scorecardresearch
‘Doesn’t make sense for Maruti Suzuki to sell EVs right now’, says RC Bhargava

‘Doesn’t make sense for Maruti Suzuki to sell EVs right now’, says RC Bhargava

Maruti Suzuki Chairman RC Bhargava says depending on factors like market conditions, costing and battery availability, the company will launch its first electric vehicle before 2025.

Maruti Suzuki Chairman RC Bhargava. -- Photo by Bandeep Singh Maruti Suzuki Chairman RC Bhargava. -- Photo by Bandeep Singh

While carmakers like Tata Motors, Hyundai, and others are pushing for electric mobility with their new launches, India’s largest carmaker Maruti Suzuki wants to take it a little slow. Company’s Chairman RC Bhargava has said that waiting for the demand to pick up makes more sense for the company right now. “We will not feel happy if we sell 1,000-odd cars. If I’m selling 2 million cars a year, then does it make sense to sell 5,000-15,000 cars (EVs) a year? I have to have a car which is more sellable. There has to be a greater demand for the product,” Bhargava said, while addressing reporters at the company’s quarterly results press conference.

Bhargava, however, added that depending on factors like market conditions, costing and battery availability, the company will launch its first electric vehicle before 2025. Maruti is also pursuing other powertrain options like hybrid aggressively. “All manufacturers, including us, are pursuing many powertrain options. It’s not one versus the other. Hybrids have a very strong advantage over ICE engine. They don’t need charging infrastructure to scale up. We think they should have a policy benefit just like what EVs have,” said Rahul Bharti, Executive Director, Corporate Affairs, Maruti Suzuki India.

Also read: Material costs at an all-time high for Maruti Suzuki: RC Bhargava
 
Traditionally, the maker of small cars, Maruti is also facing competition from other players that offer more premium options in a market where SUV demand is rising like never before. “It has nothing to do with profitable models, it’s about commodity prices. It’s not that the competition is hurting us and favouring others. Maruti has always been about small cars. We have lost the most in India. Some companies have gained because they had smaller volumes and weren’t impacted as much by commodity process,” Bhargava said.

The company on Wednesday reported a net profit of Rs 4,753 million (Rs 475 crore) in the second quarter of FY22 down by 65 per cent from Rs 13,716 million (Rs 1,371 crore) in the July-September quarter last financial year. The company said this quarter was marked by an unprecedented increase in the prices of commodities like steel, aluminum and precious metals. “The company made maximum efforts to absorb input cost increases offsetting them through cost reduction and passed on minimum impact to customers by way of car price increase,” it said in a statement.  

Bhargava expects the forthcoming months to be better. “We are hoping that November production will be higher. On CNG, we’re going to increase production to meet the demand. What we had expected in terms of volumes and profitability has changed substantially. We will not have double digit growth this year,” he said.

He said that an estimated 1,16,000 vehicles could not be produced owing to the electronics component shortage mostly corresponding to the domestic models. “The company had more than 200,000 pending customer orders at the end of the quarter for which the company is making all efforts to expedite deliveries,” the company said.

Maruti Suzuki tried to secure its margins by passing on rising costs to its customers, by increasing the prices of its cars four times this year. “It’s not that easy to get an alternative supplier once the vehicle has been designed. We are exploring these options but this is not something which is easy to do. 6.4 per cent increase in the material costs is a huge impact,” Bhargava explained.

Also Read: Maruti Suzuki Q2 results: Net profit plummets 65% to Rs 475.3 cr, net sales up 9%

The company sold 379,541 units during the quarter, constrained by a global shortage in the supply of electronic components. Sales in the domestic market stood at 3,20,133 units. However, exports were at an all-time high at 59,408 units, the highest ever in any quarter. “Export sales were the highest ever in the company’s history and the figures of the first half this year exceeded the full year sales of last year,” Maruti Suzuki said. The company’s net sales also increased from 192,978 million (Rs 19,297 crore) as compared to Rs 176,893 million (Rs 17,689 crore) in Q2 FY21.

 

Published on: Oct 27, 2021, 5:47 PM IST
Posted by: Manoj Sharma, Oct 27, 2021, 5:43 PM IST