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Share of rural mkt grows in passenger car sales with more first time buyers





Leading car makers saw demand rise by nearly 10-15 per cent during the festive season. While rural sales continued to grow faster and their share in overall sales increased, the number of first time buyers in rural markets was higher compared to urban markets, according to industry representatives.


This year’s festive season started from October 16 with Chingam/Onam and ended with Bhai Dooj in the middle of November.



While, Hyundai Motor India Ltd (HMIL) did not respond to queries, Shashank Srivastava, executive director, marketing and sales at Maruti Suzuki India Limited (MSIL), said that during the festive season his company delivered 233,000 cars, an increase of around 10-11 per cent compared to last year and the highest in the last 4-5 years. He noted, however, that there was pent up demand. He said that post Diwali, booking and enquiry levels are good and he expects the trend to continue till the end of December.


Of the total sales, he said, nearly 40 per cent came from rural areas. Last year, rural sales accounted for 38.5 per cent. First time buyers’ contribution rose by around 4-5 per cent in the rural market to around 54 per cent, while in urban markets it was around 47-48 per cent. As far as products are concerned, MSIL saw good traction for its lower-end hatchbacks, while traction for SUVs was lower in rural markets. The company’s MPV Eeco vans and small cars, including the Alto and Wagon R, sold well in rural areas, he said.


Sources in Renault India said that the company delivered more than 5,000 cars in the Navratri week and more than 3,000 cars on Dhanteras and Diwali. They said that rural contribution levels have increased by more than 50 per cent over the pre Covid levels (around 19% pre Covid and 29% post Covid) after markets opened up after the lockdown. Renault India has been offering special schemes for farmers and other rural profiles and the same has yielded a positive response. The same has attracted a lot of first time buyers and the demand was largely driven by Renault’s Kwid and Triber.


While rural sales have been growing over the past 7-8 years, post pandemic this growth story will continue to run its course while sales from urban centres might slow down because of falling income levels, said Srivastava.


Factors that helped rural sales included a good monsoon, an excellent rabi crop and a relatively lesser spread of the Coronavirus in rural areas.


With the average rainfall at 891mm, an increase of 7 per cent over the last year, rabi crop production was at 152 million tonnes, a 6 per cent rise from the last year’s 134 million tonnes. Except barley, urad and moong, there has been a good growth in cereals and pulses. The government has raised the minimum support price of rabi crops. Besides, the area under kharif crops has increased to 1100 million hectares from 1005 million hectares last year.


Srivastava said, unlike in urban markets, customers still prefer a physical connection. At present, MSIL covers 350,000 villages where the company sold at least one car. But India has 650,000 villages. While digital sales have definitely picked up in rural areas, MSIL still needs to have physical showrooms because people, while making a high value purchase, want to see the vehicle before they actually buy it, said Srivastava. The company deployed around 14,000 sales executives in these markets and around 900 outlets in rural areas.


The Federation of Automobile Dealers Associations (FADA’s) President Vinkesh Gulati added, for passenger cars, rural sales contributed almost 60 per cent during the peak lockdown period. After markets opened up, the share dropped to 40 per cent. Demand in the rural markets was largely for the entry level cars (Rs 3-7 lakh). The other segment which drives the demand are replacement markets, largely driven by compact SUV and SUVs. He added, even when it comes to addition of new dealers, at present 70 per cent of new dealer additions are happening in rural and semi-urban markets. The ones which are coming in metros and other cities are mostly replacements, he said.

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