Expats control Korean and Japanese firms still: Indians steering the wheel of global carmakers in India | The Financial Express

Expats control Korean and Japanese firms still: Indians steering the wheel of global carmakers in India

In fact, barring Skoda Auto India, Stellantis India and most carmakers from South Korea and Japan, Indians are heading all foreign car companies in India.

Expats control Korean and Japanese firms still: Indians steering the wheel of global carmakers in India

With the appointment of Santosh Iyer, 46, as the MD & CEO of Mercedes-Benz India, from January 1, 2023, Indians will be heading operations of all premium carmakers in India.

Within the premium car space, Iyer follows Vikram Pawah (BMW Group India), Balbir Singh Dhillon (Audi India), Jyoti Malhotra (Volvo Car India), Rohit Suri (Jaguar Land Rover India) and Naveen Soni (Lexus India).

In fact, barring Skoda Auto India, Stellantis India and most carmakers from South Korea and Japan, Indians are heading all foreign car companies in India. These include Piyush Arora (Skoda Auto Volkswagen India), Venkatram Mamillapalle (Renault India), Rajeev Chaba (MG Motor India) and Rakesh Srivastava (Nissan Motor India).

Leadership experts and industry veterans FE talked to said that having an Indian at the helm can have numerous advantages.

Anshuman Tripathy, faculty at IIM Bangalore, told FE that premium brands such as BMW, Mercedes-Benz and Audi are highly aspirational. “People have a life-goal of owning these cars. Their brands are already strong, and so these carmakers need a CXO who has made it big in marketing, sales or dealer development. Preferably a local who can connect better with the dealers,” he said. “A BMW, for example, doesn’t need brand building. It needs someone who can manage the local network smoothly.”

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But mass-market carmakers like Maruti Suzuki or Hyundai need to focus on cost and operations efficiency, so that the end-product is perceived as value for money by the customer. “Japanese and Koreans want to keep costs under check, and for that they need to ‘control’ operations strongly,” Tripathy said. “They are not willing to let go.”

Manoranjan Dhal from IIM Kozhikode added it is advantageous and advisable that the CXO must be from the host country. “Many foreign companies invest in India because of low-cost manpower availability. But managing employees, winning their commitment and ensuring productivity can be better facilitated by a CXO who knows the country’s culture, connects to their roots and knows what motivates them,” he said. “It’s a mountainous task to balance the company culture and the country culture.”

Japanese and Koreans

Till the time the Indian government held a majority stake in Maruti Suzuki India (earlier called Maruti Udyog), the carmaker had an Indian as the top boss. They were V Krishnamurthy (1981-85), RC Bhargava (1985-97), RSSLN Bhaskarudu (1997-99) and Jagdish Khattar (1999-2007).

In 2006, the government decided to completely exit from Maruti Udyog, effectively turning it into a Japanese company instead of an India-Japan venture. Since then (after Khattar retired), top bosses have been Japanese: Shinzo Nakanishi (2007-13), Kenichi Ayukawa (2013-22) and Hisashi Takeuchi (current MD & CEO).

Honda and Toyota, which have been in India for about 25 years, have always had a Japanese as the top boss.

“Japanese auto companies are renowned for quality and process-driven work. It mandates the transfer of learning from the parent country to the host country. They, however, find it difficult to connect to the grassroots level employees who are the backbone of production,” Prof Dhal said.

Hyundai Motor India, which last year celebrated 25 years in India and is the country’s second-largest carmaker after Maruti Suzuki, has always had South Korean top boss. The same is the case with the new entrant Kia India.

Saket Mehra, partner & Auto Sector leader at Grant Thornton Bharat, told FE that eastern style of management is driven on the principle of centralised decision making, with the most significant decisions falling under the realm of central management. This culture is not just in the automotive space, but prevails across sectors such as banking, retail, manufacturing, etc. “Western companies, however, gradually align their management and decision making locally, as they enter new markets and geographies,” he said.

Disconnect with the workers

Not having an Indian as top boss can lead to disconnect with the workers, as Maruti Suzuki learnt the hard way in July 2012, when a mob of workers went on rampage at the Manesar, Haryana, plant, which left a senior HR executive dead and nearly 100 other officials injured.

While ‘disconnect with the workers’ wasn’t the only reason for this tragic incident, Prof Dhal said that the success of foreign automakers (both as a corporate and as an employee-centric organisation) is highly dependent on how top leaders communicate with the bottom echelon of the organisation and win their trust. “The lack of this has led to poor employee relations and labour problems in some Japanese automobile factories in India,” he said.

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Even at carmakers where the top boss is an expat, today locals are heading critical support functions such as sales, procurement, after-sales and dealer development.

But ‘control’ remains

A retired executive, who worked with a carmaker from East Asia for over five years in a top management position, told FE that usually there are two people at the same position in a critical support function — an Indian and another from the carmaker’s home country. “His job, in my experience, usually was more about communicating activities happening in India in real time to the headquarters, and less about doing actual work on the ground,” he said.

An automotive analyst added that companies like Maruti Suzuki, Hyundai and Kia would like to play safe, because India is a big part of their global operations. “They have a long process of choosing a successor (to a CXO in India), and most of this process happens at the headquarter level. They usually choose somebody who has been part of the company’s global operations for a long time, and can be trusted to maintain their substantial market share in the country,” he said. “This is unlike some western companies for whom India is a small part of global operations, and so a marginal fluctuation of the market share in India doesn’t really impact their global revenues. They can afford to choose a local, and someone whom the headquarters doesn’t know very well.”

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