Tata Motors banks on rural market to speed up passenger vehicle sales

NEW DELHI: Tata Motors is banking on strong rural buying to accelerate sales, as the passenger vehicle industry witnesses softening demand in major cities. The maker of the Tiago small car organised 500-600 rural sales camps in the past six months, which it said led to incremental sales of more than 10,000 units. It now plans to organise more such sales camps.

These camps are held at places where there is a sizeable potential for offering motorised transportation, and areas where the company currently does not have an outlet. The camps operate out of a village for three days, with critical vendors like lubricant supplier (Gulf Oil), battery supplier (Exide) and tyre supplier (JK Tyre) also participating. The camps have a vehicle exchange counter, finance counter and sales platform.

Speaking on the sidelines of the launch of the new Tigor — priced Rs 5.2- Rs 7.8 lakh ex-showroom — Mayank Pareek, president of Tata Motors’ passenger vehicle division, told ET: "The rural sales are growing faster, the sentiment is very positive and it will be a big thrust area for the future. The rural camps have delivered strong numbers and we will continue to stage over 100 rural camps every month across the country to deepen our access in the country."

To be sure, for the company, rural markets already account for a third of sales.

Its sales in the hinterlands expanded 38% in the first six months of this fiscal year, much faster than in the major cities where the growth was 15-20%. For Tata Motors, any village with a population of more than 10,000 people is considered as a rural market.

While factors like rising interest rates, fuel prices and insurance cost have started showing impact on urban buying, rural demand is still being supported by fairly good monsoon rains this year and the government decision to increase the minimum support price for farm commodities.

Apart from organising hundreds of rural camps, the automaker is also focusing on opening more R outlets, or rural outlets. Tata Motors has 325 such outlets, which it wants to grow manifold.

Pareek said the company operates only out of 50,000 of the country’s 6.5 lakh villages and wants to expand the coverage to 1.5 lakh villages in three years.

Tata Motors