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Will government's electric push give market leader Maruti a shock?
As the government has set a 13-year target for India to switch to only electric cars, Maruti Suzuki does not believe that can happen. NEW DELHI: Maruti Suzuki India Ltd rules India's automobile market with a 47 per cent. It has spread its hegemony to all segments except SUVs. It is believed Maruti Suzuki cannot go wrong with India. But now it seems it can. Today, Maruti Suzuki is on a fork where it might go down the wrong road and get lost in the woods—a major revolution is coming in the country's automobile market but Maruti Suzuki is not too willing to be part of it.
As the government has set a 13-year target for India to switch to only electric cars, Maruti Suzuki does not believe that can happen. If it happens—as Union transport minister Nitin Gadkari recently indicated when he said he was going to bulldoze the government's plan through the market—Maruti Suzuki would have painted itself into a corner and lost the leadership position.
After Gadkari's warning to the auto companies, Maruti Suzuki chairman RC Bhargava said that electric cars were not going to be too popular in India due to lack of infrastructure. "It won't sell because people won’t find it easy to charge. The ultimate answer is hybrids. I think we should work on bringing down the cost of hybrids," he said in an interview to ET. Kenichi Ayukawa, managing director and chief executive, too dismissed the government's ambitious target.
It seems Maruti Suzuki still swears by hybrids and sees little future in electric cars, at least not as soon as the government wants automobile industry to make the switch. If the government has decided to ram its plan through, it will use its most powerful weapon: tax. Already electric cars attract much less tax than hybrids. Under the Goods and Services Tax (GST), hybrid cars are taxed at 43 per cent while electric cars at 12 per cent. A new automobile policy, to be out by year-end, is set to promote electric vehicles. In the long run, Maruti Suzuki's choice to stick to hybrids will not just be a bad business decision. If the government cracks the whip on the automobile market to meet its all-electric-cars target by 2030, the company will no longer be able to withstand competition from its rival who are now too puny to challenge it. Hyundai has already planned to go electric in big way. It has shelved plans to launch hybrid cars in India after the government's electric push. Now it plans to customise its existing electric cars for the Indian market. It has plans to launch a mini electric SUV in India next year. It can also launch electric versions of the Grand i10 and Elite i20. M&M has already made major strides in electric vehicles. It is at the forefront of the electric movement in India.
Maruti Suzuki's denial of the fast-paced change can turn it into a laggard from a leader. If it does not embrace the change now, a few years later it might find it too late to change when the electric market would be bustling with several big companies.
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