Maruti Chairman RC Bhargava has said that the country’s largest carmaker will launch new models and SUVs to perk up its market share and ride on the demand for passenger vehicles.
Bhargava tells TOI in an interview that the company is working on new launches and bigger cars, many through the partnership between its parent Suzuki and Japanese auto major Toyota.
He also expresses concern on the rising cases of accidents and road deaths, and says that efforts are required towards having fitness certificates for vehicles, adequate driver training and driver licensing, and enforcement of traffic laws.
Full text of the interview:
What are your views on safety of vehicles?
Bhargava: Safety is of course very important for Maruti Suzuki. Road safety should include all, including two-wheelers and pedestrians. Most deaths on the roads are of pedestrians and those on two-wheelers. Ministry of Transport data shows that two-wheeler deaths are 43% and pedestrians 18%. Reducing these deaths should be a priority.
Why are the number of road accidents high in India?
Bhargava: There are two main reasons. Drivers are not properly educated on how to drive, and don’t know the rules of the road before they get a license. Improper driving causes deaths. There is inadequate enforcement of traffic laws. Private cars meet high standards of safety when produced but there is 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 have periodic fitness tests and be certified as safe to drive. Such certification is there for commercial vehicles, but I am not sure about their efficacy.
What you have on the roads are a lot of vehicles that are not fit with respect to safety requirements. A large number of accidents and deaths are caused due to failure of safety systems in cars and commercial vehicles. Two wheelers are also not inspected for fitness. That’s a big reason why two-wheeler riders and pedestrians get killed.
What are your views on the proposal to have six airbags on cars. Will that help reduce the road deaths?
Bhargava: By putting six air bags, will you reduce deaths? A study was done which showed that additional airbags will reduce road deaths by just half per cent. In addition, even the use of seat belts in India is under 30%. Without using seat belts, airbags become a hazard by themselves. Between the pedestrians and two-wheelers, the number of deaths is about 60%. People don’t know how to drive, laws are not implemented, vehicles are not safe. So, what should be the priority?
What is Maruti’s views on having additional airbags in cars?
Bhargava: Why do you think that car manufacturers will not want vehicles to be safe? With additional airbags, vehicles will get more expensive and production and sales will go down. Benefits of having additional airbags are doubtful especially if seat belt usage is so low. Now which is the category of buyers that will not be able to buy cars due to higher prices? It’s the lower end of the market. They will be forced to buy two-wheelers that are less safe. The rich people will continue to buy cars as they have the money. Lower production of cars will impact employment.
After the introduction of BS6, there was a 28% decline in hatchback sales, which are the lower priced cars, as prices had gone up. Sales will be further impacted if prices increase.
It is a wrong idea that we (Maruti Suzuki) cannot make profits if sale of small cars go down. We can still make money by making bigger cars. Suzuki and Toyota have the technology. But I believe making small, cheaper cars unaffordable for many will be bad for the economy and the growth of the car market.
What will happen if the lower end of the society doesn’t buy cars? Then they will buy two-wheelers. Will that increase the safety on the roads, or rather decrease it further? As prices go up, people at the lower end will have to buy two-wheelers. Those are less safe.
What about Maruti’s market share and the decline that it has seen recently. Does decline in small cars see further erosion of market share?
Bhargava: This is a shallow analysis. We can make more numbers of bigger cars. We are introducing new SUVs now. We will regain market share. Our intention is to look after the lower end of the market but we have to make profits also. So, a change in product mix can happen. Remember we recovered our market share after it went down after 2011.
If sales of small cars go down as a category, I am concerned about the people who perforce may have to buy other vehicles such as two-wheelers rather than the relatively-safer small cars.
Our profits don’t depend on small cars. People have a wrong notion. We sell them almost without profits cars if you look at models such as the Alto.
But the question that we need to ask is that is it a good thing for the country if low-cost cars disappear from the market.
As far as Maruti is concerned, we can compete in big cars. Suzuki and Toyota are partners today. Do you think we have a problem in making bigger cars? If policy becomes such that small cars don’t remain viable, we will discontinue them. But then the car industry will slow down. There will be less employment in the auto sector. Is that Okay?
We can still run the company (Maruti Suzuki) profitably. It’s an absolute false analysis that Maruti will go down if small cars go down.
But your market share has declined in the past two years or so.
Bhargava: Our market share had gone down to below 40% even earlier. I guess it was around 2011-12 when diesel sales had become big, as the gap in fuel prices of petrol and diesel was as wide as about Rs 32 a litre. Petrol cars had gone down drastically then. We had slipped to below 40% in market share. But then we went up and reached 51% share again.
