Maruti Suzuki plans to expand into rural markets


Buoyed by faster sales growth in rural India compared to urban centers, the country’s largest automaker, Maruti Suzuki, is aiming to expand its sales operations to cover the remaining 2+ lakh villages as it expects the growth trend to continue , driven by factors such as rising rural incomes and increased motorization.

The company has so far sold cars in about 4.40 lakh villages out of the country’s more than 6.40 lakh villages, said Shashank Srivastava, Senior Executive Director (Marketing & Sales), Maruti Suzuki India Peppystores.

“For us, rural markets performed better than urban markets last year… Since 2007, when we started monitoring sales separately, rural markets have outperformed urban markets with all but a few years,” Mr. Srivastava said.

The company sold 5,47,490 vehicles in the rural market in 2019-2020, with these markets accounting for 38.5% of total sales, increasing to 5,83,300 units (40.9% sales share) and 5,91,800 in 2020-2021 (43.6% revenue share) in 2021-22 when the entire industry was struggling.

“If you look at the last three years, urban growth has been negative, otherwise both markets have grown at a faster pace with rural growth… and this trend will continue mainly due to factors such as rising rural income, increasing pace of motorization… The Monsoon has also been good in recent years,” he said.

He added that the company only covered about 1.9,000 villages as of 2015 and is aggressively working to increase that number to over 4.40,000 villages now. “That’s the true rural story of how motorization is increasing in rural areas… but we’re not rejoicing in the fact that we’ve covered so many villages, we’re looking at why we haven’t covered the rest of the villages,” said he .

Mr. Srivastava added that the company has a concept of RDSE or sales managers for rural traders who are present in nearby larger villages or smaller towns and are responsible for all surrounding villages. “We have increased our rural workforce, or RDSE, from about 11,000 people in 2015-16 to more than 17,000 today. Since you cannot have outlets in every village, RDSEs are a way to increase rural penetration,” he said, adding that the total outlet network in rural areas was also increased to 1,220 outlets in 2015-2016, to approximately 1,900 outlets today.

On buying trends, he said that entry-level sedans are more popular in rural areas than in urban areas. While such hatchbacks account for 11% of urban sales, that figure is 21% in rural areas.

In 2021-22, the company saw strong demand in rural areas for models such as the Alto 800 (92,000 units), Swift (82,000 units), WagonR (77,000 units), Dzire (59,000 units) and Eeco (58,000 units).

Mr. Srivastava added that Maruti Suzuki, whose market share has fallen from 47.7% in FY21 to 43.38% in FY22 due to production issues caused by the pandemic, will focus on SUVs and hatchbacks as it aims to recover to get to 50%. Market share in the domestic passenger car market.

“It’s a war cry… in our organization. We call it constructive paranoia…which means you can’t just sit back and relax…it doesn’t take long for market dynamics to change, so we’re always on the move to improve efficiency, productivity, etc.,” said Mr. Srivastava.

He noted that the company’s market share in the non-SUV segment is about 67%, adding that a smaller number of products in the fast-growing SUV segment has impacted its overall market share. “Overall, our market share in the SUV vertical is only 12%. Here we are now trying to strengthen our presence,” he said.

Asked about the demand for diesel-powered vehicles, Mr. Srivastava said that the share of diesel vehicles, which accounted for about 58% of car sales around 6-7 years ago, has fallen to 18%, with demand currently only seen in the US is in the middle SUV segment because there is a lack of a good petrol-powered vehicle.

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