Happy Diwali! No dip in rural consumption

NEW DELHI: Is meltdown a metro mania? So it would seem if buying trends in cars, two-wheelers and consumer durables are anything to go by. Top marketers are coming around to the view that the sentiment slump in consumer durables, cars and two-wheelers is a city phenomenon. Demand in rural and semi-urban areas has managed to delink itself from the financial crisis. As a result, products that have a rural focus���like bottom-end two-wheelers, entry-level cars and utility vehicles as well as lower-end gizmos���are all doing well.

���The current sentiment downturn is mostly restricted to metro and city markets. Rural and semi-urban markets, which are typically more attuned to the agrarian economy, have not been that badly affected. That���s particularly true in automobiles. In our case, models like Bolero and pik-up are doing very well because of this trend,��� says Mahindra & Mahindra chief of operations-automotive sector Rajesh Jejurikar.

Consider the stats. Demand for cars is down to just over 5% in the first half of the current fiscal. But utility vehicles and motorcycles, which have a strong rural/semi-urban spread, are up 12.53% and 12.58%, respectively. That���s the highest growth in the entire automotive spectrum, except for three-wheeler passenger carriers, another bottom-of-the-pyramid product. Ditto for consumer durables. Marketers say that while the usual festival fervour is missing in larger metro markets, rural demand has been the big face-saver this season.

Says Videocon washing machines and air-conditioners head Ajay Bajaj: ���It���s basically the monsoon effect that���s now showing up as those dependent on farm income have money to spend. The whole negative sentiment of a slowdown is more of a metro phenomenon and has not affected rural consumers, at least till now. We see people buying appliances like ACs even in rural markets.���

He adds that while Delhi as a city is not showing any significant increase in sales, the rural markets adjoining the city is recording robust growth in demand. The urban-rural divide is also apparent in the pre-diwali sales. According to Godrej Appliances vice-president (sales & marketing) Kamal Nandi: ���While sales from the upcountry markets have picked up from the beginning of October (that is before Dusshera), the urban markets are just beginning to see sales.���

Marketers say financial crunch is less squeal-worthy in rural markets than in metro. ���The reason for the skew is that larger financiers are metro-based while PSU banks traditionally service smaller markets. The withdrawal of financing by some of these bigger banks have impacted metros more. PSU banks were never that aggressive, so there���s not much change in the rural demand-scape,��� says Tata Motors president (passenger vehicle division) Rajiv Dube.