Two-wheeler sales veer into slow lane

Spoiled rural sentiments and feeble urban demand prompted by weak and scattered monsoons, high interest rates and fuel prices has triggered off delays in purchases of two-wheelers and that has begun to show in the booking numbers at the dealers.

According to SIAM’s domestic monthly sales figures, the two-wheeler segment logged a growth of 9.75 percent during the April-July 2012 period. Hero MotoCorp’s11-month-long dream-run of selling over 500,000 units per month has seen a abrupt dip during July 2012 while Bajaj Auto, TVS Motor, India Yamaha Motor and Mahindra 2-Wheelers posted negative year-on-year growth for the same period. However, Honda, Suzuki Motorcycle and Royal Enfield continued to register an upward increase in sales.

The first signs of trouble are already manifest: rising inventories at the dealer level. This will make manufacturers keep their production levels flexible and look up to the upcoming festive season of Diwali to record good sales numbers.

The industry leader, Hero MotoCorp, sold 473,033 units in July 2012, a sizeable drop of 48,777 units from its June 2012 sales. The company posted total sales of 20,68,658 units for the April-July 2012 period, registering a slowed down year-on-year (YoY) growth of 5.47 percent.

“We are aiming for our original despatch plan for August. The overall macro-economic situation and patchy monsoons have affected the industry in general, and retail sales in both the urban and the rural markets have been adversely affected. Consequently, growth in the two-wheeler industry has come down,” says a company spokesman. “However, we will have to wait and watch as things may improve as the festive season approaches. We continue to launch new models, air new campaigns and expand our network but with cautious optimism,” the spokesman added. Hero MotoCorp plans to woo customers into its showrooms with its forthcoming commuter bike, the Passion X Pro which will be powered by a Honda-derived 110cc engine.

Honda Motorcycle & Scooter India, on the other hand, continues to defy the trend with its slow and steady growth. Its domestic sales stood at 227,591 units during July 2012, up by 11,383 units over June 2012 sales and a balanced 34,080 units over its April sales.HMSI registered total sales of 849,767 units during the April-July 2012 period showing a well-poised YOY growth of 55.36 percent.

“While the current trend is pointing at slowdown in sales, Honda is upbeat about demand in this fiscal. We aim to post a healthy double-digit growth of 30 percent and sell 27,50,000 units in 2012-13. Backed by the increased production capacity, the company is now timely catering to the customer demands for scooters and motorcycles,” said Y S Guleria, vice-president, sales and marketing, HMSI.

The company has received an excellent response to its first mass motorcycle, the Dream Yuga which has raked in sales of over 57,000 units in the last two months. HMSI targets to sell 300,000 Dream Yugas by March 2013.

Honda anticipates selling a total of 600,000 units of its 125cc motorcycles – the CB Shine and the CBF Stunner – together during this fiscal. The CB Shine is the best selling bike in the 125cc category. The company plans to boost its sales during the festive season by providing timely deliveries, customer- friendly finance schemes, extended warranty and zero-depreciation offers. Pune-based Bajaj Auto registered domestic sales of 200,535 motorcycles during July 2012, marking a dip of 10,975 units over its June 2012 sales. Its domestic cumulative sales in April-July 2012 stood at 819,024 units, scoring a negative YOY growth of 0.78 percent. It sold 14,400 units of the recently launched Discover 125ST and 5,600 units of the Pulsar 200NS during the month including exports.

Hosur-based TVS Motor recorded domestic sales of 140,806 units during July 2012. Its cumulative sales for April-July 2012 totalled 591,832 units – a negative YOY growth of 3.94 percent. TVS plans to launch a new 125cc executive commuter motorcycle to boost its sales during the festive season. Riding on the success of the 112cc commuter bike Hayate, Suzuki Motorcycle India has registered sales of 39,545 units in July 2012. Its cumulative April-July 2012 sales at 132,111 units marked a substantial YOY growth of 20.34 percent. “Two-wheelers being the primary mode of commuting in India will not witness much impact of the said slowdown. Urban markets are showing more sluggishness than rural demand. The growth lies in the 100cc-125cc category while the two-wheeler industry is expected to register an overall growth rate of 5 to 7 percent in 2012-13,” says Atul Gupta, vice-president, sales and marketing, Suzuki Motorcycle India.

The Hayate has already become the best seller for the company, closely followed by Suzuki's Access scooter. The bike’s current demand is running 20 percent ahead of its actual production at its Gurgaon plant. The facility is undergoing an expansion from its current yearly production capacity of 360,000 units to 470,000 units by the end of March 2013. Capacity will be further augmented to 550,000 units by the end of next fiscal.

India Yamaha Motor sold 27,858 units during July 2012. Its April-July cumulative sales of 105,407 units were a negative YOY growth of 4.22 percent. Having recognised the speedy growth of the scooter segment in the past year, the company is all set to launch its Ray by mid-September in Hyderabad and expects the scooter to sell over 20,000 units per month.

Yamaha has received orders for over 5,000 units of the Ray within 10 days of opening the bookings across its 400 dealers. It plans to focus on promoting the scooter and the 150cc motorcycle segment for the remaining year by expanding its network in Tier 2 and Tier 3 cities. It also plans to set up 2,000 dealers by 2018. Upbeat about the scooter market, Hiroyuki Suzuki, CEO and MD, India Yamaha Motor says, “The scooter segment grew by 25 percent last year and we expect it to grow by 30 percent this year.” The company is targeting sales of 400,000 units during 2012 as against sales of 330,000 units during 2011.

Mahindra 2-Wheelers reported sales of 10,051 units during July 2012. With total sales of 40,538 units for April-July 2012, it posted a negative YOY growth of 10.45 percent. The company plans to re-launch its commuter bike, Stallio before the festive season.

Displaying steady growth, Royal Enfield sold 9,707 units during July 2012, up by 1,015 units over April 2012 sales. Cumulative sales for April-July 2012 were 36,122, a 50.92 percent YOY growth. It will launch a 500cc Thunderbird by the upcoming festive season. However, it continues to be hampered by slow production, leading to long waiting periods.

The latest entrant, Piaggio Vehicles sold 3,501 Vespa LX125 scooters in July 2012 against 802 units in April 2012. Cumulative fiscal sales were 8,418 units.

Overall, two-wheeler manufacturers remain optimistic as the festive season approaches while exposure to new rural markets with increasing penetration levels will stay on the radar of some companies. But the poor monsoon and market sentiment just might play spoilsport.