We can’t depend completely on Government subsidies in the EV space: Shashank Srivastava
We can’t depend completely on Government subsidies in the EV space: Shashank Srivastava
Maruti Suzuki’s executive director for sales and marketing chats with Campaign India on a wide range of topics, which include why the brand is yet to enter the EV space, the importance of print advertising, the post-lockdown recovery, and more…
On 11 November, Maruti Suzuki created a lot of buzz on social media for an eight-page print ad in The Times of India. At a time when print has been written off by many, Maruti Suzuki proved with this ad, that innovations on the medium still work.
We caught up with Shashank Srivastava, executive director, sales and marketing, Maruti Suzuki, to learn more about the importance of print for the company, the growing role of digital, the launch of EVs by competitors, and more…
The Celerio print ad last week got a lot of buzz on social media. While the medium is perceived to be dying, do ads like these show its relevance? How important is it for Maruti Suzuki?
Even though print is a medium that is losing a bit of ground, we believe that when a product is being launched or when you are trying to add to your reach, you need to have print in your mix.
A campaign can’t be standalone on print, though. The way I see it, is that it’s a definitive add on medium to take your reach further. Innovations like what we did, attract eyeballs and becomes a topic of conversation. This is not just in the print circles, but also on social media. I saw some users taking videos while opening the eight pages and sharing them on social media.
We spend around 27-28% of our total marketing budgets on print, and it’s largely tactical. A lot of our print expenditure is happening at the local level, to the bottom end of the funnel. So, it provides support at both, the top end (when you’re launching a product) and at the bottom end, when you’re looking for conversions.
Within print, we have observed that vernacular is becoming quite important. It’s no longer about the national, large print dailies. Although they provide limited exposure, vernaculars are seeing growth. Most of our print spends are on regional newspapers.
You've previously mentioned that TV spending is around 35% for Maruti. Could you help us with digital and other media spends?
Our television spends are around 35%. Digital is at 27%. Outdoor is at 6-7% and radio is at 4-5%.
So, digital and print are at the same number right now. But are they at different trajectories with print reducing and digital growing?
If you look at our total media spends around three years ago, digital contributed to 15-16%. Last year, it was at 27%. This year, it will be even higher. So yes, it’s clear that digital is attracting a lot more investments than conventional channels like print or television.
With the rise of digital, we are also seeing the rise of e-commerce. Has this taken off in the automobile category and how does Maruti view it?
The consumer buying behaviour has changed in terms of the process he/she uses. The starting point (for any car purchase), is the enquiries front. In 2016-17, online contributed to around 2-3% of our total enquiries. By 2019, it was at about 15-16%.
Then came Covid-19 (and the lockdown) which accelerated the process big time. After the lockdown, the total enquiries from digital were at around 40%. What took three years to grow 12-13%, took just three or four months to grow by 25%. Post the lockdown, we find that the process is now irreversible, and continues to grow.
So, digital is growing for us from a consumer perspective, and we have responded accordingly. Of the total sales process, there are 26 touchpoints, starting from the time a consumer thinks of buying a car, to the delivery of the car. Maruti Suzuki has digitised 24 of them. Except for the test drive and the delivery of the vehicle, we are offering solutions on digital.
While digital enquiries grew from 15% to 40% in a few months, how did Maruti Suzuki’s strategy evolve with the consumer changing?
We are also developing what we call the single view of customer. This is stitching together the interactional data of the consumer with the transactional data. All the data is put in a data lake, where we have a Customer Data Platform (CDP). This helps us with personalised communication. We are also looking at the predictive behaviour of the consumer based on this, which helps with lead qualification. This is being done by data engines rather than individual salespeople.
Along with digital, another trend in the automobile space is the manufacturing of electric vehicles. There has been news around an electric Wagon R and Maruti has stated that it will enter the space at an appropriate time. When do you believe that will happen?
We are testing EVs, but we have to wait. For EVs to be successful, we need a larger volume. For sustainable business solutions, we need to figure the required infrastructure.
We also need to look at the battery cost so that the consumers can have a lower cost of acquisition. It’s still in that stage, although we have announced that Maruti Suzuki will bring out an electric car before 2025.
While the Government has offered a slight relief by reducing fuel prices, they are still a lot higher than they were a year ago. Do you think rising fuel prices along with a need for a sustainable environment will accelerate the growth of EVs and Maruti Suzuki will have to fast track the launch?
Yes, because of rising fuel prices and the concern for the environment, from both the citizens and the Government, there seems to be a consensus that going forward electric or environment-conscious vehicles will become the norm and the ICE (Internal Combustion Engine) will take a back seat.
