Customers are often ignored in the centralised planning system — RC Bhargava

During the 61st SIAM Annual Convention, RC Bhargava, the Chairman of Maruti Suzuki addressed a panel consisting of various delegates from the government and the Indian automotive sector, speaking on the “Outlook of Indian Auto Industry and Its Role in India’s Economic Growth”.

By:Updated: Aug 25, 2021 10:10 PM
rc bhargava, chairman, maruti suzuki

For customers, buying vehicles has become an expensive affair over the years due to many regulations and some that are yet to come soon. Some of these costs are due to an increase in raw materials and state taxes. Steps need to be taken to sustain the automotive market in India that contributes a lot to the Indian economy.

Addressing his opinion, RC Bhargava, the Chairman of Maruti Suzuki, to a panel consisting of Vipin Sondhi, the Managing Director& CEO, Ashok Leyland, Venu Srinivasan, Chairman & Managing Director, TVS, Tarun Bajaj, Revenue Secretary, Ministry of Finance, Government of India, and the Maruti Suzuki Chairman himself, said, “There have been statements made about the importance of the automotive industry, but in terms of concrete actions that would reverse the declining trend of the industry, I haven’t seen any action.”

The chairman of Maruti Suzuki added, “I’m afraid that words alone don’t get carmakers extra sales; we need concrete action to make this happen.” RC Bhargava touched upon the abolition of auto licensing in 1991, questioning if the mindset about the car industry has changed at all in India. He said, “If the mindset had changed, everybody would have been worried long ago, about the growth of the Indian automotive industry. “He felt that there’s very little done to reverse the trend in the automotive industry, given the sharp decline in sales, especially the commercial vehicle sector that has seen a drastic sales decline.

Bhargava said how the car industry in India became modern and started growing after Maruti came into existence, which was not a planned move back in the day. He said that the Indian car industry has grown to become the 4th largest globally, not because of policies but because the people aspired to own cars. Bhargava said that Indian customers should get modern automobiles, safe and clean vehicles. However, for this to happen, Bhargava said, “How do we make cars affordable when we follow European standards to build cars? How can we make cars affordable to those with much lower income levels in India?”

Maruti’s Chairman, added, “I support the move to electrification, but how do we make electric cars affordable? If the auto industry is to drive the economy and the manufacturing sector in India, and if the penetration of cars has to increase, millions of cars need to be manufactured, and millions have to buy them. Do we have millions of customers to buy cars every year? Do we have jobs going up that fast or the income?” He said, “We often ignore these facts when the automotive industry plans for the future. Customers are always forgotten in the centralised planning system.”

Bhargava spoke about how the Maruti 800, a car that drove the motorisation of India, was given up for safety regulations. He said how the replacement car that came in, cost an additional ₹45,000. “This may not mean much to me or some of us, but for a person who is buying a car for ₹2 lakhs, it is a lot.” He points out how small increments in cost in cars lead to the fall of the automotive market in India. “The BS6 regulations added ₹22,000 to the cost of a car and the added taxes have made an entry-level car unaffordable even before the Covid-19 pandemic.”

He requested Tarun Bajaj, Revenue Secretary, Ministry of Finance, Government of India, “knowing what’s happening, taking into account the economic status of the majority of the Indian car buyers to move to cleaner cars, do we need high taxes?” He added, “In my view, I don’t think the car industry will revive with ICEs, EVs, or alternate fuel vehicles until we act on the question of affordability of cars.”

Vehicle safety is a must, and there is no getting around the fact that this adds to car prices. EVs and alternate fuel vehicles are also a must, but there are additional costs involved in R&D, raw materials, and new components, which will eventually add to the cost of a car. SO now the question remains — do we need safer, cleaner vehicles that cost more or affordable cars? Or both?

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