SUZUKI FAN

The country’s largest car maker Maruti Suzuki India has reported sales of 85,415 units in October – a jump of 32.45% compared to the same period last year. Domestic sales were up 21% to 7,155.

Here is a verbatim transcript of the exclusive interview with Mayank Pareek on CNBC-TV18 and the hindubusinessline

Q:In an interview with CNBC-TV18, Mayank Pareek, Executive Officer – Marketing & Sales, Maruti Suzuki gave an overview of the sales and growth numbers for this month.
 

Pareek: October was a festival month. So, domestic market has grown by 32%, export by 158% and overall we have got a 23% growth. However, we should be cautious in interpreting these numbers because this growth of 32% in October is coming on a very low base of last year. The right thing would be to see the growth over two years. If you see over two years the growth is around 12%.
So, there is an annualized 6% growth in the domestic market.

This growth started actually since January last year when the stimulus package from the government had come. That is one prime driver for this current growth.

 Q: Also there were a lot of festive offers, like you have said earlier festive growth also saw a surge in sales. What is the status on that? Have you withdrawn the festive offers, how is it panning out going ahead?

A: Festival offers are over with the festivals. Yes on a serious note the offers on the vehicles have come down. If you see on average a 20% reduction will be there over the festive period. They have come down.

Q: Going ahead now that A2, A3 segments have been really your front runners where would this stress really lie for the company. What are the segments will we see the company going aggressively into?

A: Our company’s philosophy is to be a leader in every segment which we work. So if you see in A1, A2, and A3, in all segments where we are present we are market leaders. Our second principle is to have a multi-brand strategy in each segment to sustain that leadership. Instead of depending only on one product we depend on more than that product. Going forward, I do not see any reason for change in that principle. We will continue to strive for leadership in every segment.

Q:Maruti Suzuki has always tried to lure customers with multiple options in one segment. How well has this strategy worked in your favour?

A:Strategically, as Indian consumers are evolving it is no longer enough to offer just one plain vanilla product. We have to give them multiple options and this is a strategy we have been following for the last seven-eight years. Each segment has multiple products and each product has multiple variants, at every price point and every choice. For example, in the A2 segment which is the largest in India, we have six cars, three in the tall boy (Estilo, Wagon R and Ritz) and three in the regular hatchback segment (A-Star, Swift and Alto). First, what we consider is that the brand is top-of-mind for the customer. Next, we see if there are enough options. With our demography favouring the young population, people look for a motoring solution. A car is just not a thing to travel in from Thane to Panwel. It is an identity and niches and sub-niches will keep emerging. That is how we launched the Swift and A-Star. Any customer who walks into the show room should go back buying a car. That is our mantra and that is why today we are the market leaders in the compact cars segment.

Q:With the introduction of Tata’s Nano, will you be focusing more on strengthening your presence in the cheaper cars segment?

A:In the Alto we have three variants ranging in price from Rs 2.3 lakh to Rs 3.2 lakh. If you look at the numbers, the low-end versions don’t sell much. The cheapest car need not be the bestseller. Take the case of the Nano. The standard variant was not the top-selling model. People today value some standard features such as air-conditioning. For most people who drive cars, it’s okay if their houses don’t have air-conditioners, but their cars should. Similarly, people love power steering. So it may be good to focus on the lower end, but people will eventually move to high-end cars.

Q:How well would the Suzuki Kizhashi, a premium brand, gel with Maruti’s current market image?

A:Our philosophy is leadership in all segments. So when we introduce the Kizhashi in India we will look at leadership and we will come in at a time when we see a substantial demand for it.

Q:Two years ago Maruti Suzuki was not a big brand in the rural markets. Things are different today. How did you expand into the rural markets?

A:The rural market was something that gave us a hedge against the so-called slowdown last year. Around July last year we realised something was going wrong. So when we introspected, we understood the rural markets better. We had to create a need in the villages, then enable them to buy the car and then remove the mental block about how servicing the car was difficult. Programmes such as the Golden Quadrilateral that have been undertaken over the past few years have connected the villages to the mainstream cities. The next step was to identify the people who could afford to buy the cars. Rural does not mean poor and only farmers.

So to sell to them, we went to their environment and that’s how we established a rapport. To segment the markets, we focused on the opinion makers like the panchayat members. Last year, we conducted around 300 Gramin Mahotsavs, where we went to the villages and delivered vehicles to them. The effect was reflected in our sales numbers. In 2007-08, 3-4 per cent of the total sales came from rural centres. In 2008-09, it went up to 9.5 per cent. Now, it accounts for around 13 per cent of total sales.

Q:Is a bad monsoon going to be a cause for concern for the company?

A:Only 17-18 per cent of India’s GDP is now dependent on the rural economy. During the last four years, India has had copious monsoons. Just as one swallow does not make a summer, one bad monsoon will not dry up the rural wealth. Moreover, the Government, in anticipation, is pumping in money though projects such as NREGA. So far, these measures have acted as a hedge against deficit monsoons. The harvesting season in November will be something to take note of. But if a similar thing had happened 10 years ago, I wouldn’t be saying this as we were completely dependent on agriculture then.

Q:How do you see the festive season demand pan out for Maruti?

A:We’ve had healthy double digit growth so far. The upsides are the steady momentum in sales and positive market sentiment, which is an important factor in the business. Last year, when sales dipped, it was not that the fundamentals of the economy changed. The sentiment was negative. Other positive factors are that GDP has more or less settled at 6-6.5 per cent and inflation is low. The possible downsides could be the monsoons and the availability of finance. For now, there is adequate finance available. I hope this continues. So on the whole, the upside is more than the downside, while six months ago the downsides were more than the upsides.

Q:With infrastructural facilities improving, do you see the risk of people migrating from compact cars to sedans and luxury cars?

A:The world over, people are hanging on to small cars as awareness about environment friendly cars increases. Infrastructural constraints such as parking may not be solved too quickly in the near future. Plus, a first-time car buyer has and will continue to prefer a small car before experimenting with a big one. With projections stating that compacts will be substantial volume drivers till about 2015, the shift from small to big cars will happen very gradually.

All the foreign players who have come into India first rolled out their sedan versions, thinking that these cars were going to sell in large numbers. Now, these companies are chasing the small cars segment due to its growing popularity. Even China is turning towards small cars. India will be the manufacturing-, consuming- and exporting hub for small cars.

source: thehindubusinessline and  CNBC-TV18.
admin: the Suzuki SX4 hatch not aviable in India

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