Just going by the kind of comments that we have got from the Minister Nitin Gadkari on lower tax on hybrid vehicles, how are you looking at that getting cheaper soon? What would that potentially mean?
Shashank Srivastava: We will have to wait and see how it pans out. At the moment, hybrids are doing pretty well. The duty on hybrids is 43% compared to 5% on EVs. But despite that, hybrids have been doing pretty well. In the last six months, hybrids have been outselling EVs. A total of 52,500 approximately in the last six months against 48,300 for EVs. One of the big reasons why hybrids have been doing well is that there is no range anxiety associated with it. Normally, consumers who are considering EVs have that range anxiety because of the lack of charging infrastructure in the country. So that is one advantage that hybrids have over EVs and the cost of acquisition of EVs is also higher. These are the two major factors working in favour of hybrids.
Is it your plan to try and broaden your hybrid portfolio?
Shashank Srivastava: Absolutely. As we have said before, in order to meet the emission norms in our country, different companies will follow different strategies and a mix of technologies will exist and we have already said that as far as Maruti Suzuki is concerned, of our total sale in 2030, 15% will be EV, 25% will be hybrid, and the rest 60% will be a mix of gasoline, CNG, biogas and flex fuels.
This reduction in taxation that is being spoken about, will it be sufficient to spark a big demand for hybrids? Was this the only reason? We barely see too many hybrids compared to regular cars. Do you think that can change with this?
Shashank Srivastava: You are right. Actually, the hybrid penetration is currently about 2.1%, which is similar to EVs and I just mentioned this similar penetration is with differential tax 5% for EVs and 43% for hybrids. One of the reasons why hybrids can do better, of course, is that the cost of acquisition could come down further, should there be a change in the taxation.
Also, the number of models which are available currently on hybrids are rather limited. So, if you have more models coming in, there is a very high correlation of the actual sales with the number of models that we have of a particular type. This would definitely increase both the tax bit as well as the increase the number of models should this segment ignite the interest of other OEMs as well.
Let us get in some more details on that. What exactly is your timeline for your own hybrid portfolio because we understand that you are looking at hybrid versions of the New-Gen Swift, Dzire as well? That is going to further accelerate the adoption by a wider audience?
Shashank Srivastava: It is very difficult for me to comment on specific timelines and specific models. Those are market moving information which we are not allowed to discuss. But I must tell you that when I said 25% of our total sales will be hybrid in 2030 and the approximate size of the industry in that year will be around 6 million, that means with our target of 50% share, we should be around 3 million mark in the domestic market, which means if 25% of that is hybrid, that is almost seven-and-a-half-lakh hybrids. Obviously, there would have to be an increase in the number of models, but on these specific models, it is difficult for me to comment.
In the last five years, the composition of your revenue mix is getting geared more and more towards premium. Every month, the entire ecosystem is in the habit of analysing your monthly sales, both retail and wholesale. Are we coming to a situation where in the next five years, you will achieve a higher profitability than in the last five years due to less number of vehicles sold because the margin and hence profit will be higher?
Shashank Srivastava: If you are talking about segment-wise sales, yes, you are right. The segment-wise sales have been increasing for our SUVs and the larger MPVs. That is also, by the way, the direction which the market has in a broader sense has taken. Consumers are preferring the B-segment sale, which is SUVs and MPVs and those are priced higher, like the Ertiga, the XL6, the Grand Vitara, the Invicto, the Brezza.
You are right that the average prices have been moving up, not only for Maruti Suzuki, but for the overall industry as well. Industry average ex-showroom prices now in this year would be about Rs 11.5 lakh, up almost a lakh over last year’s average of about Rs 10.48 lakh. So, if this trend continues – and the trend projected forward is also that the SUVs and MPVs will remain strong – the revenues will increase. The profitability part, of course, depends a lot on the cost structure and that in turn depends on the material cost and that in turn depends on commodity prices. So, making projections would be difficult because it depends on which way the commodity prices go.How has March been so far?
Shashank Srivastava: March has been pretty good so far. Although the retail is a little lower than expected, there is an inauspicious period just before Holi for about a week where the retail slowed down and we do see some of that negative effect in the northern and the central part of the country. But the overall flow of inquiries and bookings have been pretty strong. We could expect the month to end around the 375,000 mark for the industry, that should be about 11% growth over last year. March being the last month of the financial year, we are expecting industry sales to be about 42,35,000 or thereabouts which should be a growth of about 8.8% over last year’s figure of Rs 38.9 lakh.
