Monday, April 11, 2011

Hyundai and Tata follow Maruti to take village roads

Manu P Toms , Hindustan Times
Mumbai, April 10, 2011

Maruti’s success to sell 249,000 cars in rural India has led its rivals Hyundai and Tata Motors to emulate its strategy. Maruti’s 3,600 rural development sales executives (RDSEs) — each one posted in every taluka in India — together sold more than a fifth of its total sales. Determined to end Maruti's complete dominance in rural market, Hyundai will now deploy 1,000 sales executives, while Tata Motors will have 210 ‘special Nano dealers’ in small district centres.

Maruti has found a promising rural market for cars, what chief general manager Shashank Srivastava calls “a surprise discovery”, when urban-focused sales approach faced challenges in the recession-hit 2009. It loosely classified geographies beyond the limits of top 100 cities as rural areas and counts sales facilitated by RDSEs posted in those regions as rural sales.

From a mere 9% of its total sales in FY 09 it grew to 16% in FY 10. In FY 11, rural sales accounted for roughly 22% of Maruti’s domestic sales. In volume terms, this conveys an even more ebullient story — from 65,000 units to 139,000 units, which leapt to 249,000 units in the just-ended fiscal.

“Alto and Wagon R are the largest selling models in rural areas,” said Srivastava. Good rainfall, better farm output, growing non-agricultural income, improving infrastructure all contribute to the spurt in car sales in these predominantly agrarian regions.

“For this fiscal, we expect rural market will account for 25% of our total sales,” he said.

Maruti’s closest rival Hyundai also sees a similar trend. The company does not strictly track rural sales. But, it sees that semi-urban and rural sales together now account for 31% of its domestic sales against 29% last fiscal. The company is strengthening its presence in these regions by adding 36 outlets more in semi urban and rural areas.

By 2011 end, Hyundai will have 275 outlets in these regions.

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