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That includes novel financing proposals.
“In the current scenario, rural markets will grow faster than urban pockets,” said Ramesh Iyer, Managing Director of Mahindra Finance. “Migrants who have gone back will need an alternative source of income enabling pickups, 3-wheelers and LCVs to sell faster in rural markets. Finance companies are working on higher quantum of loans with longer tenures for such classes of buyers, including a new product which is being designed for a first-time buyer.”
Migrant workers returning to their villages will seek employment opportunities there. This is particularly beneficial to companies that open up dealer touch points in the hinterland.
Maruti Suzuki said its reach has been spreading in rural areas over the last 7-8 years. For Maruti Suzuki, rural sales have gone up from 6-7% in 2008 to 39% in 2019. The upside of the current rural growth is about growing income levels. Urban penetration had comparatively slowed down, Shashank Srivastava, ED, Maruti Suzuki, said in an earlier interaction with ET.
He added that the Covid impact has been lower in the rural markets and for companies with a large exposure to such markets, growth could be higher.
To be sure, experts say that incomes generated in cities typically flow into the villages, but this year that might not happen.
Mahindra saw 45% of its passenger vehicle sales come from rural India in FY20. It expects Bolero and Scorpio to continue to lead the rural strategy in the SUV portfolio.
“Our small commercial vehicles range is expected to show demand in FY21 on the back of essential goods movement. We believe the demand for small CVs will revive quicker than personal vehicles as more and more districts open up,” said Veejay Nakra, CEO, Mahindra.
Tarun Garg, director, sales & marketing at Hyundai Motors said that rural reach is a critical part of its strategy.
“This year, we plan to leverage our digital assets in rural markets by onboarding all our rural sales outlets on our Click to Buy (CTB) platform making customer buying experience seamless. Considering the strong demand of diesel cars in rural India, our strong product line up including full range BS6 diesel options will be very useful to penetrate rural markets.”
Rural penetration accounts for 19% of Hyundai’s overall business.
Two wheeler major, Hero Motocorp, which generates half its sales in rural India, said it will continue to leverage its deep network presence in these markets, where a bumper rabi crop and normal monsoons should leave farmers with sufficient cash for discretionary purchases.
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