Maruti eyes realty to ease dealer burden

Maruti Suzuki is setting up regional offices to oversee real estate purchases for its future dealerships, to ensure it maintains its hold on the domestic car market.

“We have already started purchasing land. These places will also act as a stockyard and spare-part warehouses,” said T Hashimoto, executive director (sales and marketing) of Maruti Suzuki.

India’s largest car manufacturer has purchased office spaces in Jaipur and Mumbai and would soon do so in add Kolkata, Bengaluru and Delhi. The regional offices will oversee purchase of land or showroom space and act as a stockyard and spare-part warehouse.. 

The company plans to buy properties and rent it out to its dealers instead of the latter making heavy investment in buying showroom spaces. This way, Maruti believes, it can minimise migration of investments by dealers who have been looking at opportunities in other commercial areas such as supermarkets or malls. 

The New Delhi-based company has already procured office spaces in Jaipur and Mumbai and will add Kolkata, Bengaluru and New Delhi in due course. These regional offices will oversee purchase of land/showroom space within their areas and also act as a stockyard and spare parts warehouse.

Hashimoto, said, “We are now selling 1.3 million (but) in future our business will grow so need more stockyards —land for used cars, land for regional offices — those investments we need to make.”

The company is expecting sales to increase to two million units a year by 2020 from 1.1 million in 2014-15. The automaker, which has a market share of 40 per cent, said its retail setup would be inadequate for growth. To protect its dealers from rising real estate prices, the company would be making an investment of Rs 15,000 crore spread over the next few years.

The company’s official was talking at the opening of its Mumbai-based 99th showroom of Nexa which is owned by Shivam Auto. Nexa is a premium sales outlet by Maruti Suzuki, which sells Suzuki-branded premium cars. 

Currently just two cars — S-Cross and Baleno — are sold through this new chain. More cars are expected to join Nexa in the coming period.

On if any Maruti products would be upgraded to the Nexa retail chain, he said, “In the future it may happen but it won’t be sold parallelly (both in Maruti and Nexa dealerships)”.

Maruti is preparing to enter the compact sports utility vehicle segment with the Vitara Brezza with a launch scheduled at the upcoming Auto Expo. Besides a new compact car Ignis will also be launched at the same event. 

With new launches in full swing Maruti says it is on target to achieve the 10% sales growth this financial year which it set itself at the beginning of the year.