Maruti Suzuki India Ltd, which makes half the cars sold in the country, plans to build mega showrooms spanning several thousand square feet to display as many as 50 vehicle models at a go.
These outlets will be the first company-owned ones in Maruti’s two-decade history and are part of its marketing strategy to sell a million cars a year by 2010 amid intensifying competition.
The company also plans to build warehouses for spare parts and vehicles across the country to reduce the lead time in delivering these to customers, besides setting up service training centres for employees at dealer outlets.
Currently, the company manages these activities from its headquarters in Gurgaon, Haryana, where it makes the cars.
Maruti will begin by constructing four such showrooms in major cities in the four corners of India. These showrooms will only display vehicles and not sell them. Maruti plans to eventually have 16 such showrooms.
The firm has earmarked Rs7,000 crore in its distribution network and research and development to defend its market share in Asia’s third largest automobile market.
“If there are people coming here and seeing the menu of Maruti Suzuki, it makes them interested,” said Shinzo Nakanishi, managing director of the company. Then, “they go to the dealer and buy it.”
While the idea of display-only showrooms is new to India, other manufacturers such as Toyota Motor Co. have such outlets in Japan, typically in malls, where people can look at around 70 Toyota models. The firm has also constructed what is considered the largest showroom in the world, called Megaweb, spanning several floors, with driving simulators, test tracks, future technologies, historical models and so on to drive visitors.
Maruti has one of the largest stable of cars in the country, selling 11 models, with three more likely to be introduced over the course of this year.
“We are in the business of creating images,” said Mayank Pareek, head of marketing at Maruti. “We wanted a place where customers can experience all the 11 brands and all their variants.” Pareek said these super-sized showrooms would be bigger than typical dealer outlets which typically cover an area between 2,000 sq. ft and 8,000 sq. ft.
Maruti has 564 dealers in 373 cities with each selling 1,280 cars a year on an average, compared with 680 units for rival Tata Motors Ltd, India’s largest car maker by revenues. All these dealer outlets are franchises and the company doesn't own any of its own.
With customers having more choice than before, auto firms are relying on superior sales and service infrastructure, including free pickup and delivery of cars for servicing to woo customers. With new entrants such as Volkswagen AG and Nissan Motor Co. building factories in India, at least 300 outlets are likely to be opened in the next 18 months, setting the stage for aggressive marketing.
Sales in the domestic market are expected to reach 2.2 million units by 2010 from 1.4 million in 2006-07, according to the Society of Indian Automobile Manufacturers, an industry body.