GM India follows the herd; Looks to rural India for growth fuel

14/08/2011 - 14:30 | ,   | Kaustubh Shinde

At the Beat Diesel press conference, asked the GM India management about their plans for the later half of the year. The management responded that GM India wants to become a key volumes player in India. In order to achieve that goal, a distinct plan has been established – to tap the semi urban and rural markets to maximize volumes with affordable cars.

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If I am honest this is really a no-brainer considering Maruti Suzuki has already tried this strategy and it has worked for them. The tendency to think alike comes due to two important reasons - car sales in metro regions have shown a considerable drop owing to rising interest rates and many people in the rural areas don’t opt in for car loans and hence are less affected by interest rates fluctuations.

The company currently has 250 sales outlets and is planning to inaugurate another 50 by this year end. GM India currently sells 60 percent of its cars in the urban areas. With the new strategy the company wants to sell 70 percent of its cars in the rural areas. That is a paradigm shift in sales distribution.

GM plans to get there with two low cost vans, a mini lorry and affordable passenger cars. These vehicles will be brought in from China and fitted with diesel engines.

The company has set a target of 1.4 lakh units this year as compared to 1.1 lakh units last year. Rural areas will play a key role in making sure that GM India achieves its target.

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