We are running as a company for the last 40 years, and two years of decline in market share is not a fair assessment to make any judgement on our future business.
What are your views on Bharat NCAP?
It gives an option to customers to decide what they want in a car with respect to safety features and how much they are willing to pay. If customers want 5-Star rating and are willing to pay, manufacturers will provide the vehicles. But Bharat NCAP is not statutory. It gives customers an option to choose.
I have nothing against that. Customers should have the choice, and manufacturers should follow the choice of customers.
If a customer demands for a star-rated vehicle, we will provide.
But you are assuming that every customer would want a 5-Star vehicle.
Look at the data for the last two years. Which buyers are looking at what star ratings? India is not just one category of buyers. Let’s see what message customers give us.
My firm view is that manufacturers should follow what customers want. Unlike the past, we should not try and force customers to buy what they do not want or cannot afford.
Today a customer decides what should be manufactured. It is not the manufacturer who decides.
Ultimately, it is the customer who decides. If you don’t follow the wishes of a customer, you will lose market and profits. That is the general management theory all over the world. Customer is the King.
The government looks serious on implementing additional safety measures and the Bharat NCAP ratings
Bhargava: They are required to do so. But should they not be also working on ensuring fitness certificates for private cars, and also proper licenses for the drivers. It seems that airbags should be number one priority and vehicle fitness and driving license are not that important. I hope this is not the case. But at the moment that is what is happening.
What is your assessment of road deaths in the country?
Bhargava: You are assuming that people die only because cars don’t have airbags. Look at the data. What kind of people die on the roads? We don’t have analysis of the accidents and what caused the accidents. That is the status of our data. Ministry of transport data shows that of total road deaths, 13.6% are in cars. I believe it is important to reduce the causes of accidents, as prevention is more effective.
If I talk about 2021-22 and want to find out how many people died on the roads due to what specific causes, we don’t have the data. We are just making assumptions without data. We still think cars are responsible for most road deaths. They are not.
Also, how many people use seat belts when in cars? There are studies on this. It is estimated that only 20-30% people use seat belts. Very few people use seat belts even in the front seats outside the big cities. You just have to look beyond the metro cities.
Bhargava tells TOI in an interview that the company is working on new launches and bigger cars, many through the partnership between its parent Suzuki and Japanese auto major Toyota.
He also expresses concern on the rising cases of accidents and road deaths, and says that efforts are required towards having fitness certificates for vehicles, adequate driver training and driver licensing, and enforcement of traffic laws.
Full text of the interview:
What are your views on safety of vehicles?
Bhargava: Safety is of course very important for Maruti Suzuki. Road safety should include all, including two-wheelers and pedestrians. Most deaths on the roads are of pedestrians and those on two-wheelers. Ministry of Transport data shows that two-wheeler deaths are 43% and pedestrians 18%. Reducing these deaths should be a priority.
Why are the number of road accidents high in India?
Bhargava: There are two main reasons. Drivers are not properly educated on how to drive, and don’t know the rules of the road before they get a license. Improper driving causes deaths. There is inadequate enforcement of traffic laws. Private cars meet high standards of safety when produced but there is 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 have periodic fitness tests and be certified as safe to drive. Such certification is there for commercial vehicles, but I am not sure about their efficacy.
What you have on the roads are a lot of vehicles that are not fit with respect to safety requirements. A large number of accidents and deaths are caused due to failure of safety systems in cars and commercial vehicles. Two wheelers are also not inspected for fitness. That’s a big reason why two-wheeler riders and pedestrians get killed.
What are your views on the proposal to have six airbags on cars. Will that help reduce the road deaths?
Bhargava: By putting six air bags, will you reduce deaths? A study was done which showed that additional airbags will reduce road deaths by just half per cent. In addition, even the use of seat belts in India is under 30%. Without using seat belts, airbags become a hazard by themselves. Between the pedestrians and two-wheelers, the number of deaths is about 60%. People don’t know how to drive, laws are not implemented, vehicles are not safe. So, what should be the priority?
What is Maruti’s views on having additional airbags in cars?
Bhargava: Why do you think that car manufacturers will not want vehicles to be safe? With additional airbags, vehicles will get more expensive and production and sales will go down. Benefits of having additional airbags are doubtful especially if seat belt usage is so low. Now which is the category of buyers that will not be able to buy cars due to higher prices? It’s the lower end of the market. They will be forced to buy two-wheelers that are less safe. The rich people will continue to buy cars as they have the money. Lower production of cars will impact employment.
