SMIPL | Steady Approach Towards All-Round Growth

Amid all the doom and gloom surrounding the Indian automotive industry currently, one segment that has posted growth is two-wheelers. Given the market dynamics and the product offerings, two-wheelers are a necessity buy for most, unlike cars and SUVs. And that augurs well for almost all manufacturers in the market, including Suzuki Motorcycle India Private Limited (SMIPL). The company has been around in the Indian market for a while, but hasn’t made a bang yet. However, all of that could change over the next 24 months, as Atul Gupta, Executive Vice President, Sales & Marketing, SMIPL told us in a recent interaction.

BUSINESS ENVIRONMENT

The current blip notwithstanding, the two-wheeler industry in India will continue to grow for another two decades or so, believes Gupta. He attributed this belief to the fact that the country’s infrastructure isn’t growing at the desirable pace, leading to multiple problems for cars and future technologies such as electric vehicles. The current level of growth is likely to stabilise by 2015 or so, he said, and should continue to be sustainable thereon. “A host of global factors and domestic issues such as high fuel prices and interest rates have resulted in the current situation,” he said.

Among two-wheelers, scooter sales have been on a rise, while motorcycles are presently seeing a negative trend. This is so because the technology available in scooters today is almost the same as in motorcycles. Fuel efficiency, which was once the key performance differentiator, too is closer than ever. Along with this, scooters can be used for multiple purposes by a family, reasoned Gupta.

SMIPL doesn’t look at the slowing growth with pessimism, primarily due to them being a relatively new player in the market. The company is growing in every department of the business, including products, production, and distribution. So while the segment’s growth is slowing, SMIPL is gearing up for a significant growth phase over the next couple of years.

ROADMAP

Gupta told us that SMIPL is presently focusing on expansion in three key areas – product portfolio, production capacity and sales & service network. The next 24 months or so are going to be very important as the company plans to double its performance in multiple areas. The production capacity will go up from the present level of five lakh to 10 lakh by the end of 2016. Sales in the previous fiscal were 3.26 lakh units and the present year is expected to close a shade under five lakh, since the capacity has reached five lakh only in March, 2013.

The long-term plan for SMIPL is to get into the top three category but any concrete plans on that would become clear only beyond 2015 or so, added Gupta. A clearer goal on the horizon for SMIPL is to become the largest selling company for Suzuki global in the area of two-wheelers. This could be as early as 2016, by when the company would reach production capacity of 10 lakh units.

Talking of differentiation and a unique identity for SMIPL products, Gupta said most companies are pretty close to each other in almost all technical domains. What really makes a difference today is the brand value and perception, since consumers no longer switch brands for small discounts. This is primarily down to the customers maturing and understanding the value being offered in return for the money.

The company also plans to increase its touch points, which are presently about 600 across the country. By the time SMIPL doubles its production capacity from the present levels, the touch points too will go up to 1,200, helping sales significantly.

REDESIGNED STRATEGY

Responding to our question about the company’s slow movement and if the progress up till now has been satisfactory, Gupta agreed the results aren’t satisfactory completely. Part of this is due to a wrong choice of products in the initial years. Although the company is six-years-old officially, it has seen positive movement only in the past four years or so, primarily because of a redesigned product-mix. “Things certainly could’ve been faster, but we also had capacity constraints,” he added.

In times to come, the company will add new products to its portfolio, with a strong focus on the motorcycle segment. The first endeavour will be to offer advanced technologies, which offer Indian consumers with the riding feel of the larger motorcycles in smaller machines. The next step will be to expand the scooter line-up and target consumers from segments, untapped till now. Further, the company will continue to upgrade its existing products in order to improve the value offering.

These plans along with a continuous focus on increasing efficiency within the business will result in Suzuki Motorcycle India emerging as a company, which will reach out to more people and will be a much more significant player in the market, concluded Gupta.

Text: Arpit Mahendra