“The overall industry is suffering on account of the decline of car sales.” R C Bhargava, Maruti Suzuki

What is your view on the pressure that the passenger vehicles segment is facing?

The scenario is not good at the moment, as the market is depressed. Sales of passenger vehicles have declined. In fact, the quarter as a whole has not been good. Early in 2011, the sales of petrol cars were going down but sharp growth was seen in diesel cars. Now, even diesel cars’ growth has declined. So, the overall industry is suffering on account of the decline of car sales.

Are there any positive factors for the auto industry?

There are some favourable factors but it is difficult to judge their impact. We had a good monsoon, which means that the rural areas would have recorded high sales. As we know, rural areas are growing better than the urban areas. So, we can even better sales in rural areas. Secondly, the festive season is about to start. These factors would surely increase the sales, but how much impact they would have is difficult to guess.

But these are temporary factors. Do you see any factors that are indicative of a long-term recovery?

There are elections coming up ahead at the state level as well as the General Elections. Past experience shows that during the time of elections, the sales of cars increase since there is a lot of money around that time and many political parties buy cars as a part of competition. These are the favourable factors.

Apart from this, among the negatives, the rupee has become very expensive and fuel prices are about to go up. The economy is not growing, and I doubt if we will see it cross even five per cent. As various surveys have shown, there are very few jobs in the market.

Overall, there are a few very strong negatives factors and some positives. Hence, it is very difficult to predict which way the industry would go.

What is your strategy to ride these tough times successfully?

We have had a strategy of cost optimisation for a long time, as the major factor driving sales is the affordability of the product for the customer. Affordability, not only in terms of capital cost of the car but also in operating costs and fuel costs. To reduce costs, we have utilised imported parts, hedging, improving productivity and even have cost saving suggestions coming in from our employees. Hence, cost optimisation is most important for us. We have been successful so far, and hope to maintain this in the future.