Rural markets accounted for 43.6% of the automaker’s total sales in 2021-22 compared to 40.9% a year earlier. The company sold more than half a million units in non-urban areas, fueled by demand for the Alto, Swift and WagonR hatchbacks.
Shashank Srivastava, senior executive director (marketing and sales) at Maruti Suzuki, said rural markets have outperformed the company every year except 2013, and since the company began tracking rural sales separately in 2007.
“The reason is that with the increase in rural income, motorization is spreading to rural areas. If you look at the last 3-4 years, the monsoon has been good. Last year we saw a record harvest of kharif; the rabi planting has also been very good,” Srivastava said. “The reservoirs are well above average capacity. So I think things are fine.”
Of the 1,331,558 Maruti Suzuki vehicles sold nationwide, 591,800 were in rural markets where Alto, Swift, WagonR, DZire and Eeco were the best-selling models.
The increase in car sales in rural areas comes at a time when the demand for motorcycles in the local market has decreased due to an increase in the cost of acquisition after the transition to the BSVI emission standard and the economic impact of the pandemic.
“The target customer for two-wheeler and car buyers is different. The two-wheeler buyer is also comparatively more sensitive to running costs,” said Srivastava.
Overall, while demand for passenger vehicles remains strong in the local market, the auto industry faces challenges due to global shortages of semiconductors, high commodity prices and, more recently, supply chain disruption. supply due to Russian invasion of Ukraine and Covid-19 Brakes in China.
Maruti Suzuki has particularly faced disruptions in production operations due to chip shortages. The company’s share of local sales fell to 43.4% in the latest fiscal year from 47.7% in 2020-21.
Srivastava said that while the supply of semiconductors has improved, there will also be some production disruptions in the current quarter. The company has an order book of 345,000 units, the highest in its history, due to high demand and supply problems.
Srivastava said the company will continue to strengthen its portfolio, both in hatchbacks and utility vehicles, to regain 50% share of the local market. The company plans to launch multiple SUVs in India as it focuses on new technologies like hybrid powertrains to improve fuel efficiency and take on rivals in the space.
“It’s a rallying cry in our organization…what we call constructive paranoia…meaning you can’t rest easy…Market dynamics don’t take long to change, so we’re always on the lookout to improve the efficiency. , products, etc.,” she said.
Srivastava said that hybrid technology, which features internal combustion engine and battery, could be a good bridge for the transition to pure battery electric vehicles (EVs) in the Indian market that currently lacks adequate charging infrastructure.
Srivastava said that while there is consensus in the industry that electric vehicles will become mainstream, there is no consensus on when that will happen.
“Analysts say that by 2030, 10-12% of sales will be electric vehicles… You can’t wait for it to become 100% to take care of the environment. So what happens? Of course, one solution is to make the engines more efficient and the other thing is to have hybrids, which are cheaper to buy than EVs. That could very well be the path to electricity,” he said.
Furthermore, focusing on hybrid technology could also help reduce the cost of local production of various EV components.
“If you want to reduce the cost of electric vehicles in India, you have to have localization. There is some similarity in the components used in strong hybrids and electric vehicles,” said Srivastava. “So if you have a larger volume, localization can improve.”
Maruti Suzuki is expected to launch its first electric car by 2025.