“At Maruti Suzuki, we distributed samosa whenever we crossed the sales milestone of 600 units a day,” recalls Shashank Srivastava, Senior Executive Director- Sales & Marketing, Maruti Suzuki India Limited (MSIL), in the first episode of ETAuto Unplugged series hosted by industry expert Arun Malhotra.
He was talking about the time around 1989, when he started his professional journey with the company where he has now spent over three decades. Today, the maker of Fronx and Jimny is selling close to 5,000 units a day.
In early 1970s, the annual sales in the industry was just about 50,000 units as the car penetration in India stood at 1.6 per 1000. People had two favourites – Premier Padmini and Ambassador.
Since then, the automotive industry in India as we know today has grown tremendously in the past four decades. Today, car penetration in the country stands at 27 per 1000. Several new companies have joined the bandwagon, a lot more new models have been introduced, and consumer interests have evolved to higher levels and the urban-rural divide is narrowing.
Growth of the rural market
Maruti Suzuki, which has been the popular entry level car manufacturer and boasts of the spread of its retail network across the country, especially in the rural areas, has about 43% rural penetration today. But what exactly matters in ‘rural’ areas?
The company locates rural areas based on the population there and through pin code tracking, Srivastava said.
While it has rural outlets, Maruti Suzuki also has E (emerging) market outlets which are opened in areas where total vehicles registered are significant. Other factors taken into account include the number of two-wheelers sold, sales of white goods, occupation of the residents in the area, etc. Sales in E-outlets are counted under the umbrella of rural. Currently, the carmaker has E and R (rural) outlets across 2700 cities and towns.
Over the years, the definition of rural has also evolved for Maruti Suzuki as certain areas which were counted as rural earlier have developed and now come under urban. However, there are many areas which are not rural, but not fully urban. They are rurban, says Srivastava.
He further explained how the meaning of rural can be ambiguous as there are various standing definitions. According to the Department of Rural Development, it is defined in the context of where there are local bodies of about 2.55 lakh gram panchayats, about 6800 panchayat samitis, and about 650 zila parishads.
The Ministry of Home Affairs conducts the census, and counts anything that is not urban as rural. This implies urban areas as the population goes above 5000 in residential areas, density of 400 per square km and 75% of the male population to be engaged in non- agricultural.
The Reserve Bank of India (RBI) states that wherever the population is over 10,000 is urban.
Srivastava recounts that the rural areas have evolved drastically over the past years. “Since 2007, the growth of rural markets has been higher than urban every year till 2023, except 2013.”
This may be attributed to the per capita rural income growth rate being much faster than the urban. Alongside, economic activity has increased; agriculture dependence has decreased; there has been a strong push on connectivity and infrastructure development; organised financing; and the penetration of digital is slightly more in rural than urban.
The penetration in urban areas has been lower than that in other countries like the US, Japan, etc. In India, the highest is 160 per 1000 in Chandigarh. This is closely followed by Goa and Delhi, he added.
Marketing in rural areas
While models like Alto and S-Presso have higher penetration in the rural areas, overall the buying pattern has roughly been similar to the urban. “Earlier, we could predict that some models including Esteem or even Baleno VXi would not sell in rural areas, but that is not the case today,” Srivastava said.
Based on exposure, awareness and education, the ‘influencer’ is changing. Earlier, it used to be the elderly of the village, or the male figure in the family. Now, the next generation, irrespective of gender, seems to be more influential in making a decision of buying a car. This can also be due to the narrowing of the digital divide between the urban and the rural.
However, according to Srivastava, “trust is still the biggest differentiator in rural areas for a brand. It is not so much about the product, not even about the service, but boils down to many facets of building up trust with the customer. Small things like our local sales executive being approachable, same face at the dealership every time the customer visits, can help.”
Maruti Suzuki has made it compulsory for its sales executives and Territory Sales Manager (TSM) to report on ground. “Rural markets are not easy. If one believes that in a rural market they can get away with anything, it is not true. Once you lose the trust of the consumer on the brand, even your longevity of being there will not work,” he said.
He further stressed on having a local approach for rural areas. Recounting an instance, he shared how a showroom manager once told him of an incident where he would ask the TSMs to join the showroom for a daily learning and feedback meeting at 9am. While everyone would arrive, two of them were always absent.
Things escalated as the showroom manager had planned to terminate them for their carelessness. However, later it was learnt that in the area, the two gentlemen were making the most sales. They were absent for the 9am meeting as they were, having woken up at 5am, meeting their customers who would be off to their work by 9am.
