Director, Maruti Suzuki India Limited
In Conversation With Kenichi Ayukawa, MD and CEO Maruti Suzuki India
In this episode of MotorHeads, we speak to Kenichi Ayukawa, Managing Director and CEO of Maruti Suzuki India Limited and get all the details on the new Dzire and also discuss Maruti's future plans in India with new products in the pipeline.
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Transcript (32 segments)
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Interviewer0:37
He is the NDTV Automotive Man of the Year for 2017, and today we are going to talk to him about a brand new product that has come to the market. I am speaking about Mr. Kenichi Ayukawa, the Managing Director of Maruti Suzuki India. The new car is a blockbuster: the new generation of the Desire sedan, which drops its Swift name and steps in with a third generation that is bigger, bolder, and has big plans. Thank you. Congratulations on the... Thank you very much. As I said, Desire, the name itself is so big, it is such a big model for you. The first two generations have already sold 1.38 million cars, which is a staggering number. So obviously you have big expectations from the new generation.
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Kenichi Ayukawa1:28
Fortunately, as we have said, the Desire has been growing up very well. Over the past 10 years or so, it used to be the Swift-based, but this time we dropped the Swift name because the Desire becomes independent. It is moving to become such a big model in many ways.
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Interviewer1:49
I think you mentioned it on stage today that it took you and all the people at Maruti by surprise. The fact that it has done well is not something that surprises us now, because the segment has also done well. But do you think the fact that it has been able to hold on to its position is also a credit?
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Kenichi Ayukawa2:08
I think it is. We have in the sedan segment a big possibility. That is why, as long as we provide a good product to the Indian market, customers will accept it. That is our expectation.
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Interviewer2:25
How and when did you take the decision that for the new platform and the new generation, you would do the sedan before the hatch?
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Kenichi Ayukawa2:34
That is a strategic car discussion. As you know, the Desire is mainly focusing on the Indian market. That is why we have to try to develop it specifically for this market.
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Interviewer2:54
The fact that this is not just a hatch with a boot, that you have re-engineered the car, the A-pillar is different. Does this help drive home the fact that you brought the sedan first to establish that it is all new, and that you have dropped the Swift name? Is that part of the strategy?
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Kenichi Ayukawa3:13
Yes, I think we have to develop this kind of sedan or Indian market that is a key technical aspect. That is why we try to develop independent types of model for sedan for this market.
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Interviewer3:26
What about volumes? Another thing announced today was that before the launch you already had 33,000 bookings, which is not surprising. But after the launch, those numbers will just go up. You still have high numbers on the Baleno, Vitara Brezza, etc. So how much of the strategy also had to do with volume allocation?
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Kenichi Ayukawa3:52
I think we have a more efficient solution for that. As I already mentioned, the Gujarat new plant has started and it will cover the backlog about production. We expect volumes to come up in the near future. Also, we are starting construction on the second line. We have a very good absorption as well. By developing product supply, we can satisfy the market more.
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Interviewer4:26
In the past, we have seen a lot of flexibility in your production between the Manesar and Gurgaon plants. Certain products have been shifted or done at both plants. Do you have the same flexibility with SMG as well?
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Kenichi Ayukawa4:42
In the case of SMG, the location is too far, more than a thousand kilometers different. It is a little different between Manesar and Gujarat. We have to carefully plan which model we produce in which factory and then decide. Of course, we may have to change some programs depending on the situation, but we try to make a flexible solution. For one particular platform like this one, which includes the Baleno and the new Swift, they are high volume products.
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Interviewer5:21
Does that help that you have one platform? Could you have that flexibility then?
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Kenichi Ayukawa5:34
Because of the size, the platform is for different segments: B segment car, etc. Fortunately, the Desire, the Swift, and the Baleno are all using the same platform. It is a very good changing at model for any frustration. In Manesar we can produce this platform, and SMG also produces this platform. It is very convenient.
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Interviewer6:02
You announced today during the presentation that the investment for the Desire model has been 1,000 crore rupees. How much of that investment will be shared with the Swift, or is it just for the Desire?
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Kenichi Ayukawa6:13
There will be some common part. Some portion is shared. I need to check the exact details, but there is commonality between the models. That helps in getting the Swift out quicker.
