New cars for old is how Maruti Suzuki is boosting its sales

Country's largest car maker draws nearly half of its sales from exchange programmes, rural focus

Intensified focus on exchange programmes and rural customers helped Maruti Suzuki India Ltd, the country’s largest passenger car maker, make headway in sales in the June quarter even when the overall market sentiment remained dim.

Maruti Suzuki sold 124,476 units, nearly 47 per cent of its overall sales, through exchange programmes and rural sales in the quarter. “Over a third of our sales used to come from customers who buy new vehicles in exchange of older ones before the slowdown hit the industry last year. These buyers had been deferring purchase due to the negative sentiment prevalent in urban markets. We intensified focus on expanding volumes through our loyalty programmes and have been able to grow sales by over 18 per cent in the category,” said Mayank Pareek, chief operating officer (marketing and sales), Maruti Suzuki.

For the quarter ended June 30, the company sold as many as 60,467 new vehicles through Maruti Suzuki’s exchange programmes. The company’s total sales in the quarter stand at 263,264 units, up five per cent compared to the year-ago period.

“Around 1.5 million customers service their vehicles every month, 10 per cent of whom own vehicles which are more than 10 years old. We identify these consumers and offer them loyalty bonus to exchange their cars for new ones,” Pareek said.

Additionally, the company has identified over 500 niche segments in non-metro areas to push sales through its extensive distribution network.

“There are certain consumer groups in rural areas which are insulated from the negative macro-economic sentiments. We are individually reaching out to potential customers in these areas and have registered over 5,000 booking from rural traders, over 2,500 bookings from tractor owners over the last three months” Pareek added.

What has been a challenge Maruti Suzuki executives admit is to create need among first time buyers in rural areas. A senior executive at the company said: “These people have a steady set of income which remains relatively unaffected by fluctuations in urban markets, are cash-rich but do not necessarily understand the need for a personal vehicle. We have set out seven-eight mobile theatres to visually educate these consumer sets about the benefits of owning a vehicle.”

Overall, Maruti India peddled 64,009 vehicles across 7,950 villages last quarter, which is an increase of 37 per cent over the corresponding period last year.To meet service requirements of this new customer base, the company has put in place 3,000 workshops across 1,464 locations in the country. The auto maker expects the share of rural India to account for half of overall volumes by 2015.