Monday, February 13, 2012
By Manoj Kumawat
Maruti increases dealer commission to boost its petrol car sales in India
In an attempt to boost sales of its petrol cars in India, Maruti India has reportedly increased the dealer margin on petrol cars by 8-10 percent. The move was taken primarily due to the recent decrease in sales of Maruti cars in India and the consequent dip in share to over 40 percent in the domestic market. Maruti has increased the dealer’s share on significantly on Maruti A-Star, Maruti Ritz, premium sedan Maruti SX4 besides Maruti Wagon R and best selling Maruti Alto. With the increase in dealer margin, the company expects to put its sales back on track and the customers can expect surge in freebies.
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As per the reports, Maruti will be paying Rs 1000 more to the dealers on the sale of Maruti Wagon R and Estilo and the most popular hatchback Maruti Alto. Similarly, it will be paying Rs 1500 more on the sale of Maruti Ritz and Maruti SX4 while the highest increase is in the case of sales of world-class hatchback Maruti A-Star. Notably, the present hike in the dealer margin is the first ever in the last ten years and the industry expects it as a great impetus for the dealers to further push Maruti car sales in India.
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Experts believe that the rise in dealer margin is also the direct result of the dwindling sales of Maruti’s petrol cars. Since the car maker primarily builds a lot of petrol drive cars, it has over the last six months witnessed a steep slide in the sale of its petrol cars. En route, however Maruti has witnessed a steep rise in the demand for diesel cars in India. Furthermore, the increased margin still is less than the margin percentage given by Hyundai and Volkswagen which is currently 7 percent.
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Notably, following strike at Maruti plant in Manesar coupled with meek industry response as well as rise in competition, Maruti’s profits were reduced by 39 percent to the tune of 995 crore affecting Suzuki’s overseas production as well.