Earlier, it was about functionality in a car, now it is about aspiration: Shashank Srivastava, Maruti Suzuki India

On the first Maruti car ever sold to a customer
Shashank Srivastava: The first car was sold to a Sikh gentleman, Harpal Singh. And he used to work in Indian Airlines. This car was handed over to him by none other than the then Prime Minister, Ms Indira Gandhi. This was taken from that customer in 2010, restored, and we have it here. It is very emotional not just for me, but for all employees here.

So, whenever we pass by, we remember this is the place where we started with. And in those days, India was producing only 50,000 cars in the whole year. Today, the industry is producing 10,000 cars every day. This is where we started. At that time, the auto industry was contributing just 1.2% towards national GDP. Today, it is contributing 7.5%. So, we are proud and at the same time this reminds us of how it started in the first place.

This rolled out from the Maruti Udyog factory in Gurgaon. It is called Gurugram now. Tell us if you remember, how it changed not just the face of the small car market in the country, but for Gurugram also?
Shashank Srivastava: Yes, absolutely. And during those times, the industrial hub in the north was Faridabad and Gurgaon was just started. Our chairman, Mr O Suzuki was there even before production started. When he was coming to India to discuss this collaboration with the Indian government, he used to say that there used to be just cows in Gurgaon and that was the impression he carried, because it was a very rustic and a very agrarian sort of town.

But when Maruti came and so many investments came in, a large production base was built; a lot of vendors shifted there for production, because we were very focused on localisation. A lot of employees came in, and when they did so well, we saw the entire industries coming up and that linked with the other service sector as well coming in and developing in a big way. Today, Gurgaon is a throbbing city, not a small town, which it was before Maruti came.

In the ‘80s, Maruti Suzuki took off and made it possible for the whole country to afford a small car. There was a large waiting list also. Later on when the competition came, how did you tackle the competition from Volkswagen to Ford to your Toyota to every company that wanted to come to India for that small car market?
Shashank Srivastava: The transformation of Maruti Suzuki is one of the biggest achievements of the company. Of course, we have contributed hugely to the Indian manufacturing sector. We are the leaders in the automobile for the last 40 years of its existence. But it goes beyond that and this transformation actually started coming in from the time in maybe the early 90s when you had that liberalisation era. A lot of other manufacturers came in. Remember, before that, the capacities were licensed by the government and then after liberalisation, other people could come in. I remember Tatas came in, Hyundai was there, Ford, GM, and so many other players, Honda, and so on. The general thought at that time in the media, as also among the general public, was that Maruti Suzuki, because we had that public sector sort of beginning, we won’t be able to compete with these very large manufacturers who were like there for maybe 50-60 years in the industry. So, we took the transformation drive and became more nimble, more focused on the market, and we became very competitive. You took off later on. You had to face challenges. Then, you became well-entrenched. Let us talk about the present. When many companies have folded up in India, you have always kept the ball rolling. What are the consumer trends now?
Shashank Srivastava: We have seen the change happening over the years, not only in automobiles but in the country as such. Primarily, of course, we have seen great economic growth in our country. When we started in the early 80s, the GDP per capita was about $700, $600 per person. Obviously, the consumption would be accordingly, not so much. Today, it is about $3,000 per person. So, good growth in the income level itself, which is reflected in the consumption patterns and also the psychology of the consumer.

Earlier, it was basically about functionality in a car, but now it is also about aspiration and that is a big change. Segment-wise, today SUVs and the larger MPVs seem to be attracting the attention of consumers, compared with hatches and small cars earlier. Earlier, almost everybody was a first-time buyer. But today, about 30% of the buyers are replacement buyers and the same percentage is additional car buyers.

The small car market is not growing. How do you feel about it? And what is the outlook now going forward if the small car market is not growing?
Shashank Srivastava: There is also a change in the powertrain and technology. So, the powertrain, like earlier it used to be a large percentage was diesel and gasoline, but now you have multiple technologies, EVs, hybrids, and CNG, and so on and so forth.

Let us park that aside. But talking about your question about small cars, just three-four years ago, they were about 45-46% of the overall passenger vehicles industry. But now, they are about 28% and it is not just the percentage, the absolute volumes have also dropped. At its peak in 2017-18, hatches were about Rs 15.5 lakh. This year, it is expected to be Rs 12 lakh.

But remember, Rs 12 lakh is also significant and that is very important for us because we have 70% of this market. Going forward, given the demographics of our country 65% of the people being below 35 years of age, first time buying very high still, the public transport not so developed, ownership of transportation will be there and I think we are not at that income level where people can straight away go to the very large cars. So, small cars will see a rebound and calculations show that it will probably be sometime in the second half of 2026.

During Covid, everything stopped. Later on, the bounce back of the market was great. Now, we have seen such good growth in ‘23-24 and in the last month of the financial year, you are putting up capacity. But what about next year? Does it look like a slowdown is coming there?
Shashank Srivastava: You are right. This year, with less than a month to go, we will probably be about 42.1 lakh, which is 4.21 million, that is about 8% above last year’s level. Last year was 38.9 lakh. But the projection for next year is that while the volumes will come in proportion with the economic growth, the growth may not be as high.