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Harley drives into the hinterland
The year: 2002. Fiat was displaying the chassis of Schumi's blood-red Ferrari Formula 1 race car as part of its exhibits for the Delhi Auto Expo. Among those thronging the pavilion for a dekko were two gents from the larger NCR hinterland who liked what they saw so much that they wanted to buy the 'gaddi'. Fiat officials tried to explain that the car was not meant for street driving, that it had no engine and was only a display prop and that you need a 'homologation certificate' if you want to drive anything on Indian roads. None of that logic hit home. The two gentlemen simply went out and came back with a bulky tote in which they said they were carrying some petty cash. "Name your price, " they insisted. "We'll pay you right here, right now. "
Back then, such keen consumption interest from 'non-metro' customers left car marketers bemused at best and flustered at worst. India's auto story was just about taking off and all eyes were on the bigger metro markets - Delhi/NCR, Mumbai, Chennai and Bangalore. But even then Ludhiana was already more than a hinterland - it was one of the biggest car marts after Delhi and Mumbai. In the decade since then, the importance of the Tier II and Tier III towns has grown exponentially as car marketers, even luxury marques, look for volumes beyond the metro markets. For instance, in 2011, BMW expanded its dealer and service network to include cities like Goa, Ludhiana, Coimbatore, Raipur and Surat.
Now, cruiser and sports bikes too are looking for a presence in smaller cities. Top-end motorcycle brands like Honda, Suzuki and Harley Davidson are looking for a footprint in cities like Guwahati, Bhubaneshwar, Dehradun, Lucknow, Bellary and Indore. With consumption in non-metro cities picking up speed, bike marketers have realised they need to vroom beyond the Delhi-Mumbai corridor. While Honda is focussing on Bhubaneswar, Kolkata and the Northeast for its Rs 10 lakh-plus range, Suzuki is betting on Chandigarh, Bhopal and Dehradun. As for Harley, it has already kicked off the process by setting up dealerships or service outlets in Kochi and Jaipur.
Luxury experts say this search for nonmetro volumes is part of a larger curve of maturing consumption. As India's appetite for luxury goods, including automobiles, acquires critical mass, demand will trickle down to Tier II or III cities the way it has happened in China. In order to expand their market, makers of luxury cars and bikes need to sell more. Harley, for example, has decided to locally assemble more models from its range - bringing the price down from Rs 13-14 lakh to just under Rs 10 lakh - because of the "over 1, 000 units" it has totted up since setting up shop in 2010, says Anoop Prakash, MD of Harley Davidson India. "This will allow us to reach out to a wider range of customers both in metros and Tier II and Tier III cities, " he adds.
To feed that growing appetite for luxury, car and bike marketers are doing some out-of-the-box thinking. The luxe car brigade is introducing models in the Rs 20-lakh range and introducing 'personal leasing', which will make it more affordable to own a luxury car.
The bike brigade, for its part, is simply expanding networks and trying to build communities across geographies. "The demographic is actually the same - young people, self-employed or professionals who are passionate about biking as a hobby - whether in Delhi or in Bhubaneswar, " says Harley's Prakash. "It's inevitable that more and more demand will come from these non-metro cities. What we're seeing is the development of a cruising culture, " adds Prakash.
What has helped is the greater access to information. "More and more people in these cities are aware that such vehicles are now available in India, " says Atul Gupta, VP-sales and marketing, Suzuki Motorcycle India. In a sense the luxe brigade is simply taking the cue from mass market marques like Maruti or Hyundai which focussed on non-metro demand to ride out the 2008 downturn. Given the mood in the metro markets right now, checking out the hinterland seems to make perfect business sense. If the two gents mentioned in the beginning of this article had walked into the just-concluded Auto Expo, making the same demand, the pavilion executives would have probably jotted down their particulars for future reference. In car and bike marketing, you can never say never.
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