Maruti Targets India’s Rural Population

Over the 25-year period from 1986 to 2011, the urban population of India doubled, while its rural population grew by just 45%. Despite this rapid urbanisation, the rural population numbers 840 million, which is still more than double the number of Indian urbanites. Furthermore, high interest rates and oil prices mean India’s recession-damaged urban dwellers are currently exercising restraint when it comes to buying a new car but rural inhabitants have been relatively unscathed by the economic downturn. Maruti’s initiative to reach out to India’s rural inhabitants therefore appears both timely and inspired.

Maruti is using a mobile cinema (a truck with seating and a large television screen) to reach remote locations and show a short film to prospective rural customers. Following the screening, members of the audience answer questions about the film for a chance to win Maruti-branded merchandise, thus further establishing the brand in consumers’ minds. According to an article in The Economic Times on 18 April, “Around 2% of the 100,000 cars that constitute Maruti’s monthly sales in rural India come from villages with a population of less than 200 households, something other carmakers have completely missed out on”.

Whether this particular Maruti initiative has any longevity or not, the point is that India’s rural population will continue to outnumber the urban population for decades to come, and as household incomes are rising again after a hiatus in 2009 and car ownership is negligible in many states, the potential is immense. To put this into perspective, Euromonitor International forecasts that the population of India will increase from 1.23 billion inhabitants in 2012 to 1.36 billion in 2020, and that it will overtake China in a decade. The lion’s share of growth will derive from urban areas but the rural population will remain dominant, accounting for 65% of India’s masses.

Urban and Rural Population of India and Total Population of China, 1977-2020

Source: Euromonitor International

Only 4% of Indian households currently own a passenger car, but penetration is double that in Uttar Pradesh, India’s most populous state.  In simple terms, if car ownership increases, especially in rural areas, to the point that 10% of Indian households have one in 2020, there would be 26 million cars on Indian roads.

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Source: Euromonitor International