Suzuki in fear of electric vehicle shift in India

Suzuki CEO Toshihiro Suzuki

As electric revolution is catching up in India, Suzuki CEO Toshihiro Suzuki feels that Maruti Suzuki would be in trouble if they don't catch up. 

“As the industry shifts towards EVs (electric vehicles), when it comes to India, our volumes are so large that I worry that we could be caught flat-footed if there was a sudden shift towards electrification,” CEO Toshihiro Suzuki said on Thursday.

 Maruti Suzuki dominates the Indian market and is doing well currently with its Dzire compact sedan and Vitara Brezza compact SUV. But this doesn't seem to comfort him. While strong demand for these vehicles promoted their sales in India, all of them are either petrol or diesel powered ones. “Our results may be what they are, but they don’t offer me much comfort,” he told reporters at a results briefing. 

 Maruti's mild hybrid program also has taken a toll as there is little to no support for plugin-hybrids or mild-hybrids from the Indian government. The hybrid variants of its premium sedan Ciaz and multi-utility vehicle (MUV) Ertiga have lost favour as per the last quarter. Due to high taxation, Maruti had to increase prices of both the models by about Rs80,000. Chief financial officer Ajay Seth said the hybrid variant of the Ciaz contributed 32% of total Ciaz sales for the September quarter compared to 70% a year ago. However, the impact was less for Ertiga, whose hybrid variant sales came down to 50% from 70% in the same period, he added.

 The government has been very serious on electrifying all the vehicles in India by 2030. It has put the industry on notice to shift from manufacturing vehicles that run on petrol and diesel to environment-friendly alternatives to reduce pollution in cities and cut dependence on crude oil imports. To display its seriousness, Energy Efficiency Services Ltd. (EESL) has opened a tender for procuring 10,000 cars in its first phase. 

Tata Motors Ltd. has emerged as the lowest bidder by quoting Rs 10.16 lakh, excluding GST, beating Mahindra & Mahindra and Nissan as participants. These electric vehicles procured from Mahindra and Tata will replace the existing petrol and diesel cars currently being used by the central government and its agencies over a 3-4 year period. Government's move to electrify its car fleet shows how serious it is about electrification and slowly but steadily would also focus on developing infrastructure. CNBC-TV18 has confirmed that there will be another bid, this time 20,000 cars by early 2018. Other sources aware of this plan believe that the contract may be worth Rs 2,300 crore. There is still the opportunity for Maruti to enter into the electric car business.

It's not all bad for Maruti Suzuki as they have been taking necessary steps in this direction. They have confirmed that they will build electric cars for India and rest of the world. “We will make electric cars. We intend to be leaders in the segment as well,” chairman R.C. Bhargava said. Recently, Suzuki along with two manufacturers Toshiba and Denso will also invest around Rs 1,150 crore for a new unit to produce lithium-ion batteries which will be operational by 2020.