EXPANDING REACH
As the company is pacing up towards its target of selling 2 million vehicles a year by the turn of the decade, building accompanying sales and service network will be key, Bhargava said. Maruti had invested Rs 11,000 crore for setting up its existing sales and service infrastructure. Replicating infrastructure of the same scale today will require about Rs 30,000 crore, Bhargava said, mainly because there has been an astronomical increase in land prices. Half of the resources required for the expansion will come from Maruti’s reserves. Almost a third of Maruti’s volume comes from rural areas.To further cover the hinterlands of the country and establish a strong network in emerging towns and cities, it intends to add 3,000 outlets and 1,800 workshops in the next three-four years to its existing network of 2,000 sales outlets and 3,200 workshops. Its real estate arm is, meanwhile, mapping out emerging markets for acquiring land to protect dealers from ballooning rentals.
Already 98-99% of the company’s channel partners are profitable and even the NEXA outlets, which exclusively sell Maruti’s premium products, have started making money, thanks to the rousing response to the Baleno hatchback. Unlike other carmakers, Maruti’s dealers do not rely on margins from the sale of vehicles, but sustain operations profitably from revenue gained through service, financing and sales of accessories.