New Delhi: As the going gets tougher in the Indian auto industry, Maruti Suzuki India (MSI) is driving into the rural markets to boost sales.
The company, which devised a plan to tap rural markets five years ago, is planning to have presence in a total of one lakh villages across the country by March next year.
"The industry has seen a decline in sales by about 4-5 per cent this year.On the other hand, rural sales - which accounts for about 30 per cent of our total sales -- have grown by 18 per cent in the April-November period this fiscal," MSI Chairman R.C. Bhargava told reporters here.
He said had it not been for the rural market, the company would have had an even tougher time and "we would have been in similar mess like the rest of the industry" as demand in urban areas has slowed down by 5-6 per cent.
"We have been giving emphasis on rural markets. Last year, we had covered 44,000 villages and till November this year, we have presence in 60,000 villages and by March next year, we will have presence in one lakh out of a total of 6.51 lakh villages in India," Bhargava said.
At present, MSI has a total of 700 rural outlets, which are accompanied by workshops that are authorised to carry out repairs under warranty to an extent. In addition, it has 650 mobile vans that has helped in servicing even at the customers' home, he added.
Commenting on the overall market situation, Bhargava said the market continues to be down due to the overall condition of economy and the political situation.
"In terms of retail sales, for the fiscal till November we are one per cent up from that of last year. We are hopeful that we will be able to match last fiscal's numbers," he said.
Commenting on exports, Bhargava said the company will fall short marginally due to changing policies in some of the key markets like Sri Lanka and Algeria. "We were aiming 1.2 lakh units of export this year, which we think we will fall short.
All overseas markets have uncertainties associated with policies and economy," he said. Asked about future expansion, specially the company's Gujarat plant, he said the project is currently 'in cold storage' at the moment.
"There is no point in creating additional capacity when there is no demand. We have the land, boundary wall has been erected but we are not undertaking any capacity creation. We have not decided when we will start work at the Gujarat plant," Bhargava said.
He said the company will wait and watch for the outcome of the upcoming general elections next year and what steps the new government takes in order to boost economic growth and manufacturing.
"We don't expect anything to happen between now and the elections. We hope the elections will bring something positive for the industry," he said. MSI is, however, expecting December to break monthly record in terms of retail sales with about 1.2 lakh units, company, MSI COO (Marketing and Sales) Mayank Pareek said.
"Apart from discounts, which are about Rs 17,000 on an average, exchange offers and customers advancing purchases ahead of January is boosting our December sales," Pareek said.
On the demand for diesel passenger vehicles, he said for the industry overall share has come down to 54 per cent this fiscal as compared to 58 per cent.
Bhargava said that the company's R&D centre at Rohtak is on track to be completed by 2016. It would be Suzuki's fourth such facility, the rest three being in Japan.
Commenting on the LCV project, Bhargava said the company is sticking to its 2016 launch plan. He said the vehicle could come in various options, including CNG and petrol.
