Indian automakers acquiring land to build assets

Rising rentals in most Indian cities are making big auto companies tweak their real estate strategy and start investing in own properties -be it for the company headquarters, sales offices, or even dealerships. The country’s largest carmaker Maruti Suzuki has already set up a real estate subsidiary that is looking to acquire land at key strategic locations across the country for dealership expansion. It has identified 200-300 strategic locations where the company plans to acquire land and lease it out to its dealers at a reasonable prices. “Rising rental has been one of the biggest operational risk for our dealers. If we lose a dealer in an important location to a fashion house or other industry, it is a big loss to us,” said RC Bhargava, Chairman of Maruti Suzuki. Hence the decision to invest in own property. “Under the new structure, we derisk ourselves and our dealer too,” he said.