Financial Daily from THE HINDU group of publications
Saturday, Oct 12, 2002
`Maruti has no plans to jettison 800 cc' Mr Kinji Saito, Director (Marketing and Sales), MUL
Mr Kinji Saito, Director (Marketing and Sales), Maruti Udyog
COIMBATORE, Oct. 10
THERE have been speculation of Maruti Udyog Ltd (MUL), the largest carmaker in the country, jettisoning its `bread and butter' model Maruti 800cc in view of the stagnant demand for the product and the growth in the `B' segment following the entry of several new players in the recent years.
The issue of transfer of gearbox technology has also been commented upon several times. The global alliance among several automobile giants including Maruti's parent Suzuki, GM, Fiat and Daewoo also has set off expectations as to its impact in India.
In an interview to Business Line, Mr Kinji Saito, Director (Marketing and Sales), MUL, New Delhi, shares his perceptions on these issues. Excerpts:
It is quite some time now since Suzuki took control of Maruti. What benefit has this brought to Maruti in terms of technology, product development, new models to be introduced, etc?
Even when Maruti was a 50:50 joint venture between the Government of India and Suzuki, Japan, we made maximum effort to enhance the efficiency of management. Frankly, `the change' is not much after the change in the management structure. But we are enhancing our support to Maruti. As a big manufacturing hub, it would contribute to our vast strategy. This is a big change. We are initiating several measures to increase productivity, reduce costs, etc. These are the obvious benefits. We are focussing on marketing and sales, going to upcountry markets. We are increasing our involvement.
The transfer of technology for manufacture of gearbox has always been a touchy issue. What is holding back this transfer?
If it is very good for the management of Maruti, we will introduce it. But so far this issue has been discussed in the Maruti many times and we (Maruti management) decided not to do so. This would involve a huge investment, the same as that needed for the introduction of two new models. But the benefit derived out of it by way of any cost reduction would be very small. That's why we did not do it. We have limit on our funds. Our priority is new car introduction. If we have huge funds, we could do it. But this was unnecessary usage of money (investment in gear box production).
Even in Japan, we are buying components from other companies. Inmany countries, it is not 100 per cent, may be 90 per cent or 95 per cent. In India, why we should do 100 per cent? It is not economical. It is not good for the company or the customer because we have to increase the price.
The gearbox issue sometimes is misunderstood. This is purely management decision.
Is there any serious thinking in Maruti about introducing new models? Are you going to introduce bigger cars in the `C' segment or the top end of the `B' segment? What about Ignis from Suzuki?
We are meeting customers' requirements and we will see what the customer wants. Then we will introduce it. This is our basic philosophy. The details I can't disclose.
When is the public issue of Maruti coming?
It is for the Government to decide. We are supporting it - both Maruti and Suzuki. But it is an issue for the Government to decide - when and how to go about it. We are waiting for the Government decision.
Will there be any synergy in the operations of Maruti Suzuki and GM, Fiat, Daewoo in India because of the relationship among Suzuki, GM, Fiat and Daewoo abroad?
Those are big, very big alliances and we will have some synergy or some cooperation if it makes sense in some areas. But not in India, we don't have any details. We don't have any plans now. In future there can be. But right now, we have no plans.
What is your market share? Are you planning to phase out manufacture of 800cc and make Zen or Alto an entry-level model?
Our market share in September 2002 was more than 55 per cent. As for products, it is a matter for the customer to decide. We give the options to the customer and he has the right to choose - whether 800cc or Zen or Alto.
Compared to the A segment (800cc), the B segment is growing faster. Will you shift your focus to B segment because of this?
A manufacturer cannot plan a strategy ignoring customers' demands. Maruti 800 clocks a sale of 13,000-15,000 units a month.
I don't think this market is deserting. We welcome the growth of `B' segment. `A' segment is the base of the industry. Why should it shrink?
Customers come to buy these cars. Somebody wants to say this segment is shrinking, because they don't have a model in the `A' segment.
There may be some difference in demand. But I am very confident of the growth of this segment.
India is a big country and many customers are waiting to buy.
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