EV launch plan on track; SUV segment remains a concern for co: Maruti Suzuki
In an interview with CNBC-TV18, Shashank Srivastava, ED-Marketing & Sales, Maruti Suzuki, said that the company is sticking to its 2025 timeline for launching an electric vehicle (EV). He also explained that margin has been under pressure due to rising commodity prices. Srivastava highlighted that as such, there is no real fall in booking numbers. He shared that Maruti’s market share is in fact, at 65 percent excluding sports utility vehicles (SUVs). However, he shared that the SUV segment continues to remain a point of concern for the company.
In an interview with CNBC-TV18, Shashank Srivastava, ED-Marketing & Sales, Maruti Suzuki, said that the company is sticking to its 2025 timeline for launching an electric vehicle (EV).
"We have our own plans for EVs, which I can't really discuss it here. However, I must say that we have made an announcement that we should come out with an EV before 2025," he said.
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Sharing details about the demand picture, Srivastava said that there is no real fall in booking numbers. He explained that both enquiries and bookings continue to be strong despite the price hikes. He also added that demand for CNG has been going up dramatically. Elaborating further, he shared that Maruti’s market share is at 65 percent excluding sports utility vehicles (SUVs). However, he mentioned that SUVs continue to remain a point of concern for the company.
"If you remove SUVs, the market share of Maruti Suzuki is about 65 percent. It's only the SUV sector that has been an area of concern for Maruti Suzuki," he explained.
He further mentioned, "The enquiries or the bookings continue to be pretty strong. And despite the price hikes, which most original equipment manufacturers (OEMs) took in the month of January, we have seen no real fall in terms of enquiries or bookings."
"If you see the demand for CNG, it has been going up dramatically because the cost of running for CNG vehicles is roughly one-third of the cost of running on diesel or petrol, if they are around the Rs 100 per litre mark. So we already see a larger shift in favor of CNG and we can see a larger shift - even larger than what we see today - for CNG," he said.
On margin, he said that it has been under pressure due to rising commodity prices. He explained that copper, plastic and steel prices have shot up. Currently, Maruti is not able to fully recover all the costs, however, Srivastava remains hopeful that going ahead, metal prices will soften.
He said, "Margins have been under pressure because of the commodity prices which have gone up dramatically, increasing input costs for the OEMs. Steel, which was Rs 38 per kilogram (kg), just about a year and a half back is still hovering around that Rs 75-77 per kg mark. Aluminum has also gone up - it's now about USD 1,900 or so. Copper has gone up dramatically; it came down a little bit but has steadied at around UDS 9,500 mark, as also plastics and other commodities."
"So I think while there has been some reduction in terms of the heat on the precious metal side, rhodium, palladium, etc., others still remain quite high. While we have not fully recovered, all the cost increases, which has happened on the commodity front, we do believe that there could be some softening going forward. We see a little bit of softening in the precious metals already," he further explained.
On the supply side, he clarified that the situation is getting better. He believes by September, these constraints will gradually dial down.
"On the supply side, we have had constraints because of the semiconductor crisis and it is getting progressively better over the last few months. It will possibly get resolved entirely by September, October," he said.
On production woes that Maruti faced during the pandemic, he said that the company is back to 90-95 percent levels.
"We were just at around 40 percent of production in September, 60 percent in October, 83 percent in November, about 90 percent in December, and in January also, just about 90 percent. So you can expect that in the year, closing in our calculations, the industry should be around 3.06 million against 2.7 million last year, which means a healthy growth of almost about 13-14 percent," he said.
Watch the video for the full interview.
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(Edited by : Dipikka Ghosh)
First Published: Feb 15, 2022 12:05 PM IST
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