Hisashi Takeuchi, Managing Director and CEO of Maruti Suzuki, has highlighted one of the major challenges faced by the auto industry today—offering cutting-edge technologies at affordable prices. Takeuchi emphasized the need for innovation as a critical factor in integrating advanced features into vehicles without compromising on cost-effectiveness.
“Innovation is the key to discovering ways to integrate advanced features without sacrificing affordability,” he said. Speaking at the 64th annual session of the Automotive Component Manufacturers Association (ACMA), Takeuchi underscored the importance of developing a strong local ecosystem within the electronics sector, which he believes is vital for the country to achieve true self-reliance in the automotive industry.
He stressed that this ecosystem is essential to accommodate the increasing demand for technologically advanced features in modern vehicles. Takeuchi noted that the auto industry is undergoing a transformative shift, driven by growing customer expectations for comfort, convenience, safety, and compliance with changing regulations.
“Consumers are increasingly seeking feature-rich, technology-driven experiences in their vehicles,” he explained. This surge in demand has led to a notable increase in the penetration of electronics in automobiles, further intensifying the need for advanced technologies that are also budget-friendly for the Indian market.
Maruti Suzuki CEO’s comments come at a time when the Indian entry-level car segment is grappling with significant challenges, particularly in the aftermath of the COVID-19 pandemic. The once-dominant hatchback, which accounted for more than 50% of the market, has seen its share shrink to around 25-30%. In stark contrast, the SUV segment has surged to claim a dominant 50% share of the market.
One key factor behind this shift is the rise in vehicle prices, driven by regulatory changes and inflation. Over the past five years, the final acquisition cost of vehicles has surged by 25-30%, making it increasingly difficult for two-wheeler owners to make the leap to entry-level cars.
The average vehicle price has risen from Rs 8 lakh to Rs 12 lakh, pushing car ownership out of reach for many potential buyers at the lower end of the market. Despite this, the pent-up demand following the pandemic has boosted the Indian car market, reaching a record high of 4.2 million units in FY-24. However, the growth rate has slowed significantly this financial year, hovering around 1%.
Recognizing these affordability issues, Takeuchi urged auto component manufacturers to prioritize research and development (R&D) and invest in understanding the local market dynamics. He also stressed the importance of collaboration across the value chain to ensure the development of affordable mobility solutions. “This goes beyond mere manufacturing,” he said.
“It requires a comprehensive approach that includes local testing facilities. India has the potential to position itself as a global hub for affordable automotive components.” Takeuchi’s call to action is clear: innovation, investment, and collaboration are the keys to overcoming the affordability challenge and driving future growth in the Indian automotive sector.
