Takashi Kikuchi, president and MD of Isuzu Motors India, speaks to Shobha Mathur about its India operation, localisation strategy, exports from India, and willingness to sell its engines to interested OEMs.
20 Oct 2014 | 3949 Views | By Shobha Mathur
How does Isuzu Motors India plan to make India a manufacturing hub for emerging countries?
Our plan is not only to serve India but also to serve the overseas markets. India has so many good suppliers, so we are trying to localise 100 percent our products in India to achieve ...
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How does Isuzu Motors India plan to make India a manufacturing hub for emerging countries?
Our plan is not only to serve India but also to serve the overseas markets. India has so many good suppliers, so we are trying to localise 100 percent our products in India to achieve our target. We will export our local products to the emerging markets of Africa, the Middle East and neighbouring countries of Sri Lanka and Bangladesh. Our plant in Andhra Pradesh will be ready in 2016, after that we will have enough capacity to supply our products not only in India but also for exports. The D-MAX is our first priority for exports because it is a core product of Isuzu and we are currently exporting it to over 100 countries globally.
Would that involve shifting some of the production from Isuzu’s key Thailand plant to India to give a leg up to exports?
Not shifting but increasing capacity so that new capacity can be used in India to meet increased customer demand. In the coming 10 years, the pick-up market will rise from 2 million to 4 million globally, especially in emerging markets.
To meet those additional volumes, we are planning to use to use our India base for exports. Even if the Thailand production capacity is increased, it will not be enough to meet the rising demand globally; so the Indian company will not eat into Thailand business but will add to the Thailand portfolio so that we all have an equal pie in the new markets.
How much of the total production will be exported in 2016?
First, we will allocate the capacity for the Indian market, then we will export the products outside – maybe 80 percent for the Indian market, 20 percent for exports. If we need more capacity, we will take a fresh decision to expand capacity.
What will be your localisation strategy, considering that you are looking at 100 percent local content?
At start of production, local content will be 80 percent but within three years we will achieve 100 percent localisation. We have 50-60 suppliers whom we have already selected, with about 60 percent major suppliers located close to the plant to provide just in time supplies. Other suppliers will be located in various parts of the country.
In line with Isuzu’s plan to make India a manufacturing hub, it is believed to be partnering with General Motors to make products for emerging markets. Your comments.
We are partnering for the next-generation pick-ups as the new current-generation pick-up trucks have already been introduced in Thailand. After that will come the next-gen trucks. We have a joint development agreement with General Motors for next-generation pick-ups and their derivatives in Thailand. They will first be introduced in Thailand and then as a normal process will also come to India. However, at present, it is difficult to say when the collaboration product will come to India.
There were reports that an RU30 MPV will be launched in India by Isuzu in 2016?
RU30 is one of the product names. In this joint venture with GM, we first select a platform and from that platform many products can be made – a pick-up, an SUV and many other derivatives. At the moment we are discussing the platform. It’s still too early to discuss about which products will be made from the new platform.
Currently your pick-ups have manual transmission. Will Isuzu look at bringing the automatic to India?
Currently we do not have any plan but Isuzu’s portfolio in Thailand and other places does have an automatic transmission. At an appropriate time, we will look to bring it to India. We have it in our menu and are looking at customers’ demand.
What are customers demanding?
At the moment there is not much demand for anything different in pick-ups but for SUVs there is some demand for automatic transmissions in some cities like Bangalore. In the rural areas, they still prefer manual transmissions.
Can you detail Isuzu’s plans to set up a diesel engine plant?
We are looking at a captive diesel engine plant in Sri City for our own products and not a separate diesel engine project for exporting. We have 2.5-litre and 3.0-litre diesel engine displacements and these power our main products. If someone shows interest to use our diesel engines, we are ready to discuss.
How much of Isuzu’s sales come from Tier 2 and Tier 3 cities?
The majority of our sales are coming from Tier 1 cities as our dealer presence is limited to 11 outlets. We can appoint 60 dealers today but we should also have production capacity. Our target is 2015-16 to achieve that number, so we plan to gradually expand our sales network.
How much is the current production of Isuzu Motors in Hindustan Motors’ plant in Chennai?
The capacity is 200-300 vehicles per month, mostly comprising D-MAX pick-ups.
What is Isuzu’s target for gaining market share?
We have not fixed our target market share but we would like to be the market leader. Our first focus is quality, service and great experience for the customer and volumes will follow thereafter.
In 2023, we have forecast the pick-up market to be 800,000 units, and Isuzu plans to supply 80 percent of its production locally for India out of its total 120,000 capacity in Sri City. Based on that, we will expand further. Currently the market leader is Mahindra & Mahindra, garnering almost 80 percent market share, followed by Tata Motors, Ashok Leyland and Isuzu.
How do you see Isuzu’s growth in the current fiscal, considering LCVs are still showing a downtrend?
This is normal practice where market recovery is becoming faster and September 2014 was better than last year. So I am sure that the LCV market is recovering. But next year could be a very good year for this market and 2016 will be the golden year for LCVs and we are going into mass production that year.