Maruti Suzuki Says Witnessing Better Sales Demand In Rural Than Urban Areas
Rural areas accounted for 40% of Maruti Suzuki’s sales in June—a one percentage point increase compared to the last fiscal.
India’s largest carmaker is witnessing better sales in rural areas as demand remains restricted in cities and towns due to coronavirus lockdowns.
Buying sentiment is also better in rural areas due to good initial spell of rains in June that has led to a better sowing of the kharif crop.
"Rural demand is little better than urban right now. The rural share has gone up to 40% in June which is 1% increase over the last fiscal," Shashank Srivastava, executive director (marketing) at Maruti Suzuki India Ltd., told Press Trust of India.
He listed three main reasons for the phenomenon, which is based on the recent data.
"One is that Covid-19 has impacted sentiment little less in rural areas. In fact, clusters of Covid-19 and containment zones are largely in urban areas,” Srivastava said. "Rabi crop has been good, and initial monsoon in June has also been good so the sowing for kharif crop is much better...”
Both rural and urban sales were down as compared to last year, but rural sales were relatively better than urban areas, he said. "There is decline in rural areas also, as compared to last year, but it is less as compared to urban regions," Srivastava said.
Post-Pandemic Demand
Maruti Suzuki’s sales fell 53.7% year-on-year to 53,139 units in June. That performance however was better than May, when the company sold 13,888 units. The sales fell to 76,599 units in the April-June quarter of 2020-21 as compared with 402,594 units in the year-ago period.
When asked if the company would be able to sustain sales momentum going ahead, Srivastava said, “It is difficult to predict. A lot will depend (on) how the Covid-19 situation pans out...”
"Lot of this long-term demand will depend (on) how the Covid thing unravels, how the fundamentals of economy are, and how is the financing available, so these things will decide. There are so many uncertainties involved that it is difficult to predict," he said.
Retail sales were far better than wholesales across the industry, Srivastava said.
With demand picking up, the auto industry has started to ramp up production—albeit in phases—which is also an indication of inreasing retail demand, he said. "If you see wholesales for the entire industry, it would be roughly less than 50% than last year. Retail sales is around 80-85%. Of course, both are less as compared to last year.”