Car makers step up rural push

Car makers step up rural push

New Delhi: Given the gloomy prospects for the year in India’s traditional car markets, despite the sales bump in November, manufacturers are stepping up efforts to sell cars to rural customers.

Suzuki’s local unit has started reaching out to groups such as orange growers in Nagpur, turmeric growers and granite businessmen in Tamil Nadu, blue-pottery makers in Jaipur and groundnut growers in Saurashtra.

“At the beginning of the year, when the market started slowing down due to the known reasons, we started identifying people who are not dependent on loans and are cash-rich otherwise," said Mayank Pareek, managing executive officer (marketing and sales), Maruti Suzuki. “These set of buyers are relatively unaffected by what is happening outside. So we asked our regional marketing teams, can we identify one such segment in every region every quarter? And by June, we had at least 76 such sets of customers."

The company says it has been selling an average of 4,500 cars every month to these customers. In total, it has sold 20,000 cars to these groups since June.

Across the industry, rural sales have been growing at 10% over the previous year, Pareek said. At Maruti, the contribution of rural sales has gone up from 22% in 2010 to 26% this year.

Hyundai Motor India, the country’s second-largest carmaker, is “present in most of the urban areas in the country. So, our network expansion will happen more and more in the rural part of the country," said a company spokesperson. Rural sales have been substantial this year, the spokesperson said, without providing details.

Tata Motors has also seen robust rural sales. “But I cannot give that data as they are protected," a company spokesperson said. For the Nano alone, Tata Motors has opened 30 dedicated sales outlets and it plans to reach 300 by the end of this fiscal—all in rural areas. Several factors are responsible for positive sentiment in the rural economy, an analyst said.

“There has been a hike in the minimum support price. Moreover, most of the districts have seen above average rainfall. Both central and state governments have been pushing a lot of housing schemes in these areas," said Nikhil Deshpande, auto analyst, Pinc research, a Mumbai-based brokerage firm. “While there is no data to substantiate that the rural demand has gone up, these factors have boosted the confidence of people. That is the general sense we are getting."

The excess-to-average and normal rainfall ratio is 77:23 this year. This means 77% of all districts have got normal or above average rainfall, while the rest have had deficient or below-normal rainfall. The June-September monsoon is the biggest source of water for Indian crops.

“Deficient rainfall is largely limited to the north-eastern states and some parts of northern India," said an expert with a leading brokerage firm who did not want to be named. “This kind of qualitative shift is the best the nation has had in the last six years."