Leading automobile players are witnessing a slump in rural demand despite overwhelming sales figures throughout the festive season.

One of India’s biggest car makers, Mahindra & Mahindra has seen fabulous sales figures this festive season but overall figures have gone down by 20% for this fiscal and this trend looks set to continue. In spite of a peak in festive demand for automobiles, rural markets continue to put manufacturers in a fix. A slowdown in rural demand has been eating into several vital categories of auto companies and contributing towards lowering sales figures. Tractors, two wheelers and MPVs are already bearing the brunt of this slump in rural markets due to a tepid monsoon and lowered annual income levels.

Several farmers and potential customers are awaiting the final land acquisition bill prior to unbundling their own land holdings which is a major income source. Owing to a couple of bad monsoons, demand has gone down. Sales of motorcycles have also gone down by almost 3% in recent times and this has impacted big companies like Hero Motors too. Mahindra has seen a slump in rural sales of commercial vehicles as well. The pressure should be there till February according to market experts. However, a good winter crop may improve things to a certain extent. Near-flat sales figures are being observed for most utility vehicles in rural areas and this has also left Maruti high and dry. Hyundai and Maruti Suzuki garner 20 and 30% of sales respectively from rural markets. These are being affected immensely in spite of high festive demand in urban areas.

Several car makers are banking on increased government spending and pro-active legislation to improve rural demand in the long term. Many of them are offering special finance and promotional schemes to attract buyers.