Maruti Suzuki looks to turn aggressive on rural markets

For Maruti Suzuki which enjoys leadership position in the country’s car market with a market share of 44 per cent, rural markets are proving to be the key driver of its growth. At present, the automaker, a subsidiary of Japan’s Suzuki Motor Corporation, is getting nearly 30 per cent of its total sales from rural areas. The automaker sold 10.53 lakh cars during 2013-14. “The contribution from rural markets is growing year after year. They are going to make substantial contribution to the overall sales in the times to come. Therefore, we are going for aggressive network expansion in those areas, with smaller outlets,”

Partho Banerjee, Vice President (Dealer Development), Maruti Suzuki Limited, tells P Madhusudhan Reddy in an exclusive interview.

Since you handle dealer development, what is the importance of the rural market for Maruti Suzuki?

We at Maruti call rural markets as upcountry markets. Nearly 30 per cent of Maruti’s total sales are coming from there and so obviously they are important for our growth. In fact, the contribution from those markets is growing year on year. We always expand our dealer network based on customers’ needs. Therefore, we are going for aggressive network expansion in upcountry areas. Our idea is to serve customers by being closer to them. I think rural markets are going to make substantial sales contribution in the times to come.

Do you have separate dealership model for the rural markets?

You know dealerships should be viable and it is our constant endeavour to make them so. Therefore, the showrooms are set up taking into consideration the volumes and sales prospects in the respective areas. We have developed a viable model for districts and other small towns. It’s successful now. However, it is not easy to arrive at the average investment needed for our rural outlets because the investments vary from location to location. We have to study the potential market size and other factors before a new dealership is set up.

What are your expectations from Maruti Suzuki Ciaz premium sedan you launched just now?

This is the first time that Maruti Suzuki has launched an authentic sedan which is made in the country. Earlier, we had Maruti Suzuki Kizashi. But that was brought in as a completely built unit (CBU). However, CBU models don’t do well in India as prices are high because of high taxes and duties. We have to manufacture locally to be competitive in the market place. We have invested over Rs 500 crore to develop new platform for Ciaz. There are over 14 lakh people in the country who won Swift Dzire models. If they want to upgrade to higher category, they don’t have to look elsewhere as Maruti Suzuki Ciaz is here now.

Will you export Ciaz to other markets?

We have launched Ciaz first in India. It is most aerodynamically designed sedan from the Maruti Suzuki stable. Though the initial focus is on the domestic market, we will export it to other markets as well. Geographies such as Africa, Latin America and Middle East are on our radar for Ciaz exports. Our efforts are always aimed at offering quality products to customers at right prices in addition to providing right services. That will create a loyal customer base for us. It’s no different with Ciaz.

What kind of sales Maruti Suzuki has been clocking in the past couple of years?

Our market share has been increasing for the past couple of years and it has reached 44 per cent now. We gained a market share of 2.5 per cent in the first six months of the current fiscal. That means our sales are going up and up. However, when economic conditions are bad, nobody can help. This year, we are the only automaker which is clocking sales growth despite not having any new model in the lineup.

Moreover, we are gaining the market share as well. Other automakers such as Hyundai and Honda are also increasing their sales, but their growth is driven by new models. With the launch of Ciaz, we hope to increase our sales further this year.

What kind of sales growth auto industry will register this year?

Our reading is that auto sector will register double digit growth this fiscal. However, it is not growing in double digits as of now. But we expect the sector to reach that level by end of the fiscal year as economic policies are expected to be implemented. We have seen some positivity in terms of enquiries. So, industry can witness 13 to 14 per cent growth in sales. As for as Maruti Suzuki is concerned, we have grown by 15 per cent in the last six months.