Rural mural

Mohini Bhatnagar
04 April 2003

But in the past one year or so, car manufacturers like Maruti Udyog (MUL) and Hyundai Motor India (HMI) have been trying to make inroads into villages and small towns in an attempt to grow sales and maintain leadership status in the domestic auto market.

The Indian rural market, heavily dependent on the monsoon as it is, is undependable. But with the exception of the previous year, when the rains failed in many regions, an unbroken record of successful monsoon years before have resulted in substantially improved farming incomes in many parts of the country.

According to a 2001 study conducted by the National Council for Applied Economic Research (NCAER), there are as many 'middle-income and above' households in the rural areas as there are in the urban areas and about twice as many 'lower middle-income' households.

At the highest income level there are 2.3 million urban households as against 1.6 million households in rural India. The study also says the number of middle- and high-income households in rural India is expected to grow from 80 million in 2001 to 111 million by 2007.

Enthused by studies of this kind, a number of fast-moving consumer goods (FMCG) companies have been pushing consumer goods like refrigerators, washing machines and colour televisions in rural areas quite successfully. But car purchase entails significantly higher investment than consumer durables and though MUL has been pushing ahead with its rural foray the going has not been as good as hoped.

The Maruti game plan
MUL managing director Jagdish Khattar admits that his company is having trouble making progress in rural areas where despite poverty there are many buyers. MUL was the first predominantly passenger carmaker to explore the rural market for its entry level M-800. The company is making an all-out effort to expand its consumer base in rural and semi-rural areas as its urban marketshare is sliding.