Suzuki Motor's sales push drives demand for its cars in rural India

07, Nov. 2018

NEW DELHI, NNA - Suzuki Motor Corp.'s push to gain traction in India's rural market is paying dividends with its local subsidiary registering a 10-fold jump in sales contribution from the countryside in eight years, according to data from a local research firm.

The Japanese automaker's local subsidiary, Maruti Suzuki India Ltd., which has been beefing up its rural presence for the last few years, increased the proportion of countryside sales among its overall domestic sales from 3.5 percent in fiscal 2008 ended in March 2009 to 35 percent in fiscal 2016, the Motilal Oswal Securities Ltd. data show.

"In fact, the rural share further went up to 40 percent in the second quarter of the current fiscal year on the back of our enhanced efforts toward the rural market," said R.S. Kalsi, senior executive director (marketing and sales) at Maruti Suzuki India, during a press conference to announce financial results for the July-September period.

Maruti Suzuki India, the country's largest passenger car maker accounting for over 50 percent of the South Asian country's domestic car sales, has been expanding its rural outlets and hiring local staff as part of its strategy to push rural sales to maintain its leadership position, according to Kalsi.

"We have currently more than 750 rural outlets," said Kalsi. "But what's more important is that we have built a team of 15,000 rural sales executives over a period of time who are well acquainted with the rural market," Kalsi told NNA on the sidelines of the news conference.

The carmaker is witnessing a spurt in its rural sales along with its network expansion intended to make its products and services readily accessible to rural customers, according to R.C. Bhargava, Maruti Suzuki chairman.

"I think the confidence among the rural customers that if they buy a car, there's somebody who they can go to...the guy who sold them the car, and that there's a dealer and a workshop available locally is helping push our rural sales," Bhargava said during the conference.

Jinesh Gandhi, research analyst at Motilal Oswal, said the lack of sales and service networks in the rural market was one of the key issues affecting demand for passenger cars.

"Customers in the rural market had to travel a long distance to either buy or get their cars serviced," Gandhi told NNA, talking about the challenges rural buyers were facing.

According to Motilal Oswal's April 2018 report, Maruti Suzuki is targeting around 4,000 outlets across the country by 2020 against the current level of around 2,790 outlets, with plans to increase its presence in both rural and urban markets.

"It is expanding its network to significantly increase its presence in urban as well as rural areas. This implies a 12.8 percent compounded annual growth rate in the sales network over FY2018-2021," the report said.

The company posted its highest ever total sales of 1,779,574 units in the last fiscal year, up 13.4 percent from fiscal 2016. In the first half of the current fiscal year the company sold 975,327 vehicles, up 10 percent on a year before.(NNA/Kyodo)