Maruti Suzuki, Hyundai rev up on rural market growth

Written by Sandeep Singh | Anil Sasi | Updated: Sep 23 2014, 13:37pm hrs
CarsBoth Maruti Suzuki India and Hyundai Motors have seen their rural market sales drive up growth. Reuters
For the countrys two top carmakers, the rural markets hold the key to continued growth momentum. Both Maruti Suzuki India and Hyundai Motors have seen their rural market sales drive up growth, even when the demand from the urban markets had slowed down.

While Hyundai saw the share of its rural sale rise from 12 per cent in 2011 to 20 per cent as of August 2014, Maruti too increased its penetration and in FY14 it sold vehicles in 93,000 villages, up from the 44,000 in FY13. Rural sales of Maruti grew by 16 per cent during the year and accounted for 32 per cent of its sales, up from less than 30 per cent a year ago. Extensive marketing and sales efforts in both urban and rural India have helped increase sales, a Maruti executive said.

Following a hub-and-spoke model, Hyundai has seen the emergence of 320 rural sales outlets over the last few years. Offering models such as Santro and Eon, they also provide service and repairs. When there was no growth in the urban markets, we were driving comfort from our rural presence and it compensated for the drop in numbers in bigger cities. Overall, while it compensated for the losses there, it also helped us increase our market share, said Rakesh Srivastava, Sr VP and division head, marketing and sales, Hyundai. The firm plans to take up its rural sales to up to 30 per cent of its total sales in few years, We see future growth coming from these markets.

Other than the changing urban-rural mix, the auto industry is also seeing a change in the demand for cars, depending upon the fuel they run on. While the price of petrol that was higher than diesel by around Rs 23/litre a year ago, the difference now is just Rs 10. With this, the demand for diesel cars that had risen significantly over the last three years, has now come down.

Share of diesel vehicles for industry came down from 58 per cent in FY13 to 53 per cent in FY14 whereas those of petrol vehicles grew by 4 per cent after having declined for two years. A Maruti executive said that in Q1FY15, its diesel sale was more or less static as compared to last year. Even for the industry the diesel penetration corrected from 54 per cent in Q1 last year to 50 per cent during the April-June quarter 2014-15.

Hyundai to launch compact SUV in 2015

Having missed out on the rising volumes and high growth in the compact SUV and multi-purpose vehicle (MPV) segments for lack of a product in that space, Hyundai Motors India is all set to roll out one product in each of the two categories over the next two calendar years. We are seeing that growth in SUV and MPV segment is happening in the compact space. We will come up with a product in them as they are high volume and high growth segments and we do not have presence there, said Rakesh Srivastava, division head, marketing and sales, Hyundai Motor India. Sources say that the firm may launch the compact SUV in 2015 as that segment is drawing higher volumes in India. Sandeep Singh