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 lots of 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 unit has built a network targeting India’s at least 700 million rural residents as General Motors, Volkswagen and Tata Motors challenge its grip on cities.
“It’s a huge competitive advantage for Maruti,” said Juergen Maier, who helps manage $1.4 billion of assets, including Indian stocks, at Raiffeisen Capital Management in Vienna. “Rural markets are difficult to enter as you need the volumes to attract dealers, so it will take some time for new players to get there,” he added.
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. Sales may reach 3 million units by 2015, according to the government.
Maruti increased the proportion of sales it got from rural areas to 16.5 per cent in the year ended March from 3.5 per cent two years earlier by reaching out to villagers who hadn’t previously considered owning a car, said Mayank Pareek, managing executive officer in charge of marketing and sales. About half of India’s more than 600,000 villages didn’t have all-weather roads as recently as five years ago, he said.
“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.
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 sells about 10 cars a month, he said by phone. Sugarcane farmer Karta Ram Paswan bought an air-conditioned Maruti Alto hatchback, costing from 269,713 rupees ($5,700), 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 by phone.