‘The role of Maruti Suzuki in Suzuki’s global business plans will assume even greater importance’
Kenichi Ayukawa took over as the Managing Director and CEO of Maruti Suzuki India (MSI) in April this year, amidst a challenging time for the automobile industry.
A law graduate, Mr. Ayukawa has been associated with the Japanese auto major for over three decades. In an interview with The Hindu, he talks about the need to bring on board new customers and also the larger role MSI is expected to play in the parent’s global operations. Excerpts:
The economic slowdown, tight monetary policy, and rising interest rates – they are all taking a heavy toll on the automobile industry. What do you see is the way forward?
Right now the industry is going through a very difficult phase. The economy is reeling under a slowdown. One of the main reasons is, in India, we don’t have oil. This has a big impact on the auto sector as well. This year will be quite tough. The period between April and August was very tough, and I see no respite.
I took over in April. Since then, sales have been declining. I hear people saying sales are declining because of low consumer sentiment. Nobody is asking why there is low consumer sentiment. People are concerned while purchasing a car primarily because of economic worries, high fuel cost, and higher interest rates. This is affecting their purchases — not just of cars but other things as well.
The festive season is around the corner. What kind of response are you expecting this season given the prevailing poor sentiment?
We are hoping sales will pick up in the festive season. We are not expecting very strong sales during the period considering the current macro-economic conditions. It won’t be as good as in the previous year. Last year, sales were boosted by demand for diesel cars. This year with increase in diesel prices, their demand has been impacted a bit. I think in the long-run, people will return to diesel.
Plus, there has been enough rain this year. This is good for agriculture, and which will, in turn, boost sales, particularly in rural areas.
How do you see Maruti Suzuki emerging out of these challenging times?
At this moment, I can do very little. But we are making efforts. As market leaders, we have to protect our position. We have our sales men at work. We at present have 1,300 showrooms, and even they are not enough to reach all our customers. There are still a lot of untapped customers. We’ll be expanding our reach to such areas and develop them. We are focusing on rural areas and targeting new customers. In the April-August period, we saw 21 per cent increase in our sales from the rural areas as compared to the same period last year.
What kind of HR (human resources) strategy are you working on to bring greater harmony in the functioning of the company?
Human resource is important. We’ll review that. We must try to improve further. What has happened in the past is mainly because of miscommunication with our workforce. We, at present, employ 12,000 people, and we have to improve communication with them. Although people read about us in papers and get to know things, it is our responsibility to tell our workforce the current company situation.
The decline in the market share of MSI can be partly attributed to its weak presence in the SUV (sports utility vehicle) segment. How does the company plan to work in this segment, particularly in view of the rising demand for cost-effective SUVs like the ones introduced by your rivals?
Everybody is asking me that. Product development takes time...2 to 3 years. I cannot give a timeline now. However, this is one segment we are definitely looking at. Also, there is no definition of an SUV. I can bring a product and say it is an SUV. We need to have a definition.
Don’t you think being a late entrant will negatively impact Maruti Suzuki?
No, I do not think so. If you have a good product, it will sell.
You recently launched the Stingray. What kind of a response did it receive from the market?
It usually takes two weeks to access the response. We have just launched the car.
What is the role India plays in Suzuki’s global operations? How do you see operations here contributing more?
Maruti Suzuki is playing a very important role in Suzuki’s global business. We contribute about 40 per cent of the total sales of Suzuki. Besides areas such as manufacturing, quality and sales, both companies are now working in a unified way on R&D and product development.
Since India is a market for the future, the role of Maruti Suzuki in Suzuki’s global business plans, therefore, will assume even greater importance.
My focus will be to continuously enhance Maruti Suzuki’s business in India.
With MSI’s increasing importance in the parent company’s operations, can we expect an Indian on the board of the company?
We have many Indian people involved in our management.
They stay here. In the case of Japanese, they come only for three-to- five years.
In the company’s annual report, it was stated that India will be responsible for some of the export markets for Suzuki, and a new plant would be coming up overseas. Could you elaborate a bit on that?
We have not firmed up any plans to set up a manufacturing plant overseas. On the export front, yes, Suzuki Japan has decided that India will now be responsible for the export markets of Africa, the Middle East and our neighbouring countries. We also have to study and decide the products for these markets.
Will there be increased focus on exports to get some benefits from the depreciating rupee?
Exports are definitely an area of focus. But I do not see much of immediate gains, since the economic situation across the globe is a bit slow. Currencies of some other countries have also been declining. But we are definitely expanding exports, and it may take one year.
What kind of products that MSI is planning to launch or showcase in the upcoming Auto Expo?
We will surely showcase something new and interesting. But what it will be, I will not disclose now.