Financial Daily from THE HINDU group of publications
Friday, Apr 09, 2004
Financial Daily from THE HINDU group of publications Friday, Apr 09, 2004 |
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Marketing
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Strategy Maruti used-car outlets in Tiruchi, Coimbatore R.Y. Narayanan
Coimbatore , April 8 ABT Ltd, dealers for Maruti vehicles, has opened `True Value' outlets in Tiruchi and Coimbatore to facilitate sale/purchase of used cars. The company expects the volume of used car sales through its arms would account for at least 10 per cent of the new Maruti vehicles that it sells every month, according to Mr N. Shanmugasundaram, Chief Executive, ABT Ltd, Coimbatore. He told Business Line that the company had opened a year back `Maruti True Value' outlets in Chennai and Madurai. The vehicles coming for exchange at the True Value outlets were refurbished and sold with a warranty. Explaining the reasons behind dealers themselves opening outlets for sale of used cars, he said in India, the used car business had remained largely unorganised with brokers calling the shots. But with the entry of car manufacturers into this segment, the business has become transparent and more organised. It has also become a win-win situation for both the buyer and the seller since both are assured of a fair valuation of the vehicles being offered for sale and the buyers have a reliable intermediary whose assessment of the vehicle's worth they could trust since it was done by personnel from Maruti itself. Mr Shanmugasundaram said the customer profile in Coimbatore was different because of greater awareness of automobile in the city. This resulted in better vehicle maintenance that ensured a better price for second hand vehicles. At present, the new car sales by ABT Maruti were around 600 vehicles a month. Each Maruti True Value showroom costs around Rs 25 lakh to establish. He attributed several reasons for the boom in the used car business currently underway in the country. The entry of the car manufacturers has lent greater credibility and transparency to the business. With rising disposable income, car owners were able to go for a faster upgradation of their vehicles than in the past and the car manufacturers were also helping this process by launching newer and trendier models that are also technologically superior and more contemporary in styling. Asked about the legal problems vehicle sellers faced in some instances subsequent to selling, when vehicles sold were involved in accidents, due to the name transfer not being effected by the buyers, Mr Shanmugasundaram said the company closely followed whether the name change was made by the buyer once the transaction was completed. Mr Shanmugasundaram anticipated the used car market in India to undergo a major transformation and as in developed countries this would become a huge market for the organised players. To his company, this provided an opportunity to retain its existing customers. Maruti itself was encouraging its distributors to enter used car business, since it offered a huge business potential he said.
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