Friday, Sep 04th

LATEST:
You are here: Business Business Global automakers scour India's backroads in search of dream market

Best_of_2015_587x57_Results

Global automakers scour India's backroads in search of dream market

indiaMUMBAI--For global automakers, the dusty backroads of rural India could be the new El Dorado.

As economic torpor suffocates demand for new cars in India's megacities, incomes are growing faster in small towns and country areas. That's pushing the likes of General Motors and Honda Motor Co to fan out in search of buyers in places where fewer than 20 people in every thousand own a car - for now.

Standing firmly in the way are strong home-grown brands. With local services plentiful and repairs cheap, Maruti Suzuki India Ltd, Mahindra and Mahindra Ltd, and Tata Motors Ltd dominate the rural vehicle market where foreign automakers are seen as expensive and distant.

Foreign companies showing cars at the Delhi auto show, starting on Wednesday, have already poured billions of dollars into factories, product development and marketing in India's once-booming car market. Still, no foreign car maker has a share of more than 6 percent in India's passenger vehicle market aside from South Korea's Hyundai Motor Co with 15 percent.

Car makers see success in rural areas as vital, as slow economic growth, high interest rates and rising fuel prices mean overall sales are headed for their second straight year of decline. Though the need for rural sales has been recognised, success could yet prove illusory.

Japan's Honda entered India nearly two decades ago but will still have only 170 dealerships by end-March, compared with market-leading Maruti's current 1,300. Of the 60 sales outlets Honda plans to open in India in the fiscal year that starts in April, 43 will be in small towns.

"It's very easy to travel once in three-four years to a place 100 kilometres away to buy," said Jnaneswar Sen, senior vice president of sales and marketing at Honda India. "It becomes a bit of a hassle for the customer to travel 100 or 150 kilometres every few months to get the car serviced."

Like most foreign carmakers in India, however, Honda is seen as a premium brand, beyond the reach of price-sensitive rural buyers. To expand its potential market, Honda last year launched the entry-level Amaze sedan, which starts at about 520,000 rupees ($8,300) and has helped it nearly double its market share to 4.7 percent.

Smaller towns and cities account for nearly two-thirds of Amaze sales, the company said. "Smaller towns and rural areas are a gold mine that foreign automakers are yet to tap efficiently," IHS Automotive analyst Anil Sharma said. "One of the prerequisites for any automaker to be successful in rural areas would be availability of after-market services. Since the population is more dispersed in rural areas, what we probably need is services like mobile workshops."

Selling foreign cars to rural India remains tough. Deepanshu Rai, who lives in Raigad, a small town about 100 kilometres from Mumbai, said he never considered buying a foreign model when he bought his first car about 10 months ago, an Alto 800 hatchback made by Maruti.

"If you buy a foreign brand, it won't have a service centre everywhere. You may have to travel far even for a small issue," said the 22-year-old Rai, who works for a mapping company.

For Maruti, the opposite is true. Founded in Gurgaon, outside the Indian capital of New Delhi in 1982, Maruti accounts for nearly one in two new cars sold in India. Though it has drawn on the small-car knowhow of Japan's Suzuki Motor Corp, its majority shareholder, Maruti is seen as so home-grown that in the 1980s, the word "Maruti" was used generically to mean any car.

On narrow rural roads, its cheap small cars jostle for space with Mahindra's sturdy utility vehicles, tractors, motorbikes and bullock carts, with foreign models scarce. Spare parts, including fakes, are cheap and ubiquitous, and mechanics everywhere can fix a Maruti, keeping maintenance costs down.

Maruti's deep rural penetration has helped it defend its market share amid the industry's two-year downturn. That's despite the onslaught of new models launched by foreign rivals.

Next in line will be Nissan Motor Co's relaunched low-end Datsun brand. At the Delhi auto show Datsun will showcase a hatchback to compete with Maruti's Alto 800, which starts at 280,000 rupees.

Areas with populations of less than 10,000 people account for 31 percent of Maruti's sales so far in the fiscal year that ends in March, said Mayank Pareek, Maruti's chief operating officer for marketing and sales, adding the company began a heavy push to target rural buyers five years ago. "Unlike urban markets, in the rural markets customers are very loyal. So you get a big first-mover advantage," he said.

General Motors has been selling cars in India since 1996. It has a market share of just 3.5 percent and 273 dealerships, increasing to 300 by the end of the next fiscal year. Most of the new outlets will be in smaller towns and rural areas, said P. Balendran, vice president at GM India.

"With higher growth expected in rural areas as compared with the metros, we expect the share of rural markets in our overall sales increasing in the future," he said.

One thing that is certain in the push by global car makers beyond India's big cities is more choice for the growing number of rural buyers. Until a few years ago, many rural buyers essentially had just one choice to make - the colour of their Maruti 800, the hatchback predecessor to the Alto.

