Maruti Suzuki is betting big on rural market, CNG vehicles

Nandana James Mumbai | Updated on March 06, 2020

Maruti Suzuki’s marketing and sales efforts will be directed towards its network expansion, particularly in rural areas, as well as pushing sales of its compressed natural gas (CNG) cars.

“We have to look at our network expansion, especially in smaller pockets — the rural pockets for example,” Shashank Srivastava, Executive Director - Marketing and Sales, Maruti Suzuki, told BusinessLine in a recent interview. “Although we are strong there, we need to go deeper. The other task is that we have to push CNG vehicle sales because CNG is something which the government wants all OEMs to promote.”

The rural market contributes around 38.5 per cent to the overall sales of the company, and Maruti wants to take this forward, said Srivastava, without citing a number. About 12 years ago, rural car sales contributed just 7-8 per cent of Maruti’s overall car sales. “This has grown up to 39 per cent (now). So, there seems to be an expansion of car sales and ownership in smaller areas,” he said.

He attributed this trend to rising rural incomes and aspirations, increased government spending in rural areas, improving road infrastructure as well as low penetration at present.

Currently, Maruti has around 3,000 outlets, of which around 900 are in rural areas.

CNG variants

Srivastava said Maruti is currently offering CNG options in eight models and, going forward, it will have at least one CNG variant for each of its small cars. The company has a sales target of 1,55,000-1,60,000 CNG cars for the next fiscal. By the end of this fiscal, its CNG sales are expected to touch 1,05,000 units.

Maruti Suzuki was the first OEM in 2009 to roll out factory-fitted CNG vehicles, and it is now betting big on its CNG models, especially following the April 1 implementation of BS-VI norms.

With diesel vehicles set to see a steep price hike in the BS-VI regime, the share of diesel vehicles in overall sales will be dropping further, said Srivastava. “What should replace diesel? It should be some fuel which is cheap to run...So CNG is a very good option in that sense,” he added.

He further said CNG cars ensure around 30 per cent less CO2 emission compared to internal combustion engines. “Since CNG is cheaper, it can fuel 20-40 per cent of cars by 2030 and reduce the the import bill of oil,” he said.

The Society of Indian Automobile Manufacturers (SIAM), in its March 2019 ‘White Paper on Alternative Fuels for Vehicles’, said an estimated 3 million CNG vehicles in the country would negate the need for roughly 2,000 million litres of gasoline fuel every year and, with the growth of CNG infrastructure, the savings can be significant.

The government’s decision to have in place 10,000 CNG gas stations in the country by 2030, from the current 1,700, will give a boost to the growth of CNG vehicles across India, said Srivastava. This will help the company to push its CNG car sales further, he said.

Improving prospects

Talking about the automobile industry facing one of its worst-ever slowdowns in decades, Srivastava said the uncertainty factor — wrought by the impending transition to BS-VI norms as well as the general elections — has subsided. The monsoon was good and rural sentiments have improved, he added. But, dampening factors such as the high acquisition cost and liquidity constraints still persist, he said.

Srivastava said Maruti Suzuki has almost fully liquidated its BS-VI stock. The company’s total sales during February fell 1.1 per cent year-on year.

Published on March 06, 2020

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