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Interviewer6:31
I think so. Once the Swift arrives, it will again be a huge number. How much advantage do you get by keeping so many months between the Desire and the new Swift?
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Kenichi Ayukawa6:54
I think because the one plant started, and then the new model coming is already ready. The production cost and boring cost, we have to encourage that. That is why we planned like this. We also requested investment for your factory in Haryana and Gujarat.
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Interviewer7:20
I want to ask you this because in the pre-launch, we had the unveiling of the car and I spoke with both the chief engineer and the designer. I asked them the same question: two big decisions with the third generation - first, the structure of the car is not exactly like the hatchback, and second, dropping the Swift name. One is a big marketing decision, one is a big production decision. How quickly did they convince you to take this?
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Kenichi Ayukawa7:53
Over the past three or four years, we considered this as a new challenge. Next is also a matter of branding. This kind of challenge, we have to make good challenges. Even though we try to keep the lead in the industry, we have to challenge. We have done that. So it was not a difficult decision.
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Interviewer8:23
Did it start fairly early in the process? Obviously, the new Swift was being designed in Japan. You always knew you had to do a new Desire. At what point did you decide that this car needs to be very different?
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Kenichi Ayukawa8:36
No, already the Desire becomes a solid generation. In terms of styling, it becomes bigger and bigger. We have to consider the differentiation. I think it was good timing.
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Interviewer8:51
One thing about this segment: everybody says it is uniquely Indian, sub-4-meter, and the proportions are not always very attractive. With the new car, you have been able to take away that disadvantage. You have given the car great looks, premium styling, and nice proportions. Given that it now becomes a more attractive product visually and in terms of features, do you think it has potential in other markets now more than in the past?
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Kenichi Ayukawa9:21
I believe so. We have a low-tempo strategy to approach other markets as well.
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Interviewer9:30
But is that going to be a function of Suzuki Motor Corporation or Maruti Suzuki?
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Kenichi Ayukawa9:32
Maruti Suzuki tries to do it. I know it is too early to ask which markets or how many, because first we have to expand the servicing network and spread information to other countries. If customers show interest, through our network if possible, we try to deliver. But if the vision is much inside, that is where I was going with the set sail. It is never a problem. We encourage the customer feeling that this is a great car. That is very important. When global people see that India makes this kind of unique car, it is good for investment, work, and advertisement.
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Interviewer10:28
I thought and where I was going with this is that given the fact that this is such a popular model, forget about the short term. Even a year or two years after launch, it is not as if you will not have huge demand locally. So when I talk about exports potentially, how do you work that strategy into it when volume will just be so big even from a domestic demand perspective? So how do you work in an export strategy when your domestic demand is so huge?
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Kenichi Ayukawa10:54
The point is the volume consequence. As far as we establish a new factory in Gujarat, we will be able to absorb that. We are planning for the future, which means a total capacity of 7.5 lakh units. So we have to consider an additional factory in Gujarat or somewhere. Sorry, that was a vague step.
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Interviewer11:34
Absolutely. It makes the consolidation of your position even stronger. But now that in February we had trial production, and now actual production has begun in Gujarat, how much of that pressure has already eased for you? The Baleno is a big model as well. Are you already seeing a huge advantage?
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Kenichi Ayukawa11:50
I think that in the last month we received about 10,000 vehicles from Gujarat. The capacity has almost doubled. It used to be that we only delivered 3,000 or something like that. Now we are crossing 70,000 to 80,000 per month. We can deliver to the market and quickly absorb growth.
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Interviewer12:19
The point I know that was made by some journalists today about the government's move towards electric vehicles instead of hybrid vehicles. I get why they were asking that question. Obviously doing hybrid as a first step is easier than doing full electric. But as all these decisions get taken, and I know you said you are waiting for clarity from the government, how quickly can you move on these decisions? When you talk about future investment and future capacity, how much of all that is affected?
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Kenichi Ayukawa12:47
In case of what the government decides about the next five or six years, if the direction changes, we have to prepare something. But before that, we have to define a realistic direction. Is it the next five years or 15? We have to discuss with concerned people including government people, and then set that in the future investment. It is very important. Suddenly coming up some idea is not easy to switch direction.