Krishnakant Shinde, a farmer in Gove, a village about 250 kilometers from Mumbai, says he was the first in his village to buy a Volkswagen AG when he upgraded last October to a Vento sedan from a Maruti Swift Dzire entry-level sedan. Volkswagen, which has market share of just 2.25 percent in India, said it doesn't plan new outlets in the country this year. But it opened a dealership in Satara, a regional hub about 15 kilometres from Shinde's home, about two years ago.

"Volkswagen the company wasn't new to me, but I didn't buy earlier as I was worried about spare parts and servicing," said Shinde, a sugar cane and dairy farmer. "Now, since they have opened a showroom and service centre in Satara, I decided to buy."

Image
Friday September 04, 2015 St. Maarten Midday Weather Forcast
Friday, 04 September 2015
DATE ISSUED:  Friday, September 04, 2015 @ 12:00 Lst (16:00 UTC) VALID UNTIL:  Saturday... Read more...
Image
Destination Publications to re-launch its website
Friday, 04 September 2015
PHILIPSBURG--Destination Publications will be re-launching its upgraded... Read more...
Image
Jamaican woman busted with three pounds of cocaine in bra
Friday, 04 September 2015
FLORIDA--A Jamaican woman was arrested at the Fort Lauderdale-Hollywood International Airport after... Read more...
Image
Hundreds with ‘residency gaps’ receive Antigua citizenship
Wednesday, 02 September 2015
ST. JOHN’S, Antigua--More than 300 nationals from around the region and internationally became... Read more...
Image
Clerk jailed for gay marriage defiance
Thursday, 03 September 2015
ASHLAND, Kentucky--A Kentucky county clerk was jailed on Thursday for refusing to issue marriage... Read more...
Image
Trump signs Republican loyalty pledge
Thursday, 03 September 2015
NEW YORK--Republican front-runner Donald Trump on Thursday bowed to pressure from the party... Read more...
Image
China to cut troop levels by 300,000
Thursday, 03 September 2015
BEIJING--President Xi Jinping announced on Thursday he would cut troop levels by 300,000 as China... Read more...
Image
Guatemala's president quits, jailed on corruption charges
Thursday, 03 September 2015
GUATEMALA CITY--Guatemala's Otto Perez resigned as president and was jailed on Thursday while a... Read more...
Image
ECB chief flags beefed up asset-buying programme
Friday, 04 September 2015
FRANKFURT--The European Central Bank cut its growth and inflation forecasts on Thursday, warning of... Read more...
Image
France offers new farm aid as 1,500 tractors hit Paris streets
Friday, 04 September 2015
PARIS--France offered its farmers additional financial help on Thursday including tax rebates and... Read more...
Image
Can’t decide
Thursday, 03 September 2015
Dear Queenie, A couple of years ago I was in a relationship with this guy and we never really... Read more...
Image
Attempts to tarnish our good name regrettable
Wednesday, 02 September 2015
Dear Editor, The management and board of Sint Eustatius National Parks Foundation (STENAPA) have... Read more...
Image
Statia Softball
Thursday, 03 September 2015
Victor Henriques was the winning pitcher as Lara Reyes  Tiburones crushed Carlos Lopes’... Read more...
Leg two of 3 For Life Run set for September 13
Thursday, 03 September 2015
SIMPSON BAY—The second leg of the 3-For-Life Running Series is set for Sunday, September... Read more...
Image
Bieber shows vulnerable side as comeback gets under way
Thursday, 03 September 2015
NEW YORK--Oh Baby! Justin Bieber's comeback is getting off to an emotional start with the Canadian... Read more...
Image
Venice film puts spotlight on Boston's paedophile priests
Thursday, 03 September 2015
VENICE--"Spotlight" starring Michael Keaton and Mark Ruffalo as reporters working on the Boston... Read more...
Image
Look hot this weekend with Aqua SXM!
Thursday, 03 September 2015
~Fashion for Sunlovers~ Aqua is a gorgeous boutique with beachy, comfy and beautiful clothes and... Read more...
Image
Breakthrough Talent-Beat Boxers!
Thursday, 03 September 2015
TelCell breakthrough competition is getting more and more exciting as the days go by. The 24... Read more...
Editorial - Reasonably bright
Friday, 04 September 2015
Media often are accused of bringing mostly bad news, simply because when things go well there is... Read more...
Editorial - All hands on deck
Wednesday, 02 September 2015
Today's news that the screening of two new prospective ministers was completed with success (see... Read more...
Image
Saturday Sept. 05, 2015
Friday, 04 September 2015
Image
Friday Sept. 04, 2015
Friday, 04 September 2015
Notices September 4
Friday, 04 September 2015
Friday, September 4 CULTURAL EVENING Organised by Home Away From Home Senior Citizens Foundation... Read more...
Notices September 2
Tuesday, 01 September 2015
Baseball Program St. Maarten Little League Association informs the general public that their... Read more...