CEAT Ltd. plans to expand its tire sales network in locations with a population of 5,000-10,000 through its FMCG-style distribution, aiming to double the outlets to 1 lakh in two to three years, said the company’s COO. Arnab Banerjee said on Friday.
The company, which has successfully partnered with kirana store operators, small automobile spare parts vendors and puncture repair shops, feels that it has a more or less ‘saturated’ penetration in the country’s population of 25,000 and needs to reduce further. It has populated areas for two wheeler tyres.
What started around 2011-2012 as a move to get closer to rural two-wheeler customers, who otherwise would have had to travel more than 25 kms to buy replacement tyres, has now yielded decent returns for Ceat, which It contributes about 70 percent of its total sales. The replacement clause, Mr. Banerjee said.
“We have a total of 50,000 outlets, which we plan to double to 1,00,000 in the coming years. For this a major operation is underway to further improve penetration. We think we have expanded to 25,000 locations. But have reached saturation. Population but there are gaps below 25,000,” he said.
At the moment, he said the company is conducting a housing-based survey “as not all locations with populations of 5,000 or 10,000 have outlets” and that Ceat aims to reach out to customers as much as possible, whether through kirana stores, auto spare parts. be from Shops or even some concept shops.
“Wherever there are customers, (intention) how can we set up a network that can supply tires to these customers. If there is no one other than the grocer then it will be the grocery. If spare parts are companions, then the trend is spare parts. It will be more for the customers to go to the shop. So, we are not fixed on kirana or auto spare parts shops,” Banerjee said.
When asked about the extension timeline, he said, “Within two to three years, maximum in three years’ time, we want to reach 1,00,000 direct outlets with whom we have a relationship and have visibility and there we have Buying and selling tyres. These incremental 50,000 will be mostly “unconventional” outlets, but the company may also find a few dealers in some places, Banerjee said, adding these channels will add value to larger geographies, smaller ‘mandis’ between smaller cities, towns and villages. Will happen. ,
On the success of the FMCG style of tire distribution, Mr. Banerjee said, “If the total sales in the replacement segment is 100, then 70% is unique business. This is significant.”
At present, the company’s monthly tire sales in the replacement segment are less than 10 lakh units per month as the market has not yet fully reached pre-COVID levels, he said.
“The market should expand. If rural demand comes, we should be good for more than 10 lakhs regularly in the replacement segment,” Banerjee said.
For the first quarter ended June 30, the company’s consolidated revenue from operations increased to ₹2,818.4 crore, from ₹1,906.4 crore in the year-ago period.