The Emergence Of Rural Market For Auto Sector

The rural World stands out to be the huge opportunity for growing automobile sector. India is the World’s second-fastest growing car market after China, passenger vehicle ownership here is among the lowest in the world, at 12 vehicles for every 1,000 people. While nearly a third of people living in metros own personal transport, the penetration in rural areas is half, at 15 per cent. This has led industry observers to believe a major proportion of growth would come from these areas. Another important factor is that while urban demand is dependent on growth of the economy, as a whole, the rural population being largely agrarian, the demand is largely dependent on factors which affect agricultural growth such as monsoon.

The current sales pattern of cars in Indian rural market shows a sharp increase in the number of sales for four wheeler this year when compared to previous year’s steady growth. This pattern of consistent growth results are only shown by few automobile four wheeler giants like Maruti and Hyundai. Despite such growth, Indian rural markets for automobile sector lag behind drastically when compared to the urban world. Statistical data shows that only 3 or 4 of every 1000 in rural areas of India own a car against 12 of every 1000 in urban areas. But urban market shows stabilizing figures and had reached at a certain saturated level which gives automotive sector a huge boost to develop and establish their rural marketing strategies easily. In April 2015, passenger car sales in the country jumped 18.14% compared to the corresponding period last year – the sixth straight month of growth , and the highest in 30 months –thereby prompting talk of a turnaround in the world’s sixth largest automobile industry .The strong sales in rural world shows improved economy and high purchasing power.

On the other hand, the current scenario of two wheeler market shows up a steep decremented growth rate by 5.22 percent. The rural world has been an important grab and consumer for two wheeler giants like Bajaj, Hero Motocorp etc . It is believed that the emerging rural market has a potential to contribute 35-45% sales in industry. But the falling sales in number of two wheelers show the rural distress for the current year. The rural market has been hit by various factors like unseasonal rain, delayed monsoon, poor crop realization etc affects the agrarian output and are main sources responsible for weak rural demand.

But still the emerging rural market for automobile sector has a great demand factor left in it when compared to saturated urban market. It can be a great opportunity for those companies whose products combat with the modest budget .But this has not turned out to be into reality. The current figures show that the rural market has been declining with no signs of recovery .The rural demand has been sluggish in nature due to various factors that lead to low agrarian output which in turn affect demand factor. But the main advantage of rural market is that it is wide spread and has got lot of scope for investors. The automotive giants aim at getting higher profits with the moto of creating balance between investment and demand.

The current scenario shows that many companies in the forum have started to build the bridge to establish their brand in rural market with the aim of expanding the production and brand base across the country. Companies like Tata, Maruti, Hyundai, Bajaj, Hero MotoCorp etc have started to reach out to the rural market via different strategies.

For the country’s two top car makers, the rural markets hold the key to continued growth momentum. Maruti and Hyundai have seen a considerable increase in rural growth rate despite low urban growth rate. Rural sales of Maruti grew by 16 per cent during the year and accounted for 32 per cent of its sales, up from less than 30 per cent a year ago. Hyundai and Maruti have started a drive by increasing the number of rural showroom outlets and service centers expansion. Hyundai has seen the emergence of many rural sales outlets over the last few years .The current scenario stands out to be very interesting with hope of outstanding growth for the auto giants and it would be very compelling to see where each firm will stand in this competitive era after applying a specific strategy for rural establishment of their brand in the sector.