Maruti plans to double dealer outlets by 2017

Maruti Suzuki is looking at an aggressive ramp-up of its dealership presence in the country to meet its target of selling over 2 million cars by 2017. The company plans to double dealer outlets in the next three years from 1,331 at present.

“From the dealership perspective, we focus on how close can we go to our customers. We are looking to double the dealership presence by 2017 to increase our reach,” said Mayank Pareek, chief operating officer (marketing & sales).

For Maruti, the share of first-time buyers of new cars has dropped sharply to 37% from around 50% two years back. With competition coming in from Nissan in the entry-level segment and other players in different segments, the company needs to maintain its headstart in terms of reach.

At present, the company has two dealership formats — main outlets and the emerging market outlets. It would add two more formats to penetrate rural areas which contributes about 32% in volumes to sales, up from about 5% in FY07.

“We are starting the third concept this year called the Rural Outlets. These will be very small without the frills, and use digital interface to display the cars to the customers. The fourth will be very local and called Resident Leader Sales Executives, wherein a local who speaks the local language will be appointed through the dealers,” said Pareek.

Maruti Suzuki sold 10,53,689 units in FY14, a growth of 0.25% compared with the year-ago period. The PV industry declined 6% to 2,503,685 vehicles in FY14.

While the company did not disclose the territories it has on its radar for expansion, it said the focus would be on rural areas and zones where it has a weak presence, including the North East.

“Slowdown was an opportunity and we focused big time in rural areas. In India we have about 651,000 villages and we sold in 94,000 villages in FY14, up from 44,000 villages in FY13. Rural story has just begun, we can double or triple it,” said Pareek.

“The prediction is optimistic though a lot of it depends on the pace of recovery as in PV sentiments drives the volumes. Though Maruti’s ability to capture the growth when the market climbs back is unmatched as it is spread out wide and large compared to peers,” said Dharmesh Shah, auto analyst at SBICap Securities.

Maruti Suzuki India Limited