Maruti Suzuki India Ltd. plans to launch its first electric vehicle in India by 2020, with Suzuki and Toyota working to provide the carmaker with the necessary technology.
The government policy on electric vehicles is very clear, and production should not be further delayed, RC Bhargava, chairman of Maruti Suzuki, told BloombergQuint in an interview.
The carmaker is banking on the increasing demand for its new Swift Dzire to increase its market share. Bhargava, however, cautioned that if the automobile industry grows faster than the current pace, Maruti is unlikely to be able to maintain its market share, given its production constraints.
Here are the edited excerpts from the conversation:
How do you plan to ramp up production and increase your market share?
It is very difficult to predict how the market will grow in the coming months. If the market grows slowly and we can keep increasing production, then we can maintain our market share. But if there is an acceleration in the demand for cars and the market grows faster than it is now, we shall not be able to maintain our market share due to production constraints. The ability to keep the current market share depends on how the demand for cars plays out over the next few months.
How much capacity ramp-up do you anticipate in your Gujarat plant since new launches have seen a long waiting period and the growth is getting constrained?
The total capacity when there are two shifts running in the Gujarat plant will be about 20,000-21,000 units a month. A second shift has just begun in the plant and with the shift building up, the production will increase from the current levels and should reach 20,000-21,000 units in the next four to five months.
Will you be looking at setting higher prices for the products because all raw material cost, excluding rubber, has been increasing?
The increase in commodity prices has an adverse effect on the total cost of production. But that has been offset by the hedging we have done earlier in the year. Whether there is a need for prices to increase or not will depend on the totality of all the factors, including the impact of higher production. And that decision will be taken as we go along.
Do you expect Maruti to play a key role in selling electric vehicles in India?
I don’t think the decision to start manufacturing and selling electric vehicles can be delayed further. The government policy on it is very clear. It is necessary for car manufacturers, especially for Maruti as the number one car manufacturer, to conform to the government policy. What Suzuki is doing along with Toyota is to give Maruti the kind of technology to enable us to the lead in such vehicles in the Indian market.
By when do we see electric vehicles being launched in India?
The press note from Suzuki indicated that the start of the production of the electric vehicles should be around 2020.
Can you give us details on your order book and waiting period for the new swift Dzire and mention the production ramp-up plans?
The demand for the new Dzire is very high. There is a waiting list. We would be ramping up the production close to 20,000 units in a month.
Will you be launching a sports utility vehicle shortly?
We will launch a bigger SUV. The one we have is under 4 metres. We will therefore be launching an SUV higher than 4 meters. But it will not happen immediately in the next couple of quarters or even a year. It will take us a little bit longer to launch the SUV.
You can watch the full interview here.