‘Sentiment has clearly improved now’

From Mayank Pareek’s point of view, June was a particularly satisfying month. As Chief Operating Officer (Marketing & Sales) of Maruti Suzuki, it was clear to him that the 31 per cent growth in domestic sales marked a positive change in customer sentiment.

India’s largest carmaker sold nearly 1.01 lakh units last month and a little over 2.7 lakh for the April-June quarter, a 10 per cent jump from 2013-14. To Pareek, this was welcome news after months of waiting for a revival to happen in the auto space. The previous UPA regime had announced huge excise duty cuts in its Interim Budget of February but customers refused to bite the bait.

“Buyers were putting off purchases but sentiment has clearly improved now. There was latent demand which has since translated into actual demand,” Pareek told Business Line. The change is largely due to a sense of greater faith in a new Government which is expected to bring back the growth momentum.

June was equally memorable for Pareek as Maruti reported its highest ever sales of the WagonR at 17,000 units. But the Alto was the icing on the cake with 30,000 units sold, still 5,000 units short of its all-time high.

Considering that Maruti achieved these numbers despite a week long shutdown of its plants in June (as part of the maintenance schedule twice a year), it is quite likely that this month could see Alto sales set a new record. Another piece of welcome news was the upsurge in demand from urban markets by 12.5 per cent in June.

The recently launched Celerio, with its automated manual transmission option, has done the trick in drawing customers by the droves to dealerships. According to Pareek, there is a five month waiting list for this compact car whose monthly sales are in the region of 5,000 units. While women are queuing up for the Celerio, the company is as pleased that nearly 43 per cent of customers are buying it as their second car. The exchange offer scheme has also worked wonders and contributed to volumes of nearly 35,000 units in June. And, finally, retail sales at 107,486 units exceeded wholesale numbers and Maruti is now sitting pretty with a market share of 45.8 per cent.

What is particularly interesting is that sales across its vast product kitty have been quite brisk. The Dzire compact sedan accounted for nearly 16,000 units in June with the Omni and Eeco clocking 9,800 units. The Ertiga MPV is on course with over 4,000 units while the replacement to the SX4 is expected to do the trick in the sedan space.

An upbeat Pareek believes that with India’s young population and a car penetration level of just 18 per thousand, the sky is the limit. This is irrespective of the fact that the rains have been delayed and there are fears of a fall in rural incomes which could affect demand for cars.

As Pareek puts it, it is not as if a dry spell ends up being catastrophic for the country’s entire population. This is where he and his team will continue to focus on niche marketing where specific customers are targeted for cars. They could be in a variety of professions but still form a potentially strong buyer base that can be tapped into.

Today, the company has identified over 350 niches which constitute diverse vocations - from coffee farmers to priests. Individually, they could be small numbers but add up to a sizable group as was evident in last fiscal’s sales where niche marketing contributed over 60,000 units. This exercise will continue through 2014-15 and become an important marketing tool for Maruti’s growth script.

Petrol cars are also back in favour after the frenzied dieselisation trend two years ago. Today, the company’s share of petrol is up to nearly 70 per cent with diesel having seen a rapid slide over the last 18 months. As the price gap between the two fuels is bridged even further, it is likely that the end of this fiscal will see Maruti’s share of petrol cars at 75 per cent.

Pareek and his team are going to have their hands full over the next three years as Suzuki prepares to launch a slew of models. The company had made its intent known during the Tokyo Motor Show last year when it indicated plans to launch 14 models in India before 2017.

The strategy will see Suzuki launch at least one new model every year which will include sedans and SUVs. India will also play an important role for its new auto markets in West Asia, Africa and Latin America. In the case of Latin America, Suzuki plans to launch global models from India, Indonesia, Thailand and Hungary. On the other hand, the West Asia and Africa markets will be solely serviced by the new India headquarters.