After the introduction of BS6, there was a 28% decline in hatchback sales, which are the lower priced cars, as prices had gone up. Sales will be further impacted if prices increase.
It is a wrong idea that we (Maruti Suzuki) cannot make profits if sale of small cars go down. We can still make money by making bigger cars. Suzuki and Toyota have the technology. But I believe making small, cheaper cars unaffordable for many will be bad for the economy and the growth of the car market.
What will happen if the lower end of the society doesn’t buy cars? Then they will buy two-wheelers. Will that increase the safety on the roads, or rather decrease it further? As prices go up, people at the lower end will have to buy two-wheelers. Those are less safe.
What about Maruti’s market share and the decline that it has seen recently. Does decline in small cars see further erosion of market share?
Bhargava: This is a shallow analysis. We can make more numbers of bigger cars. We are introducing new SUVs now. We will regain market share. Our intention is to look after the lower end of the market but we have to make profits also. So, a change in product mix can happen. Remember we recovered our market share after it went down after 2011.
If sales of small cars go down as a category, I am concerned about the people who perforce may have to buy other vehicles such as two-wheelers rather than the relatively-safer small cars.
Our profits don’t depend on small cars. People have a wrong notion. We sell them almost without profits cars if you look at models such as the Alto.
But the question that we need to ask is that is it a good thing for the country if low-cost cars disappear from the market.
As far as Maruti is concerned, we can compete in big cars. Suzuki and Toyota are partners today. Do you think we have a problem in making bigger cars? If policy becomes such that small cars don’t remain viable, we will discontinue them. But then the car industry will slow down. There will be less employment in the auto sector. Is that Okay?
We can still run the company (Maruti Suzuki) profitably. It’s an absolute false analysis that Maruti will go down if small cars go down.
But your market share has declined in the past two years or so.
Bhargava: Our market share had gone down to below 40% even earlier. I guess it was around 2011-12 when diesel sales had become big, as the gap in fuel prices of petrol and diesel was as wide as about Rs 32 a litre. Petrol cars had gone down drastically then. We had slipped to below 40% in market share. But then we went up and reached 51% share again.
We are running as a company for the last 40 years, and two years of decline in market share is not a fair assessment to make any judgement on our future business.
What are your views on Bharat NCAP?
It gives an option to customers to decide what they want in a car with respect to safety features and how much they are willing to pay. If customers want 5-Star rating and are willing to pay, manufacturers will provide the vehicles. But Bharat NCAP is not statutory. It gives customers an option to choose.
I have nothing against that. Customers should have the choice, and manufacturers should follow the choice of customers.
If a customer demands for a star-rated vehicle, we will provide.
But you are assuming that every customer would want a 5-Star vehicle.
Look at the data for the last two years. Which buyers are looking at what star ratings? India is not just one category of buyers. Let’s see what message customers give us.
My firm view is that manufacturers should follow what customers want. Unlike the past, we should not try and force customers to buy what they do not want or cannot afford.
Today a customer decides what should be manufactured. It is not the manufacturer who decides.
Ultimately, it is the customer who decides. If you don’t follow the wishes of a customer, you will lose market and profits. That is the general management theory all over the world. Customer is the King.
The government looks serious on implementing additional safety measures and the Bharat NCAP ratings
Bhargava: They are required to do so. But should they not be also working on ensuring fitness certificates for private cars, and also proper licenses for the drivers. It seems that airbags should be number one priority and vehicle fitness and driving license are not that important. I hope this is not the case. But at the moment that is what is happening.
What is your assessment of road deaths in the country?
Bhargava: You are assuming that people die only because cars don’t have airbags. Look at the data. What kind of people die on the roads? We don’t have analysis of the accidents and what caused the accidents. That is the status of our data. Ministry of transport data shows that of total road deaths, 13.6% are in cars. I believe it is important to reduce the causes of accidents, as prevention is more effective.
If I talk about 2021-22 and want to find out how many people died on the roads due to what specific causes, we don’t have the data. We are just making assumptions without data. We still think cars are responsible for most road deaths. They are not.
Also, how many people use seat belts when in cars? There are studies on this. It is estimated that only 20-30% people use seat belts. Very few people use seat belts even in the front seats outside the big cities. You just have to look beyond the metro cities.
For all the latest business News Click Here
Denial of responsibility! TechAI is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.
