New safety regulations may bump up small car prices 10%: Maruti

With the new safety regulations in place the price of small cars will likely increase by 10 percent, says RS Kalsi of Maruti Suzuki. In an interview Kalsi told CNBC-TV18 that Maruti plans to launch two new models by the end of this fiscal through its NEXA showrooms and expects this festive season to be better than last year.He sees the passage of GST and good monsoon to improve buyer sentiment.Below is the transcript of RS Kalsi’s interview to Ronojoy Banerjee on CNBC-TV18. Q: What kind of an impact do you see on account of the new safety regulations? A: There would be some impact, but it would not be to that extent. Maybe about 10 percent impact may come on account of safety regulations. And I am sure if it is there, for all the manufacturers, overall ticket size would move up and entry level customers, certainly will go in for that only. And with easy availability of loans and equated monthly instalment (EMI) spread over a longer tenure, the situation would be attached to that kind of a mechanism. Q: Nexa now accounts for about 10 percent of the overall volumes and you have said 15 percent by 2020 is what the company is aiming at. So, can you give us a sense of the kind of how many new products? You have already said 15 new products by 2020 or thereabouts. How many of these products do you foresee coming in solely through the Nexa showrooms? A: Nexa is our premium channel not only from the product point of view, but also from the experience point of view. When I talk about the product, it is not just the price point which determines whether the product is a premium product or not, it also includes a whole set of features, styling and the kind of target group with which we will be matching it. So, we continuously do various customer clinics wherein we match the profile of soon to be launched models with the kind of target groups that are going to be interested in that particular product. So based on these factors, we would be positioning our product on the Nexa channel and maybe by the end of this year, towards the festival season, we will be bringing in two more models in the Nexa channel. Q: The GST might be tabled in the parliament. How big a moment will it be for the auto sector, something that you have been asking for seeking and hoping for, for some time now? A: I would like to say that not just auto industry, but entire industry in the country, it would bring in good growth momentum. The processes will become more efficient. There would be productivity in the system. The logistics would become easy. So, certainly, auto industry would also get benefitted, particularly in a scenario where we have our component suppliers spread across various states in the country and also our customers being across the country and plant being at one or two locations. So, there is a lot of inter-border trans-border movement. So, it will certainly make the operations smooth, bring efficiency in the system and certainly, taxes will become more efficient and maybe customer friendly. Q: Finally, what do we expect now from the auto industry’s perspective, as far as the festive season is concerned. Do you believe that this year’s festive season might actually be better then what we did last year because there is a general feeling that the auto industry is now on a growth trajectory, at least companies like Maruti. A: Market is optimistic. A couple of factors that endorse that, one is that the monsoon is good, it has brought in a good sentiment. Though the actual benefits of monsoon will come six months down the line once the crop is ready and the cash flow happens. Second thing is that a lot of bills which were stuck up, particularly GST bill, if it gets through, it will certainly bring in excitement in the industry.