Auto firms see rural market driving sales
India’s top automobile manufacturers are expecting robust rural sales in the current fiscal year as a favourable monsoon and faster economic growth are likely to boost farm income.
Car market leader Maruti Suzuki India Ltd, two-wheeler maker Hero MotoCorp Ltd and tractor maker Mahindra and Mahindra Ltd (M&M) generate about 35-50% of their sales from rural areas.
Rural market demand for twowheelers has improved significantly after two straight years of near-normal monsoon. Motorcycle sales grew by over 10% in the year ended 31 March for the first time in six years on improved demand for cheaper motorcycles from rural and semi-urban markets. Sales of M&M’s Bolero sports utility vehicle, another model that generates most of its sales from rural areas, also grew at a robust pace. In the two months ended February 28, Bolero sales rose by 31% from the previous year. “We have a focused rural strategy to increase our penetration and network in rural and upcountry India. In fiscal 2019, we aim to continue to leverage this network to achieve robust business growth,” Rajan Wadhera, president of the automotive sector at M&M, said in an
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emailed response to a query.
Demand in semi-urban towns and rural areas is looking up as the impact of demonetization has abated, Vishnu Mathur, director general of lobby group Society of Indian Automobile Manufacturers (Siam) said, adding that a normal monsoon for a third year will bolster sales.
“In two-wheelers, the base is very high so even if there is a 10-12% growth, it will be great for the industry. Also, availability of finance has improved for the buyers which will also help,” Mathur added.
Sales of utility vehicles and two-wheelers are likely to continue to grow at a healthy pace in the current fiscal year, according to Siam.
Rural incomes will receive a significant boost from a normal monsoon owing to agriculture’s heavy dependence on rainfall.