Having understood the prospect of rural market, two-wheeler manufacturers have been taking the rural market more than seriously. The two-wheeler market in India is the largest contributor to the automobile industry with a size of nearly Rs.2, 00,000 million. Two-wheeler sales in recent years have shot up, and it is expected to cross 20 million marks by 2015. Its penetration stands at around 10% of rural household and 28% of urban markets. Among the two-wheelers, motorcycle enjoys more demand than scooter because of petrol efficiency, looks and resistance on bad-roads.
The rise in sales can be attributed to increase in credit and financing for two wheelers, rise in income and erratic public transport system. All that the manufacturers have to do is to increase the overall penetration. The Japanese manufacturer Honda is planning to add more than 500 sales and service outlets by the end of 2014 to its already existing 2,000-odd outlets. It is training its focus with its entry-level motorcycles and aggressively increasing its distribution network in the hinterland.
The move, apparently, is to challenge the dominance of Hero. The latter has been turning in brisk sales on the back of strong rural sales which touched 48% of its total sales.
Hero MotoCorp has 5,000 sales and service touch points. And it sources over 45 % of its revenue from sales in non-urban areas in the world’s second-largest two-wheeler market. To bolster it sales and sustain its position it organises free vehicle servicing and medical camps in over 100,000 villages around the country.
To have recently joined the rural motorcycle wagon is Mahindra. As a part of its strategy, it is trying to reach out to the lower taluk levels as much as possible through the sub dealers and service centres.
It is likely that the company can achieve its projection, given its network of Mahindra Finance and Mahindra’s tractors division in rural India. Like others, the manufacturer is planning to set up 500 touch points in the southern region in the coming years and around 2,000 touch points across the country in the same period. And a lot of its initiatives are happening in Tier 2 and 3 towns.
All these developments have come at a time when two-wheeler sales have slackened primarily in urban areas, due to high inflation, a sluggish economy, low job creation and lower wage hikes. And it makes sense to train the focus on where the prospect is much higher and rather untapped.
However, the larger part of the success will largely be dictated by the pace at which manufacturers are able to increase their distribution networks. Apart from it, brand name and good marketing, which comes with sound understanding of consumer behaviour, are other major factors. Also, identifying consumer needs and expectations is a vital step towards ensuring that customer wants are understood and thus satisfied. Subsequently, a long run relationship can be maintained.
Observing the developments, it can be concluded that the competition will only be tougher and it will require the players to be more serious and sincere.