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Car industry banks on polls, says Bhargava

New Delhi, December 24, 2013, DHNS:
Urban demand has slowed and we have been giving emphasis on rural sales.  R C Bhargava Chairman   Maruti Suzuki India

Amid depressed urban car sales and a sluggish economy, India’s largest passenger vehicle firm Maruti Suzuki hopes to revive its fortunes through a spurt in rural sales and sees the 2014 general elections as the next trigger for the industry to generate esteem.

“Urban demand has slowed and we have been giving emphasis on rural sales. We plan to capture one lakh villages in India by the end of this fiscal,” Maruti Suzuki India (MSI) Chairman R C Bhargava said in an interaction with reporters.

To spur its small town demand and credit needs of rural poor, Maruti has tied up with as many as 38 banks including country’s largest lender State Bank of India, Canara Bank and a host of cooperatives and regional rural banks.

Bhargava said lack of demand in urban area due to high interest rates, high fuel costs and lack of job creation, especially in the IT industry has hurt car sales in urban areas where the industry as whole has seen a decline in sales by about 5 per cent in eight months (April-November) of this fiscal. Inflation is another big reason which has eroded people’s capacity to buy asset.

“Job creation, especially in IT industry today is half of what it used to be earlier, added to that the cost of maintaining a car has also risen very sharply whereas the under-penetrated rural areas have a lot of opportunities,” Bhargava, whose company devised a strategy to tap the rural market some five years ago, said.

Maruti’s rural sales -- which account for about 30 per cent of its total sales -- have grown by 18 per cent in the April-November period this fiscal. Rural sales were just 3 per cent of Maruti’s total sales about five years ago.

But, to revive its urban market and its future expansion plans, Maruti Suzuki is depending on the outcome of 2014 general elections.

"We don't expect anything to happen between now and the elections. We hope the elections will bring something positive for the industry," he said, adding the company will wait and watch for the outcome of the general elections next year and what steps the new government takes in order to boost economic growth and manufacturing.

MSI is, however, expecting December to break its monthly record in terms of retail sales with about 1.2 lakh units.

“In terms of retail sales, for the fiscal till November we are one per cent up from that of last year. We are hopeful that we will be able to match last fiscal's numbers," he said.


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