II tier and III tier cities become key markets for carmakers in India

The potential in the Indian auto market which is now the second fastest growing auto market in the world never seem to end thanks to its diversity in terms of geographical boundaries. Now the auto giants are exploring the small towns and cities in India, as the metros and I tier cities are slowly becoming an exhaustive market due to immense competition. Maruti Suzuki, Hyundai Motors, General Motors and Mahindra are looking at the II and III tier towns where the potential to grow is immense. The auto companies see array of positive factors in these auto markets as the penetration level is low and there is less dependence on the car loans.

Maruti Suzuki, the Indian auto czar registered around 20 per cent or one fifth of the company's sales from the small towns and cities of India in 2010 which was 3.5 per cent three years ago. General Motors recorded around 60 per cent of the growth from these new emerging auto markets.

Mayank Pareek, managing executive officer at Maruti Suzuki said that the emerging auto markets have become a high potential market for the auto giant. Pareek said that Maruti is already doing well in the smaller auto markets and is making attempts to gain momentum in these potential auto markets.

Arvind Saxena, sales and marketing director at Hyundai India said that the auto company is generating a database jotting territories village by village to make sure Maruti is available across India. He said that the smaller auto markets are becoming a high potential auto market among the various car companies. Hyundai Motors for 2010 accounted sales of more than 30 per cent from small towns and cities which used to be only 18 to 19 per cent five year ago.

As per the Maruti Suzuki India, around 63.5 per cent of the buyers from small towns purchase the cars in cash. However, interestingly only 10 per cent of the urban population and 2.3 per cent car owners belong to rural and smaller towns.

GM India has taken measures to cement its position in the emerging auto market. P Balendran, vice-president, GM India said that the company has tied up with State Bank of India to be a part of these small town auto markets. GM is making sure to be part of various events to increase awareness about its cars.

However, Maruti has not left behind itself as it has attached itself to various panchayat level programmes. Maruti has also appointed more than 5000 Residents Dealer Sales Executive (RDSEs) for semi urban and rural areas capturing 3500 tehsils.

Read More on : Chevrolet Camaro