Demand for cars in rural areas to push Maruti ahead

Owing to high demand from an exponentially growing economy, the car manufacturers market major Maruti Suzuki marked a tremendous progress in the year 2010. Now the company is planning big for the coming year by installing new production capacity, which will be given a capacity of 17.5 lakh units a year. The company also has plans to enter new market segments with new launches in venture with Volkswagen, the German car maker.

Mr R.C. Bhargava, Maruti Suzuki Chairman, on questioned about his views for the growth of the auto industry in coming 5-10 years commented that, the industry is expected to grow at a rapid rate same as this year but with best progress in the small car segment. He said that the growth of auto industry depends largely on economy growth and the purchasing power of buyers and both have improved in India thus auto industry will accelerate. He said that company is expected to be counted among the top five auto manufacturers in coming 10 years especially on growth of rural demand. He said that a growth of post 20 per cent is expected if things goes right. He said that the GST has to be considered in the year 2012 which will affect the excise duties for cars.

Mr. Bhargava was asked for reforms needed to make the auto industry grow, on which he commented that infrastructure is a unit which needs a lot of work in India. He said that Govt inability in improving the infrastructure can be treated with more privatisation. He also commented that improvement in the agricultural sector can help the economy improve at a good rate as it will strengthen the rural market which is a good target for car makers. He concluded by saying that last but not the least, education can improve the sector growth prominently. Education will provide the companies with skilled workforce.

He was questioned for his opinion on Suzuki-Volkswagen partnership for which he commented that the company has yet not reached the final stage of the decision but is in the process at global level. He stated that Suzuki intends to bring better technology support from this partnership and in return Volkswagen aims bigger presence in India.

On questioned for views on increasing petrol prices he said that CNG is the solution of the growing problems related to both pollution and high prices. He also said that electric vehicles are the future of auto market as environment friendly solution.

He was asked for his opinion on lack of investment in the R&D sector on which he said that R&D is a field which gives results only in long run and is a large sized investment. It thus become tough for small companies to invest in this segment. He also said that investing in R&D from borrowed funds is a risky job, as payback is not assured. He assured that for development in this segment companies have o invest in this field largely.

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