Kenichi Ayukawa: Customer demand is changing very fast; we have to keep track of these expectations
Kenichi Ayukawa, managing director and CEO of Maruti Suzuki, on the challenges he faces, the continuing dominance of Maruti and whether that is a result of stronger fundamentals or weak rivals.AutoExpo2018 Updated: Feb 07, 2018 16:00 IST
With 51% of India’s passenger vehicle market, the nation’s largest car maker Maruti Suzuki India Ltd is on a roll. But that’s not stopping its managing director and chief executive Kenichi Ayukawa from continuing with his plans to revamp the company. In an interview, Ayukawa comments on challenges he faces, the continuing dominance of Maruti and whether that is a result of stronger fundamentals or weak rivals.
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Under your stint, Maruti has strengthened all the verticals, signs of which are visible in your earnings and market share. But, the company still seems to be weak on the technology front amid changing industry dynamics.
You say you have some concern about the technology development in the company. But, if we cannot do, we cannot survive. We have to do something to catch up with the requirement and demand of customers.
What is it that the consumers want in the next five-seven years?
Customers demand is changing very fast. Any time, they want an affordable and good product... that is a basic. With the economic situation in the country changing, minds of customers are also changing. We have to find out what they are expecting. But affordability continues to be a very important aspect. That remains the bottomline of Indian market.
Will it be possible to maintain this kind of pricing level amid changes in emission norms, safety norms, which will increase cost?
Obviously, with new regulations we will have new technology, which will increase costs. That could be very challenging. How we are going to compensate for that is another challenge for us any time. But, everybody is facing the same difficulty.
If the prices go up, will buyers postpone their purchase decisions?
That is a concern for everybody. If we add additional cost to the price... practically it is very difficult for the customers to accept that.
Indian industry has a tagline—small is beautiful. Do you think that will stay?
I believe so. People understand that there is no need to spend additional money for a bigger car. Small is beautiful and good enough for a product.
Will you be able to maintain your market share?
We will try to maintain our market share. Nobody wants to see any reduction in volumes and we are not much concerned about target of maintaining the market share. We try to expand our business across the country. Hence, eventually or fortunately we are getting additional market share.
Maruti is the only company that is growing in the country. What differentiates you?
As far as Maruti is concerned, the company is looking at the Indian market first. That’s why we always develop products that the Indian customers want and that is very important. Other players are looking at other markets as well. They bring products which are suitable to other markets, here... That is one of the differences, I believe. We are based here and should manufacture products which will match the Indian customer demand. That is a very important point. If you think why Maruti Suzuki has been successful that has been a key point. That’s why everyday we are focusing on the change in the Indian customer’s expectation two or five years down the line.
So, what is the reason for the success of Maruti? A stronger Maruti or a weaker competition.
I don’t know about the competitor but the thing that we must do is to match the market and that’s why our products will be accepted by the customers, in terms of price quality and features. Also the customers select us because of the network as well. Out network is stronger than others and any given place they can find our dealer. Even if some problem crops up it can be easily repaired.
What are the challenges that Maruti could face in the next 7-10 years?
Right now the automobile industry globally is facing a lot of challenges. How it will turn out and whether we will be able to survive or not will be decided after 10-15 years and that is a very critical time, I believe. Everyone is facing the same difficulty not only us, but also Toyota, Volkswagen and General Motors, etc. Also new players and new entrepreneurs coming in the industry in different times. Mechanically producing a vehicle is not easy, it’s not like a computer. Also there are safety concerns associated with a vehicle. If there is some safety-related problem then it cannot be easily modified like a computer. You cannot just try to fix it and keep the data somewhere else. Cars cannot be repaid in such a way.
Have you noticed a change in the attitude of first-time buyers? They seem to be moving towards higher priced products.
Simply looking at the model wise sales, still Alto is number one! Other bigger size vehicles are becoming popular and the first time customers are directly buying the Dzire, Swift or the Baleno. Still there are customers who prefer small cars and we have to take care of those people. Some customers are directly buying the Swift or the Dzire but some are upgrading from Alto, Wagon R to Swift and Dzire or Ciaz. We have these kind of customers and have to take care of them. That is an important point. We have to cover a lot of customers under the Maruti umbrella and that is very important for our industry. Some customers upgrade from motorcycles to a used car and then try to buy a new car. So we have to comprehensively take care of our customers. That’s why we need a small car and a good car and then the second step third step and so on. That is our strategy.