In the face of a shrinking small car market within the passenger vehicle industry, Maruti Suzuki India has reaffirmed its commitment to manufacturing low-cost small cars aimed at budget-conscious buyers. RC Bhargava, Chairman of Maruti Suzuki India Limited, emphasized this strategy in the company's annual report for the financial year 2023-24, as first reported by Moneycontrol on Sunday, August 4.
Commitment to Affordable Mobility
Bhargava underscored the importance of aligning Maruti Suzuki's business goals with the economic and social needs of society. "We have believed that the company will benefit most if, while enhancing its competitiveness, the economic and social needs of society are also met to the maximum extent possible," he stated in the shareholders' note. This philosophy drives the company's continued efforts to produce low-cost small cars, addressing the economic conditions of the country and the aspirations of citizens to own safe and comfortable vehicles.
Despite the overall growth in the passenger vehicle (PV) market, the small car segment has experienced a decline. Maruti Suzuki's sales in the PV segment for the April to June quarter stood at 2,22,193 units, marking a 12.8 percent drop from the 2,54,973 units sold in the same quarter of the previous year.
Bhargava also highlighted Maruti Suzuki's goal to expand its service network to rural areas and small towns, ensuring that residents in these regions receive services comparable to those available in larger cities. "The intention was that people in these areas of the country should get facilities similar to what was available to those dwelling in large cities. Now about 46% of our sales come from rural areas," he noted.
Maruti Suzuki is actively awaiting a government policy framework that promotes all green technologies, ranging from strong hybrids to alternative fuels, to replace fossil-fueled vehicles and reduce carbon emissions. Bhargava pointed out the environmental impact of pure petrol and diesel cars, stating, "It is also clear that pure petrol and diesel cars are the worst in terms of carbon and greenhouse gas emissions and fuel consumption."
As part of its green initiative, Maruti Suzuki is set to introduce strong hybrid technology in its cars over the next six to seven years, alongside developments in electric vehicles (EVs), flex-fuel vehicles, and more. The company plans to launch its electric cars in the coming months. Bhargava emphasized the benefits of hybrid cars, which increase fuel efficiency by 35 to 45 percent and reduce greenhouse gas emissions by 25 to 35 percent. While CNG cars are not as clean as hybrids, they still offer a better alternative to fossil fuel-driven cars.
Maruti Suzuki has commenced trials to produce biogas and is looking forward to government policies that could enhance the efficiency of this fuel's development. "Biogas is completely renewable, has no import content, and is overall, carbon negative," Bhargava explained. Additionally, the company is working on modifying car engines to utilize petrol blended with 20 percent ethanol, with existing technology enabling the use of higher ethanol blends.
Despite the evolving automotive landscape, Bhargava reassured that Maruti Suzuki would not neglect the needs of consumers who cannot afford expensive cars. The company's strategy includes producing low-cost small cars to cater to the economic conditions of a large majority of citizens while also expanding its product range to include more SUVs and higher-priced models.
Future Outlook
As Maruti Suzuki implemented its Maruti 3.0 strategy, Bhargava emphasized the critical role of technology development. Suzuki's dedicated R&D company will focus on new technologies, while Maruti Suzuki will strengthen its capabilities in conventional technologies. The company's engineering workforce has now grown to about 2,500.
Maruti Suzuki India Managing Director and CEO H Takeuchi expressed optimism about India's rapid development and aspiration to become a developed nation by 2047. He highlighted his mission to deliver the "joy of mobility" to as many Indians as possible. In FY 2023-24, India's passenger vehicle market achieved a milestone with over 40 lakh units sold, maintaining its position as the third-largest market globally. However, car ownership remains low, with only 3% of the population owning vehicles, underscoring the vast growth potential.
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