Q/Is the worst over for the Indian auto industry?
A/The Covid situation seems to have receded into the background, though in the past few months we have seen spikes in some countries. It is not over and we have to closely monitor the situation. The supply chain situation with the lockdown during Covid seem to be not there [any longer]. So in that sense, there is an improvement.
On the semiconductor situation, the nadir was in August 2021 when we could only produce 40 per cent of our planned production. But now it is at 94-95 per cent. The thing is that 95 per cent was achieved last April, but it has not changed beyond that. So we still have a semiconductor issue in the industry, especially for specific chips. This situation is likely to continue for some more time.
On the sales front, 2021-22 was a slight improvement over 2020-21; there was a 13 per cent growth. And the current financial year has been very good as far as volumes are concerned. The volume expected this year is 3.8 million, which is the highest ever; the previous highest was 3.37 million in 2018-19.
That is fine, but going forward we have to be very careful to not read too much into these figures. Because while it is a record 3.8 million, this 13 per cent growth has happened over a four-year period, which is actually not so great. Secondly, there would have been an element of pent-up demand in this year’s volume which may not be there [going forward]. And third is, we are also looking at the three red flags of inflation, liquidity and high interest rates.
Q/The focus of this year’s Auto Expo is on EVs and sustainability. Though Maruti Suzuki was reported to be testing its electric cars quite a while ago, there is still no hint of a market launch.
A/Maruti Suzuki will have the global unveiling of its electric SUV at the Auto Expo. There is a consensus in the industry that with emission norms getting tighter all across the globe and also in India, EVs will become mainstream. But what is not in consensus is when it will happen. The question is not ‘whether’ but ‘when’.
For the ‘when’ part, we have had many researches, and there is a sort of a consensus that the EV adoption will be different for different categories. In two-wheelers and three-wheelers it will be faster, in four-wheelers, it will be slower. Within four-wheelers, it will be faster in larger four-wheelers, compared with smaller ones. Also, in usage pattern, fleet usage will be more than individual usage. And it will vary from country to country. It depends on how you make the electricity that power these vehicles.
The two major constraints to the adoption of EVs in India are the high cost of acquisition, and charging infrastructure―which is non-existent in the country at the moment. On the price front, you need to reduce the battery cost. Maruti Suzuki is spending Rs10,000 crore in setting up a battery plant. Maruti Suzuki believes the inflection point for adoption of EVs will come at a later stage. In the meantime, we should be focusing on reducing emissions, by looking at alternate fuels like CNG, biogas and also hybrid.
The localisation of components of powertrain of EVs will be done as there are common components when it is hybrid. When you get volumes, then localisation is possible. That is why at Maruti Suzuki we believe the path to electrification will be through hybridisation.
Q/Do you think ICE will survive?
A/It really depends on how quickly the development and adoption of technology happens. By 2030, projections are that 17 to 20 per cent, and in 2032 about 28 to 30 per cent, will be EVs. Obviously ICE are going to remain for quite some time. What we need to do is improve the fuel efficiency so that the environmental effects of ICE vehicles are less. That is why we are saying that we should carefully look at such cleaner fuels like CNG or biogas or flex fuels and so on.