Maruti Suzuki Hikes Dealers’ Margin on Petrol Cars by 10%

  • 12/02/2012

  • Economic Times (New Delhi)

India’s biggest carmaker Maruti Suzuki has increased margins for its dealers to drive sales of petrol cars. The 8-10% rise in commission comes at a time when the company’s share in the domestic market has dipped below 40% for the first time. While Maruti will pay . 1,000 more to its dealers to sell small cars, such as the WagonR, Estilo and Alto, it increases amounts to . 1,500 in the case of Ritz and SX4, and . 2,000 in the case of the AStar. The revision follows the increase in retail prices across the company’s fleet last month. This is the first time in almost a decade that Maruti has increased the commission paid to its dealers. Sales of petrol cars have been on a slide mainly because the government has singled out the fuel for repeated revisions. Carmakers, including Maruti have, however, been struggling to meet the growing demand for diesel models. The revision in commission brings Maruti closer to rivals such as Hyundai Motor and Volkswagen, which offer up to 7% by way of commission. Maruti’s dealers manage to earn just up to 4%, after discounts and freebies, even as the company’s volumes remain much higher than the competition. “Dealer margin is as per the agreement between the manufacturer and the dealer. In line with the business needs and market conditions, it is revised from time to time,” a spokesperson of the company told ET, without sharing numbers. A Maruti dealer, however, said on condition of anonymity that on average any dealer selling 100 petrol cars a month would now earn about . 80,000 more as commission. Maruti Suzuki, which saw a 39% plunge in its profits to . 995 crore in the first nine months of the current fiscal compared with the corresponding period of the previous fiscal, also pulled down parent Suzuki’s overseas production for the first time in 11 years. The company has been under pressure to revise commission as it is the only carmaker in the country that does not allow its franchisees to trade in other brands. A Small Push • Maruti’s share in domestic market has dipped below 40% for first time • Co will pay . 1,000 more to its dealers of WagonR, Estilo and Alto • Dealers of Ritz and SX4 will get increased amounts of . 1,500