Smart Finance has been launched to strengthen digitalization on Maruti Suzuki platform: Shashank Srivastava, ED

Shashank Srivastava, Executive Director - Marketing & Sales, Maruti Suzuki India, talks about Smart Finance service, price hike plans, demand expectations and future guidance of growth among others during a candid chat with Swati Khandelwal.

Production is low while demand has increased and this mismatch has led to an increase in the prices: Zee Business

Shashank Srivastava, Executive Director - Marketing & Sales, Maruti Suzuki India, talks about Smart Finance service, price hike plans, demand expectations and future guidance of growth among others during a candid chat with Swati Khandelwal. Edited Excerpts:

Q: Tell us more about the first-of-its-kind online car financing platform model that you have launched for NEXA customers? How the company will be benefitted from it and what does it mean for the customers?

A: We have launched Maruti Suzuki Smart Finance service and its pilot was stared in August. Now, it is available in NEXA and 30 cities across the country. Basically, we have done this because we found that the customers were facing difficulties for finance on digital platforms, like document submission or comparing the offers or to find the financers or in comparing the offers or who are the financers or the available offers. So, they, the customers, used to move out from this whole cycle of buying on the digital platform and go to other places, like the banks or financers and even to other sites, where financial aggregators are present. This distracts the attention of the customers, which reduced his satisfaction because he was not getting the best prices, deals were not transparent and finance products were not cleared. Therefore, this has been done as part of strengthening digitalization on Maruti Suzuki platform. This is the first time in the auto industry where this process has been incorporated on the digital platform. Currently, it has been launched in NEXA, which will be extended to Arena in the next quarter. At present, around 12 banks have linked with us and 17 more banks will be added in the next quarter. With this, we can take care of around 95% of the loans in the auto industry. I think it is a very good system for consumers, they will get much better transparent deals and they get to see many offers from the financers. For the manufacturers, the importance is that the conversion ratio of the customer from the enquiry to sale will improve.

TRENDING NOW

Q: The company has also announced that there would be a price hike across segments to pass on input cost burden to the customers from January 2021. What kind of price hike should be expected in terms of percentage? Is input prices and good demand are two reasons behind the decision?

A: I will not say that demand a reason for it. But the main reason is that when we transitioned from BSIV to BSVI last year, then we did not passed-on the entire cost of the conversion. As you know that the market conditions were not that great last year and the industry was down about 18%. We did not pass the entire cost of conversion to the consumer. In the transition from BSIV to BSVI, there is a catalyser where some metals are used, which is termed as precious metals, like Rhodium and Palladium. Now, their prices across the world have increased a very fast pace and have increased many times. The basic reason for this is that there has been a big mismatch in demand and supply there. 80% of the demand for Rhodium and Palladium comes from the auto industry and its demand has gone up across the world in the auto industry because the norms of using the catalyser have been strengthened everywhere, whether in Europe, the Euro VI has been launched or BSVI has been launched in India or China VI has been launched in China. So, the demand has increased a lot, while the production has been slightly low this year. Around 80% of the production of Rhodium happens only in South Africa and 80% of the Palladium is found in Russia and South Africa, however, their production went down at both the places due to the COVID. This means production is low while demand has increased and this mismatch has led to an increase in the prices. I am not talking about the precious metals, but if you have a look at the prices of steel and plastics then they have also increased a lot, across the world because of investments in infrastructure and rebound in demand, now, things are becoming very expensive on the commodities front. This is why input cost has increased a lot and we will have to pass it on partly to the customers.

Q: So, should we consider that prices will be hiked in a range of 2-5%?

A: I will not be able to make any comment on this quantum because we are studying the kind of hike should be made on which model. So, once it is done in the next few days then we will talk with you again and inform you the percentage increase that is expected.

Q: A few days back, the company's chairman said that 2021 will be much better than in 2020. What is that thing that is giving them the confidence to you is it the demand that is coming from the customers? And what are the factors that will be positive for the sector and the company for next year? What is the outlook for next year and will we be able to see a double-digit growth next year?

A: The future guidance about which our Chairman has told at a place that 2021 will be better than 2020 and the basic reason for this is 2020 has been a very unusual and unprecedented year for us. You know that there was no sale from mid-March to May. This is why 2021 is expected to be better and 2020 seems to be like a bottom as far as the auto industry is concerned. But, we have seen some green shoots, now, and you know that there has been a good bounce back in the second quarter and a good bounce-back was seen during the festive season in the third quarter. More importantly, I think, what is giving confidence to the manufacturers for December, going forward is that the kind of drop that was expected after the festive season has not happened in bookings and enquiries. This is a positive signal in which there is a substantial drop that we have seen it in the previous years, immediately after the festive season there is a substantial drop in booking enquiries, but it has not happened this year. This means, some pent-up demand is there yet and this is something that is giving confidence in December. At the same time, I would like to tell something to you that going forward we are a bit apprehensive in providing the forward guidance because the long stayed demand of the auto industry will turn strong only when the economic fundamentals, especially the correlation with the GDP per capita income growth and it is very correlated with it and it will depend a lot on COVID sentiments. Therefore, we are a bit hesitant in giving forward guidance.

TAGS:

Maruti Suzuki