More dispensable income through land sales, increased farm output, better roads and a stable law and order condition in states like Bihar have resulted in rise in sales of Utility Vehicle (UVs). As per auto dealers and executives, sales of such vehicles have gone up in villages and small towns in the first 10 months of the ongoing financial year. According to Society of Indian Automobile Manufacturers (SIAM), sales of UVs in the domestic market have increased by 13% over last year to 2,91,333 vehicles, while passenger car sales have reduced by 1.19%.
According to Toyota India, rural and semi-urban areas account for 40 per cent of the sales of Innova Multi Purpose Vehicle (MPV), a steep rise from the 25% share of last year. Sandeep Singh, Deputy Managing Director of Marketing, said that the company received a large number of enquiries from dealers for the MPV when it opened dealerships for Etios and Etios Liva. Now, the Japanese manufacturer has flagged off a pilot programme wherein Toyota dealers will establish 'dummy showrooms' in small towns and rural areas where it has no outlet. According to a dealer in Hisar, Haryana, the manufacturer has to reach potential consumers if they are unable to reach the company.
Mahindra & Mahindra (M&M), the leading UV maker of India, has enjoyed a rise in sales in these areas, which in turn has boosted its consolidated sales. Arun Malhotra, Senior Vice President, Sales and Customer Care, said that the demand of models like Scorpio has gone up in areas like Lakhimpur Kheri in Uttar Pradesh and Muzaffarpur in Bihar. He said that high penetration rate of service centres in such areas has attributed to the rise in demand.
On the condition of anonymity, an East India-based car dealer said, “There has been a change of governments in Bihar, Jharkhand and West Bengal. The new governments have brought in change in terms of social security, unlike the past, when people were scared of buying a car. Now they are willing to spend freely. Apparently, in Bihar, there are numerous examples where customers have made 100% cash purchase, rather than relying on loans. People of these states always had money and now with the local economy on track their aspirational levels have gone up.”
He also said that there is tremendous demand for Mahindra's new XUV 500, even though dealers tell people that the company will start delivering in Bihar only after it restarts bookings. Talking about the demand of XUV 500 in these states, the President of Automotive and Farm Equipment Sector, M&M, Pawan Goenka, said, “We did not anticipate this kind of demand for XUV from states like Bihar and Jharkhand. We are not happy with this fact. We are trying to meet demand by increasing capacity at our plant.”
As per the dealer, increasing number companies are establishing dealerships in the far corners of Bihar due to better security. Therefore, manufacturers like Toyota, Honda and Chevrolet have reached areas that earlier had dealerships of Maruti, Tata Motors Ltd and Hyundai only.
According to Pradeep Lokhande, Rural Relations (a consumer relations organisation working in rural areas), government-sponsored initiatives to improve road conditions in rural areas has given rise to a number of small contractors. These small contractors account for a large number of consumers of UVs as per Lokhande. Mahantesh Sabarad, Senior Vice President (Equity) at Fortune Equity Brokers (India) Ltd., said that programmes like these usually result in a magnanimous multiplier effect.