What is not a consensus, however, is when this point of inflexion will happen. When has been shifting – a few years ago, people said that 2022 or 2023 will be the time when the running cost of EVs will become cheaper than ICE vehicles. But what has happened is a little different, and the date seems to have shifted back. There’s a belief that even by 2030, India will have only around 8-10% of EVs. The reason for this is that the battery cost hasn’t come down as quickly as one thought earlier. So, the cost of acquisition remains a barrier.
Secondly, the charging infrastructure is still not at a great level. Even in places where you have good charging infrastructure, you still find the adoption of EVs a little low, which is again because of the cost acquisition.
Thirdly, there’s range anxiety for consumers. That’s partly related to the number of charging stations. Destination charging (like at a mall for example) infrastructure is still not there.
One thing that Maruti Suzuki believes in is that we can’t depend completely on Government subsidies. The moment that subsidy moves out, it becomes expensive. We need to reduce the cost of acquisition by reducing the battery cost.
The route to electric cars will be electrification. This means we’ll probably see more hybrid cars coming in before pure EVs. There could also be a different fuel mix that could be environmentally friendly.
Even if we reach the 10% mark of EVs in 2030, India will sell about 70 million cars by then. That means more than 60 million cars will still be running on ICE. If one wants to make a difference to the environment, we need to do something for these cars and that means you need to make more fuel-efficient cars and bring down the emissions.
With the likes of Tata Motors already launching EVs, they have the first-mover advantage. Is that something that Maruti Suzuki has missed out?
There’s always an advantage for moving first. But for Maruti Suzuki, we believe consumer convenience is more important than trying to hurry up something that later on might become a point of dissatisfaction.
A lot of manufacturers have showcased EVs. It’s largely to show the technology, but volumes are what will make the difference to the business and the environment. I know a lot of manufacturers that have showcased EVs, sell a few vehicles, perhaps 20-30 every month, and then sell large diesel cars too. So, that doesn’t help make a difference to the environment.
We want to make that difference and therefore we believe that before EVs become mainstream, we need to do something to get the emissions down.
Is that one of the reasons Maruti Suzuki is steering clear from diesel engines?
At the moment we are not interested in diesel engines. It’s beyond the environment and the pollution that it causes. Diesel engines don’t make economic sense too. About six to seven years ago, diesel was about 60% of the industry, and the reason was there was a high gap in the fuel price between gasoline and diesel. Now, it’s down to Rs 5 in the country. Yes, there are states where the gap is more than Rs 10, but there are states where the gap is around Rs 2, too. At these price points, the running cost between diesel and gasoline isn’t that much.
Secondly, gasoline vehicles are also getting more fuel-efficient.
Then, if you look at options like CNG, whose running cost is around Rs 1.5 per kilometre, and the cost of acquisition is only about Rs 80,000-90,000 more than the petrol version, this makes sense.
For diesel, after BS6 norms, that have come in place, the difference between a diesel and petrol vehicle of the same nature is Rs 1,50,000 at least. Going forward, it’ll only become more. So, there’s a high cost of acquisition, with a similar running cost, which doesn’t make monetary sense.
There may be some consumers, for which the running cost won’t be the only issue – they are looking for higher torque, and for them, therefore larger diesel vehicles could make sense.
Up until a few years ago, the Indian consumer in the auto space was perceived to be value-centric. Now, there are trends about first-time car buyers looking at premium products. Given Maruti has been known to offer an excellent VFM proposition, do you think first time buyers who are looking at the premium product are looking for other brands?
Yes, there's a perception, but data clearly shows that such a trend doesn’t exist. 46% of all automobile sales come from the hatchback category. This has remained the same for the last five years. Then, one might believe that premium hatches are driving sales. Premium hatches as a total have also remained around 24%.
The demographics of India are such that there are large first-time car buyers. This has been stable at 47-50% for the last 20 years. The reason for this is that we are a young nation. 57-60% of the first-time buyers still prefer hatchbacks. There is a shift in terms of entry-level SUVs. The entry-sedan buying population has moved to the entry-level SUV.
The pandemic – what are the learnings of operating through it?
We saw a change in consumer behaviour. We saw trends in personal mobility, where people moved away from public transport and shared mobility. We are seeing people buy cars more for utility, rather than upgradation. Replacement car buying came down from about 26% to 18-19%. Additional car buying increased from about 30% to 35%.
We discussed this earlier, where digital consumption increased majorly too. Communication in this space has become quite significant.
From the brand perspective, the pandemic showed us, that you need to build trust. It’s the new currency of brand differentiation. We looked to build this by caring for our customers. This wasn’t done through marketing, but by making sure we did something for the customer. Our spends on CSR increased during the pandemic. We built trust by freeing up our oxygen cylinders, made investments in the making of PPE kits.
Communicating with employees, consumers, dealers, other stakeholders is also important if you want to sustain and later flourish when the crisis ends. We have a slogan now imprinted which is ‘never let a crisis go waste’. We used the crisis to become more efficient and productive and this helped us in the long run.