The Hindu : Maruti's dealer network expansion on course

Online edition of India's National Newspaper
Saturday, Mar 22, 2003

Business

Business

Maruti's dealer network expansion on course

By Our Special Correspondent

CHENNAI MARCH 21. Even as it continues to have a big piece of the Indian car pie - 59 per cent share in the third quarter of the current financial year, Maruti Udyog (MUL) is trying to get its act right in places where competition has turned intense.

If Jagdish Khattar, Managing Director, were to be believed, MUL will strengthen its presence in `A' class cities and metros where competitors have stolen a march over it. In an informal interaction with select presspersons here today, Mr.Khattar indicated that MUL was well on course to beefing up its dealer network in major metros and large cities. It is set to add five more dealer outlets in Delhi, two in Bangalore and one in Ahmedabad. It has just added one more dealer in Chennai. MUL had, in fact, identified at least nine cities where it was performing below par and placed the onus of improving Maruti's position in these areas on Mr. Khattar and K. Saito, Director (Marketing & Sales).

Mr. Khattar justified the new focus on `A' class cities and metros, especially since MUL was doing well in places such as Kerala, Punjab, Uttar Pradesh and the North-East. In these regions, Muruti had an average market share of above 60 per cent, the MD pointed out.

He admitted that about a dozen or so dealers had been `weeded out' of the MUL network in the past few months. Nevertheless, he said the existing dealers were keen on investing more. Pooh-poohing suggestions that car dealers were wary of fresh investment in the face shrinking margins in an intensely competitive field, Mr. Khattar claimed that "MUL has become a Udyog", generating new business opportunities to dealers.

The dealers realised that "consumer focus is much bigger than just selling cars," especially in view of the new business initiatives such as finance, insurance and the like undertaken by MUL Mr. Khattar said dealers had made a substantial addition to their sales staff in the past few months, at least 50 per cent, in his reckoning.

This would not have come about if they had not taken a positive call on the business, he said. Mr. Khattar felt that this augured well for MUL's business.

He guesstimated that an investment of around Rs. 150 crores would have flowed in from dealers in the past few months, both for beefing up existing infrastructure as well for putting up new show rooms. Mr. Khattar said MUL was always keen on encouraging its existing dealers to set up more show rooms. Given this, the question of opposition to new dealers in a region did not really arise, he suggested.

Quizzed on the possibility of a price hike, the Managing Director merely said, "it is not far off". With steel prices going up every month and other input cost rising, Mr. Khattar said "the balance has to be struck".

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