India's largest car manufacturer, Maruti Suzuki India Limited (MSIL), is focussing its attention on the rural market, where it sells one out of every three cars sold. By the year 2015-2016, the car maker expects the rural regions to contribute nearly half of its annual sales volumes. The company has opened 23 new dealerships in smaller towns and villages over past three months to counter the low sales volumes in the sluggish Indian auto market.
The share of MSIL in rural sales volume has been on a constant northbound trip. During June 2012, the car maker's total share in the industry was on a record high of 33 per cent with rural sales contributing a massive 55 per cent. Contrarily, in 2007-2008 the market share of the company was a minuscule 3 per cent. Rural market has become the key sales driver for the company in the wake of a slow market owing to ever increasing fuel prices and taxes.
Managing Executive Officer, Marketing and Sales, MSIL, Mayank Pareek, said, “Now, we have a reasonable base of rural sales and the 55% jump epitomises the strength of the Indian hinterland markets and villages. We are developing new markets and generating customers who have never used cars in these smaller towns (and expecting them) to generate long-term competitive advantage.”
Going by Maruti's figures, any settlement with 10,000 strong population qualifies as rural market and the company has sold over 23,000 units in such markets in June, 2012. Back in 2007, the leading car maker started its rural marketing program by identifying several customer groups to sell its cars. It engaged the village panchayats to locate the possible customers for its products. As of now, many of these customer groups like turmeric farmers in Tiruchengode in Tamil Nadu, apple growers in Himachal Pradesh have been the loyal buyers of the company. Going by the statistics of MSIL, majority of these buyer groups generate sales volume of 35-50 units every month, which almost doubles during the harvest season.
Rural markets have been very crucial for the car makers as well as the two-wheeler segment to generate substantial growth in terms of sales. 46 per cent of the sales of the country's largest two-wheeler manufacturer, Hero MotoCorp comes from rural areas and the figures have been on a constant surge. The growing consumption in these regions is the outcome of higher farm income and stable economic growth.
Being a company which caters to all sort of customers from rural to elite, MSIL stated that its high-end cars are in demand in the rural areas owing to exposure to television and other media. To illustrate, premium cars like Swift, Dzire and SX4 from Maruti's portfolio have been enjoying equal shares in rural and urban regions alike. However, taking into account weak monsoons so far this year, Maruti Suzuki may suffer a little slowdown in its key markets of rural regions.
