Director, Maruti Suzuki India Limited
Interview | Kenichi Ayukawa | Maruti Suzuki | Autocar India Podcast
Maruti Suzuki launched the Vitara Brezza today. Kenichi Ayukawa, MD & CEO Maruti Suzuki India recounts the importance of the SUV for the company and shares his views on the budget amongst other topics.
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Transcript (23 segments)
I
Interviewer0:06
We're in conversation with the MD and CEO of Maruti Suzuki India Limited, Mr. Kenichi Ayukawa. Thank you, Ayukawa-san, for speaking with us today and congratulations. Big day for you with the launch of a new baby. Um, you know, you've had an iconic SUV in your stable, the Gypsy, which was one of the very first few around, but historically after that, it's been difficult for Maruti in the SUV segment to crack that it's been tough. So, uh, you know, what's your take? Do you think it was really lack of product or was it perception of the brand?
K
Kenichi Ayukawa0:35
I'm sorry that we have to apologize to our customer that a long time make them wait. You know we are preparing a new SUV this time and I believe that this car will satisfy our customer.
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Interviewer0:55
Okay. And what are your expectations of the Breza and who do you think is the Breza customer?
K
Kenichi Ayukawa1:00
I think that our target is mainly that young family and we expect them to enjoy driving and sport driving and off-road driving through this car, also using it as an urban cruiser and enjoying driving in the city.
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Interviewer1:25
Okay. And you know you've already told us that Breza will not be positioned in the Nexa showroom. So obviously you're expecting it to be a big volume car. Is that what your expectations of the Breza? What's the future of it that you're looking at?
K
Kenichi Ayukawa1:37
As you say that in the sports SUV segment, we are a little bit behind. We are in a sense the new entrant in that segment, but as far as we supply the product to the new segment, we want to be at the number one position. That's why we supply this model to our existing network.
I
Interviewer2:03
Okay, and tell us a little bit about the Nexa network because you know when we heard of Nexa we assumed that it would be the more expensive cars that are in Nexa, but it's been a little confused. Would you tell us what the idea behind Nexa is and the positioning of car models that will be in Nexa and not in Nexa?
K
Kenichi Ayukawa2:20
I think we are considering it as I said. When we started the Nexa channel, we presented a new experience to customers. That's why we have to arrange a different color, different type of product for that compared to the existing network. That is our target. That's why we have to present new types of vehicles which are different from the existing channel product and to try to catch new customers.
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Interviewer2:53
So will more premium products be there? Is it a strategy of the premium products being there and the more mass market will be in the regular channel?
K
Kenichi Ayukawa3:01
I think premium itself is a very difficult definition. Of course some people feel that Nexa is premium, that is good in a sense, but I think some differentiation from the existing channel: the Nexa channel we will have to look for which is the new, we are still looking for that future.
I
Interviewer3:29
Yeah. Okay. So Maruti is also still defining what is Nexa and what is regular. Okay. Um, you know, great time for you because you have just under 50% of the market share. You've come with your 3 millionth Alto. So it's fantastic numbers that the company has. But do you feel that sometimes maybe this mass and this volume is also a deterrent for the company as far as premium positioning goes, because somehow people don't see it as a premium brand and that's where Maruti inherently has struggled?
K
Kenichi Ayukawa3:59
I think that basically our company started to project to the people that we are targeting at any time mass. That is the main business line for us, the core business. And also after 30 years, people's demand is changing. People's demand becomes more varied. In order to catch up with those customer demands, we have to arrange various products. It is true we have to arrange some premium models, but we are not targeting luxury cars.
I
Interviewer4:41
So basically an unfriendly budget, lots of taxation on cars, lots of new rules coming out, and of course GST also in the offing. So what's your take on this budget, the taxation, and of course diesel cars, the unfriendliness towards diesel, newly added taxes? We are very much surprised that everybody is not happy about adding a new tax. Also industry and we including we as we are expecting implementing GST as possible, that is the key to developing industry in this country. And this issue also that customer prefers which kind of vehicle, that is the key point. We are preparing to continue the business in diesel vehicle or changing to petrol depending on the market and what customers expect. But this kind of instability of policy is difficult for manufacturers because strategies are often decided well in advance and then for manufacturers to change suddenly. So is this causing a problem because Make in India is being pushed so hard but yet there is no stability of policy?
K
Kenichi Ayukawa5:44
Yeah, I think that in case about the business, especially the industry, they are expecting long-term investment. That's why suddenly changing direction has a negative impact for the industry.
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Interviewer5:56
There's talks now of 2020 for BS6. If it does come in, is Maruti ready for that or do you think 2020 is a little bit early?
K
Kenichi Ayukawa6:04
I feel that a little bit early, but the target itself is not easy. Although industry has some responsibility about the air pollution issue that we have to recognize. Also everybody recognizes that we have to try to solve that problem, but we need time. We have to carefully consider otherwise we have to make big investment and also that will impact the cost. We have to consider and communicate with the government.
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Interviewer6:32
Yeah, also because they are announcing that 2020 will probably be the metros first and not across the country. Now for Maruti that's a tricky situation because you are spread across the country. So it is not feasible because that car is moving to various places, not only the big cities but also rural sites. It is very difficult to change that regression. They're talking about now safety and crash test and emissions changing. So all this will impact pricing. Do you think it'll make it tougher in the future and will customers be affected?
K
Kenichi Ayukawa7:02
But safety itself is a very important factor. We are already focusing on those things. As I said before, all our models have the option of safety devices available. Gradually we have to change that way.
I
Interviewer7:14
Yeah, with crash test becoming compulsory and emission norms changing, but pointed that vehicle safety is not only product, we have to control the total society. People following traffic rules, etc., to avoid accidents. Those kind of implementation is very important. So do you think in the long term the customer will be impacted with price differentials that prices of all kinds of cars, especially the bottom end, will go up because of the additional devices? The cost is increasing.
K
Kenichi Ayukawa7:44
That is true, I think.
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Interviewer7:46
You know, lastly, Maruti has managed to hang on to the market share, the biggest part of the market share through all the tough times, and sometimes even increase it through these tough times. So what is that magic formula? What is that one secret that actually makes you different from the rest and gives you this market share? What do you think is the USP?
K
Kenichi Ayukawa8:06
I think there is no magic idea. We have to make effort that we anytime want to be with the customer. That is the basic point: how to satisfy the customer. That is the key word for us. Every people considering that point and every day that is how the market will be successful. That is the key point.
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Interviewer8:22
Thank you so much for taking the time for talking with us. Thank you very much.