Saturday, August 29, 2009

Maruti Suzuki Upbeat about Future Car Sales in India

Maruti Suzuki is the top player in Indian car market. The main reason it is the leader in the country is the matter that it understands Indian consumers very well. That is why, it always focused on making inexpensive models that became very popular. Recently, TATA came in the market with Nano but could not move Maruti Suzuki from the top spot. Now, many people in India are worried about the possible negative impact of lack of rain in this rainy season. Most people in India are depended on agriculture directly or indirectly.

Shortage in rain fall means there is real fear of shortage in production of agricultural commodities. It is bad news for Indian economy. However, Maruti officials are confident that the drought will not have serious impact in Indian economy and there should not be any big problem about auto sales in the country.

REUTERS reported:

Maruti, 54.2 percent owned by Japan's Suzuki Motor Corp (7269.T), earns about 15 percent of its revenues from the rural market, a segment it plans to expand in, but a deficient monsoon this year could hit rural income and spending.

"So far, we have not seen any impact because this crop comes in November," said Mayank Pareek, executive officer of marketing and sales

"My guess is the effect will be there, but will be very marginal effect. If at all it is there, the first hint we will get in November," he said, adding Maruti was not reconsidering its plans to expand in rural areas.

I agree and disagree with this official. I think that drought may have bad impact on the Indian economy this year and farmers would suffer. However, the farmers are not the target group of Maruti. It is the wealthy people who buy cars in India and I don’t think they would suffer so much.

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