses for drivers? It seems that airbags should be the number one priority and vehicle fitness and driving license are not that important. I hope this is not the case. But this is what is happening for the time being.
TOI: What is your assessment of road accidents in the country?
Bhargava: You are assuming that people die just because cars don’t have airbags. Look at the figures. What kind of people die on the streets? We do not have an analysis of accidents and what is the cause of accidents. This is the state of our data. Data from the Ministry of Transport shows that 13.6% of the total road deaths are in cars. I believe it is important to reduce the causes of accidents, because prevention is more effective.
If I talk about 2021-22 and want to find out how many people died on the roads due to which specific reasons, we don’t have the figures. We are just guessing without data. We still think that cars are responsible for most road deaths. They are not.
Also, how many people use seat belts in cars? Studies are being done on this. It is estimated that only 20-30% of people use seat belts. Very few people even use seat belts in the front seats outside major cities. You just have to look beyond the metro cities.
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