The Hindu : Car sales zoom in Bangalore

Online edition of India's National Newspaper
Tuesday, Mar 16, 2004

Karnataka

Karnataka

Car sales zoom in Bangalore

By Harichandan A. A.

BANGALORE, MARCH 15. Bangalore accounts for only five per cent of all new cars sold in the country. But more professionals, people with small businesses and even the odd academic are buying cars with a zest that would please any dealer. The city is matching the countrywide car sales growth of 45 per cent, and the growth will be faster in the coming months, people in the industry say.

For instance, while the old faithful Maruti 800 continues to attract the price conscious people, more first-timers are buying the `B-segment' small car. Affluent second-timers are finding value in moving up to the "C-segment" mid-size car, choosing from an increasing number of options.

As if on cue, companies are tweaking existing models to make them more attractive, and dealers and banks are stretching their imagination to offer flexible loans.

Small wonder Bangalore is emerging as one of the fastest growing car markets in the country. According to Samar Vikram Bhasin, Chief Executive Office of Pratham Motors, which sells Maruti Suzuki cars, "in terms of growth rate, the city is probably No. 1 in the country or No. 2 after Pune." Ajay Singh, Sales Manager at Advaith Motors, selling Hyundai's popular Santro and Accent, says that "Bangalore is No. 1." The city also has the "highest Santro density" in the country, according to Mr. Singh.

According to Maruti Udyog's Assistant Regional Manager, Samar Khan, "the industry (including all companies)" sold 2,400 cars a month. This year, for the first nine months, the monthly average was 3,000 cars. Maruti itself has sold more cars (15,500) in the first 11 months of this financial year than in the whole of last fiscal (12,500), in Bangalore.

In the past three months, the "industry average" was closer to 4,000 cars a month in the city, he said.

A look at the more expensive bigger cars, such as General Motors' Chevrolet Optra, which really ate into the market share of Hindustan Motors' Mitsubishi Lancer, tells a slightly different tale.

Many cars that are sold here as up-market products or even entry-level luxury cars are at best higher-end mid-size cars in the United States.

So, companies are more likely to wait and watch before introducing new models, preferring the much cheaper route of tweaking existing models. Hyundai, Tata Motors, and Maruti have done this successfully with their fast selling B-segment cars, Santro, Indica, and Zen and the re-positioned Alto. Maruti even offers a "step-up EMI" for the "new" Zen, with EMIs starting low and "stepping up" each year of the loan tenure. The idea is that "we expect an executive buying the Zen to move up the career ladder, so afford the progressively higher EMIs," Mr. Bhasin says.

That, in a nutshell, is the story of Bangalore as a car market as well.

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