Experts said that the smaller towns and rural areas are equally contributing to the sales of auto companies as rural economy is still growing on back of healthy monsoon and good crop this year.
Pravin Shah, chief executive, automotive division, Mahindra & Mahindra, told Financial Chronicle, “In the current scenario urban markets have slowed down compared to smaller towns and rural markets. Rural economy is flourishing due to healthy monsoon which has resulted in good crop this year. Thus people in the rural area have cash to purchase vehicles.”
Shah said M&M has products like Bolero and Mahindra Maxximo, Mahindra Alfa which are doing well in the rural market compared to urban markets. The company plans to launch more variants of its existing products going forward.
However, overall the auto sector is witnessing a slowdown at the moment due to high inflation, uncertain economic conditions, high fuel prices among others.
A senior official from Hyundai Motor India said, “As a strategy we plan to strengthen our position in rural areas and are planning to increase our rural sales points to 1,000 by 2014 from around 380 points at present.” The official said the company’s compact segment of cars are performing very well apart from the SUV and MPV segments.
Jnaneswar Sen, senior vice president, sales and marketing of Honda Siel Cars India said, “We are present in more than 100 cities with dealer network in further rural areas. The smaller towns are equally contributing to our sales at par with urban areas.”
Models like Brio and Honda Amaze are doing equally well in both smaller towns and urban areas.
Car market leader Maruti Suzuki reported over 18 per cent growth this year mainly due to strong sales from the rural markets.
The company said that the rural market has turned out to be the saviour for the auto industry at a time when sales in urban and
semi-urban regions are facing stress from slowing economic growth, high fuel prices and rising interest rates. Between April and November this year, Maruti sold about 2 lakh units, or 30 per cent, of its total volume in rural markets, as compared to 26 per cent last year. The company, which covered about 49,000 villages till last year, has already covered 60,000 this year and hopes to touch one lakh by March.