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Craze for SUVs too shall pass in years to come: Maruti's R C Bhargava

Maruti Suzuki India Limited is India's largest carmaker with about 43 per cent volume share

RC Bhargava

Maruti Suzuki India Chairman R C Bhargava at the Business Standard Manthan event on Thursday

Deepak Patel New Delhi
The craze for big cars such as sport utility vehicles (SUVs) in India will pass in the coming years after more people learn that such vehicles generate larger carbon emissions, Maruti Suzuki India (MSIL) Chairman R C Bhargava said on Thursday.

Utility vehicle (UV) sales in India have increased by 25.87 per cent year on year (Y-o-Y) to 2.21 million units during the April-February period of the current financial year (FY24). On the other hand, the smaller cars - which include sedans and hatchbacks - saw an 11.58 per cent Y-o-Y drop in their sales in the first 11 months of FY24, according to the Society of Indian Automobile Manufacturers (Siam) data.

"By 2047, we should have much cleaner cars throughout India...Whether they will be electric cars or whether some new technology will come up, I do not know," Bhargava said during the fireside chat here at BS Manthan.

He said by 2047, India will be a major producer and exporter of cars.

"This craze for large vehicles, for big SUVs and all that, will pass in the coming years. The world will gradually realise that you do not need to have such big vehicles if you really are aware of the environmental needs because big cars not only in terms of operations but also in manufacture and material used generate a lot of carbon footprint (emissions)," he added.

MSIL is currently the leader in the Indian UV market. During the April-February period of FY24, the company's share in domestic UV sales increased to 26.39 per cent from 18.72 per cent in the corresponding period last year.

"Globally, to get a low carbon footprint, cars will tend to move towards the smaller size. India is well placed to take advantage of that," Bhargava said.

Last year, India announced its goal to be a net-zero carbon emitter by 2070.

"We are fully committed to helping the government achieve the goal of carbon neutrality. We have considered the Indian situation, customer and infrastructure and other handicaps or positives existing in India. We believe that in our circumstances, we need not only electric vehicles but all other technologies to achieve the goal of reducing carbon emissions as quickly as possible," Bhargava noted.

He said it was obvious that the electric cars - which currently have about 3 per cent volume share in the Indian car market - will take a long time to grow themselves to a sizeable share. "During this time, if you have only ICE (internal combustion engine) vehicles, then the carbon footprint is going to remain pretty large," he added.

Bhargava noted that the ICE vehicles should be transitioned to cleaner alternatives such as CNG, hybridisation, ethanol, biogas, or any other emerging technology, even as the share of EVs (electric vehicles) in total sales gradually increases. MSIL is India's largest carmaker with about 43 per cent volume share.

"The government is very well aware of this situation," he said, referring to Union Roads and Highways Minister Nitin Gadkari's statement earlier this month suggesting that the taxes on hybrid cars should be reduced to 12 per cent from the existing 48 per cent.

"Today, hybrid technologies are suited for bigger cars. But I believe that in the course of the next few years, there will be developments in hybrid technologies that will lower the costs and make it available also for the smaller cars," Bhargava said.

The MSIL Chairman noted that while EVs could be introduced at a faster rate in India but 75 per cent of the electricity generation in the country still comes from coal. He said that the goal is to reduce the carbon footprint of the country as a whole and not just in the metro cities through the introduction of EVs.

MSIL will launch its first electric car called eVX in India by 2025. This electric car would be launched in the premium category.

"The government has to move as rapidly as possible towards ensuring that electricity generation in India is clean and not dependent on thermal power. That is the basic requirement because you cannot have a low carbon footprint from the transportation sector if your electricity generation is not clean," he said, adding

That India produced a billion tonnes of coal last year.

"People will move towards smaller electric cars. Technology will develop so that electric cars become feasible for smaller sizes. The battery technology will change. It is already changing. Toyota has brought out a solid-state battery that is smaller and lighter," he said.

Bhargava said EVs ultimately were not using totally renewable materials.

"There is a lot of literature about how much carbon is generated in the mining of lithium and the production of batteries. So, these are the areas where we have to work on," he said, adding that everyone should keep looking at alternative technologies.

"Electric car may not be the final word when you are looking at not at 2047 but at 2087. I don't think it will be a final word. We need something that is much more renewable, clean, and does not require import. That is the ultimate goal. So, maybe it could be hydrogen," he noted.

What history has taught MSIL

MSIL was established as Maruti Udyog Limited in 1981 as a 74-26 joint venture between the Indian government and Suzuki Motor Corporation (SMC). The government had a majority stake in MSIL till 2002 when it was privatised. The government completely exited MSIL in 2007.

"The lessons from (history of) Maruti are that it is very difficult to operate a partnership with the government for any length of time. This business of gradual localisation. It does not really do much good to the company. Maruti got real benefits after the government exited," he said.

Even when the government was a minority partner with a 30-40 per cent shareholding in MSIL, the company used to face difficulties in taking decisions, he said. "The people in the government, the minister, the secretary, the joint secretary, they keep changing frequently. When different people come, they understand what has been going on, it changes every time. There is no continuity," Bhargava noted.

The partnerships with the government as such are not bad but the continuous change in people becomes an issue, he said.

"It is widely accepted the world over that the continuity in management and policies is one of the essential things required for good management. We can't have that in a partnership with the government," he added.

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First Published: Mar 28 2024 | 9:55 PM IST

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