Maruti Suzuki India salesman Ram Krishna Upadhyaya goes to a farmers’ market three times a week to find out who has had a good crop and can afford a new car.
“Many people think that the rich only live in cities, but there are many people with enough money to buy a car in villages,” Upadhyaya, 33, said in Mankapur, 400 miles southeast of New Delhi. “Also, there’s no competition to sell a car in rural areas.”
India’s largest carmaker more than doubled rural sales last year as Upadhyaya and 4,000 other agents used a personal touch in villages where televisions and newspapers are a rarity. The Suzuki Motor Corp unit has built a network targeting at least 700 million rural Indian residents as General Motors (GM), Volkswagen AG and Tata Motors challenge its grip on cities.
“It’s a huge competitive advantage for Maruti,” said Juergen Maier, who helps manage 1.1 billion euros ($1.4 billion) of assets, including Indian stocks, at Raiffeisen Capital Management in Vienna. “Rural markets are difficult to enter... so it will take time for new players.”
India’s nationwide auto sales increased 25 per cent to 1.53 million in the year ended March, with New Delhi-based Maruti accounting for half the market.
Maruti increased the proportion of sales it got from rural areas to 16.5 per cent in the year ended March, compared with 3.5 per cent two years earlier, by reaching out to villagers which hadn’t previously considered owning a car, said Mayank Pareek, managing executive officer in charge of marketing and sales. “We found that many people in villages don’t feel comfortable going to an air-conditioned showroom and talking to a salesman wearing a tie,” he said. “We have seen only the tip of the iceberg” in terms of rural sales, added Pareek. Maruti fell 0.4 per cent to Rs 1,232.75 at 9:58 am in Mumbai trading today.
Prime Minister Manmohan Singh is boosting spending on agriculture and rural infrastructure under the ‘Build India’ campaign, designed to create jobs and improve living standards.
In China, government’s efforts, including vehicle subsidies, helped rural auto sales growth outpace urban areas for the first time last year, according to the nation’s commerce ministry.
Maruti has 812 dealers across India, who can operate more than one outlet. Upadhyaya runs a small showroom near Mankapur and also displays cars under a tent each week at the farmers’ market. He sold about 10 cars a month, he said.
Sugarcane farmer Karta Ram Paswan bought an air-conditioned Maruti Alto hatchback, costing from Rs 2,69,713, after Upadhyaya invited him to view cars at the market and helped arrange financing.
“I know the salesman quite well and he has promised to look after any problems,” Paswan, 25, said. “I’ve never heard of Volkswagen or General Motors.”