In a bid to augment sales in a market characterised by cut-throat competition, carmakers are increasingly going rural. With close to 70% of the country?s population residing in the rural parts, leading carmakers like Maruti Suzuki, Hyundai Motor and General Motors are scurrying to these parts to augment the sales figures.
For instance, rural sales of Maruti Suzuki has increased to 16% in 2009-10 from just 3.5% in 2007-08. The company?s managing executive officer for marketing & sales Mayank Pareek identified factors like government incentives and programmes like NREGA in this regard. ?About 80% of rural sales come from Alto, WagonR, Estilo, Maruti 800 and Omni,? he said.
Partner in the automotive practice at Ernst & Young, Kapil Arora said that aspiration levels were driving people in rural hinterlands to own cars. ?Rising disposable incomes, access to affordable credit and growing consumer confidence are key growth drivers,? he said.
General Motors India, on a high after the successful launch of its small car Beat, expects a major chunk of its sales to come from rural and semi-urban areas. GM is the only company in India that has a whopping 60% of its sales coming from these areas and the company expects the trend to continue in the future as well.
President & MD of GM India Karl Slym said the metros were getting saturated and GM was looking to increasingly focus on the non-metros for increasing sales. ?The non-metros are the ones where most expansion is happening. When we developed our sales network and services, we put a lot of effort in spreading ourselves to newer cities in the non-metros and it continues this year as well,? he said.
The country?s second largest carmaker, Hyundai, is increasing its rural footprints by setting up dealership centres instead of the conventional dealerships seen in metros. The company?s director for marketing & sales, Arvind Saxena, explained that dealerships required heavy investments.
?Instead of opening dealerships in these markets, Hyundai is opening dealership centres to reach out to them. Currently, we have 80 such centres and we will push the number to 130 this calendar year,? he said. Saxena added that till about four to five years back, about 19% of the company?s sales came from rural areas, which has shot up to over 30% last fiscal. ?We find the rural markets to be a lot more stable. Even banks have reached many small markets, making financing easier,? he said.
The domestic auto industry created a new record in 2009-10 with sales crossing the 12-million mark. Overall passenger car sales was 15,26,787 units against 12,20,475 units in the previous year. Close to 70% of these sales were in the small-car category. A Delhi-based auto analyst said that by 2012, close to 40% of the overall passenger car sales would come from rural areas. Currently, he said, rural areas accounted for a little over 30%.
The Society of Indian Automobile Manufacturers (Siam) has forecast a growth of 12-14% of the auto market. President of Siam Pawan Goenka said that rural sales could be a key driver for growth over the next three to four years.