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Hyundai strategies low- cost car in Indian rural areas

Hyundai Motor is keen to expand its market now to rural areas with setting up 300 new rural sale outlets all this expansion is in progress for the launch of the cheapest car from the Hyundai stable until November this year.

The plans to launch a new car under a price tag of Rs 3 lakh by November were announced by Hyundai officials this May. According to car experts the new Hyundai car which is codenamed as Hyundai HA, could fiercely compete in terms of sale with the present market king Maruti Suzuki’s Alto; in the small car segment.

Currently Hyundai is maintaining its standard 325 dealership outlets within cities and this new expansion strategy could make the rural outlet number network extend to 1,000.

Hyundai Motor’s, India’s second largest car manufacturer has announced to generate employment for about 2,000 sales executives at these rural outlets. According to Hyundai Motors, the car markets which are present in areas outside the superior 40 cities are marked under rural areas.

According to Shashank Shrivastava, Chief General Manager, marketing at Maruti Suzuki the company boasts around 960 dealerships in standard form and within the ‘taluka’ region the outlet number is 3,400. At these so called ‘taluka’ outlets Maruti Alto, the largest selling car in India is sold. However Maruti is also planning to expand its ‘taluka’ outlets upto 3,600 by the termination of 2011. According to inside statistics, 33 percent of total sales for Maruti Suzuki are generated by the region excluded by its 40 main cities.

Arvind Saxena, director of marketing & sales at Hyundai Motor India given in an interview to Financial Chronicle said that the company has already placed 700 new outlets at rural areas with 300 more coming in way within the next few months. These outlets are just the basic models made with small investments and these are not the typical permanent outlets made with brick and stone. Their basic plan is to give a feel to rural folks with car demonstrations, test drives in addition with basic little repair requirements.

The size dimensions for these rural showrooms would be 900 sq ft.. Around 150 of these rural outlet showrooms would house a 2,000 sq ft service workshop of their own.

A four member team is made with 2 sales and two executives for service by the Korean Autocar giant for the rural model and they will visit the rural outlets at regular intervals. The ever increasing importance of rural areas is signified from figures which show that they contribute about 31 per cent in sales for the company. According to Saxena the company plans to generate 33 per cent share, by the end of 2011 from these rural models as they help amazingly in increasing the sales. It is estimated that 356,717 cars were sold by Hyundai n 2010.

Mritunjay Kapur, country managing director for Protiviti Consulting said that the rural areas are generally taken over by the conventional Indian players like the Maruti Suzuki and Mahindra & Mahindra. Appreciating the product line up by Hyundai he said that they would definitely generate profits and increase sales in these rural areas.