The country’s largest car maker Maruti Suzuki is aggressively acquiring land parcels across the country to de-risk its future network expansion as it marches towards the target of selling two million cars annually by 2020.

The company has created a separate vertical for land acquisition and identified 77 land projects in FY17 for setting up its dealerships.

“Land acquisition is a subset of our integrated plan as we are moving towards 2020. Our intent has been to be available at the doorstep of the customer while selling as well as for after-sales service. We don’t want escalating land prices to affect this. The way to safeguard it is by investing in land for dealerships across India,” RS Kalsi, Executive Director, Marketing and Sales at Maruti Suzuki, told BusinessLine .

Strong network

Maruti had a network of 2,020 outlets across 1,652 cities as on March 2017. This is more than the combined numbers for rivals Hyundai, Mahindra & Mahindra, Tata Motors and Toyota. The company has expanded rapidly in the last five years, almost doubling the network number from 1,100 in FY11.

Apart from this, its True Value format for exchange of cars has 1,007 outlets. The number of its service outlets stands at over 3,200 in 1,556 cities.

Now, its target is to have a network of 4,000 outlets as that is the only way to sell 20 lakh cars annually in a country as vast as India.

“We thought of separating the land function as moving forward it would be difficult for a new or existing dealer to invest that kind of money and stay profitable. So, we have a separate unit with the exclusive responsibility to identify and procure land to speed up our expansion,” Kalsi said.

Awaiting approvals

The 77 land parcels identified last fiscal are under various stages of commercial and regulatory approval. “We are at the moment working very hard in terms of closing these 77 properties and have a very large appetite this year for buying many more parcels of land. First, we will identify where all we need to be located both for sales and service and then we will get the dealer to construct,” Maruti CFO Ajay Seth said in a post results conference call last month.

So the company will now buy and own the land, while the dealers will invest in the infrastructure and operate the showrooms. “We will give opportunities to existing as well as new dealerships. This is the only way we can achieve our target,” Kalsi added. The older model of the dealer owning the land will also be continued wherever feasible.

The company commands 47.5 per cent share in the country’s auto market. “The market is moving rapidly and we have to stay ahead of the market. That is our motto and it is also reflecting in our market share,” Kalsi added.

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