India only major country where demand for cars will grow: RC Bhargava

The Indian market will be the only geographical market to see a growth in demand for passenger vehicles, claims RC Bhargava, chairman, Maruti Suzuki India Limited (MSIL). According to the octogenarian chairman and former CEO of MSIL, car penetration in developed economies like the U.S. or Germany has reached a point where demand for new vehicles has plateaued. “In India, car penetration continues to remain low, especially compared to the western economies. There is a preponderance of two-wheelers. We still have 200-230 million registered two-wheelers in India. Two-wheelers, however, are inefficient and unsuitable for use. A country cannot depend on two-wheelers,” he explains.

It is with this belief that Bhargava thinks that the future of automobiles and its ancillary industries looks bright for India. “As we will witness economic growth, people in the workforce will look for more comfortable and efficient modes of transportation, and a surge in demand for cars will be witnessed. We need to uplift the quality of life of people in India,” he avers. Bhargava has been vocal about the pressures the market for small cars in India faces, and says that the government had to take some tough decisions to make vehicles efficient and safer (the implementation of stringent BS6 emission norms and the mandate to fit cars with six airbags and ABS), which have come at the cost of impacting the bottom-end customer. “Initially I had thought of suggesting a relative introduction of safety features, based on income levels, but accidents can happen to people from all social classes,” he says.

He narrates a caveat that the company’s perspective and his on the small-car market may not be in agreement with each other. “The company is not afraid of temporarily moving away to profitable segments. It must continue to do what the masses do; the key to success is learning what the customer wants,” he says. MSIL, which once cornered a 50% market share, has seen a dip in market share in recent years—benefitting homegrown carmakers Tata Motors and Mahindra, and foreign carmakers like Hyundai and Kia. According to Bhargava, the drop in market share has been a learning curve for MSIL. “If you are a leader, you need to be conscious of complacency. We have been complacent, and it jolted us out of our comfort zone,” he adds.

A former bureaucrat, Bhargava believes that the private sector’s contribution will play a pivotal role in driving economic growth in India. According to him, the public sector is handicapped—irrespective of business environments across nations, and it cannot deliver the growth levels manufacturing can. “A few years ago, I was pessimistic about industrial growth. There was a lot of talk about removing the deterrents private enterprises faced in India, but nothing happened on-ground,” he says. However, the present NDA government—led by Prime Minister Narendra Modi—has completely turned the solemn situation around. “The present government has openly supported the private sector. It has privatised the beleaguered Public Sector Undertakings (PSUs) (to lessen the burden on the public exchequer); banks are getting privatised. Profit is no longer a dirty word,” he explains.

Bhargava also throws light on the industry-friendly environment the Gujarat state administration—then led by Modi as chief minister—offered when Suzuki was looking beyond Gurgaon and Manesar. “The state government was the most industry-friendly that we came across. Usually, manufacturers come across certain impediments during land acquisition, but that was not the case here,” Bhargava alludes to the spirited opposition that ensued in Singur, West Bengal—when Tata Motors was acquiring land for the ambitious Nano project. Tata eventually pulled out of Singur, and instead built a factory in Sanand, Gujarat—where Suzuki’s manufacturing facilities are also housed.