The Hindu Business Line : Carmakers on expansion drive in smaller cities

Outlook
Car financing industry see 300 new dealerships coming up in the next one year.
Honda Siel to add 40 cities by 2009; has expanded market share in smaller cities.
General Motors has witnessed an over 100 per cent growth in C and D category of cities.

Priyanka Vyas

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New Delhi, Feb. 27 Improved road connectivity and high penetration of retail finance has triggered car makers to go on an expansion drive of increased dealerships in smaller cities. The car financing industry reckons the number of dealerships to be opened in tier 2 and 3 cities to be around 300 in the next one year.

Honda Siel Cars India in the next one year would open its outlets in 39 newer cities where it has not had a presence. “We see a huge potential in these markets. We are adding 40 new cities to our map by 2009 from the present 51,” said Mr Jnaneshwar Sen, Senior General Manager, Honda Siel Cars India. Comparing fiscal 2007-08 to 2006-07, he said that the company has expanded its share from 15-22 per cent in Ludhiana, 26-33 per cent in Karnal, 44-57 per cent in Ghaziabad for its model Honda City. In the case of Civic, the market share in Agra increased from 62 to 81 per cent; in Indore from 23 to 38 per cent.

Led mainly by its small car Spark, in case of General Motors too, the maximum growth occurred in the smaller towns and cities where it witnessed an over 100 per cent growth in 2007.

“In the last calendar year we grew by 74 per cent, of which the C and D category of cities contributed 120 per cent. Our sales outlets, which increased from 89 by the end of 2006 to 107 dealers in 2007, were largely in these cities,” said Mr Ankush Arora, General Manager, Marketing, General Motors. By the end of 2008, the company plans to expand its dealership network to 190.

The Maruti Suzuki General Manager - Marketing, Mr Mayank Pareek, said the company stepped into smaller villages and cities through a focused marketing campaign targeted at panchayats, and teachers with a good disposable income. He attributed the growth to increased road connectivity thanks to the development of the Golden Quadrilateral and the availability of finance.

“On an increasing portfolio, the contribution of the C and D category of cities has increased from 10 per cent to 35 per cent in the last two-three years. We expect the ratio between the metros and non-metros to be 60-40 respectively in the coming years,” said Mr Rajan Pental, Senior Vice-President, Auto Loans, HDFC Bank.

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