Most car companies in India are making losses at present because of which many foreign companies that had invested in India are closing up, said chairman of Maruti Suzuki RC Bhargava. He said one of the main reasons for this was the government’s decision that cars in India should now meet the same emission standards as the ones in Europe.
What has happened this year is that we (government) decided that all standards of automobiles in India will now match the standards followed in European countries. But the ability of Indians to pay is not the same as Europeans. No one talked about difference in the cost of production (of cars of the two standards) before changing the regulations, RC Bhargava said.
He said this in response to an argument made by Niti Aayog vice-president Rajiv Kumar on the auto sector crisis while participating in the India Today Conclave 2019 in Mumbai today.
While speaking about the crisis in the auto sector, Rajiv Kumar said auto companies should also take the blame for the present state of the sector. The auto industry which has been performing well for a long time should be able to get its act together and get its sales up, he said.
Rajiv Kumar suggested that auto companies should consider slashing price of their products to boost growth which will increase the demand. Part of the onus for the present crisis lies with the auto companies, he said.
Responding to this RC Bhargava said, At this stage for having a debate on who is making how much profit, requires one to take a look at the balance sheets of car companies in India. Most of the car companies are making losses. GM4 and Ford folded up because they were losing money. Most of the foreign companies who made investment in India are losing money. Tata Motors is losing money.
Explaining his company’s position he said, We (Maruti Suzuki) have accumulated money because from the beginning we have been a very frugal company. We have paid low salaries to our top management, we have not spent money on various other kind of things…we have build up our reserves.
To this, Niti Aayog vice-president Rajiv Kumar asked Bhargava if he would also tell the audience what are your export revenues, what sort of royalty payments have you made. The fact is that there are companies like Hyundai that are actually doing well because they have been exporting cars, Rajiv Kumar claimed.
He said the state of an industrial sector depends on a large number of things. It’s not just what the government does. Let’s agree to do things together to put back the industry back on track.
In his reply, Bhargava said: As far as our (Maruti Suzuki) exports are concerned, we are exporting about 120 thousand cars a year. Our foreign exchange earnings from exports have always exceeded what we pay out in royalties. With the kind of technology we have, we have been exporting (cars) even to Japan. There is hardly any product manufactured out of India which goes to Japan.