Festive demand restores growth in two-wheeler despatches in October 2018

Initial reports from the major two-wheeler companies clearly suggest that the anticipated demand in the festive season has already restored year-on-year (YoY) growth in vehicle despatches to showrooms across India.

As per the reports on the wholesale volumes shared by the top six two-wheeler manufacturers, total despatches stand at about two million units or 19,77,174 units precisely. This has marked a YoY growth of 18.77 percent over last year’s October’s wholesale numbers, which stood at 16,64,640 units (cumulative volumes of the same six OEMs).

While Hero MotoCorp, Honda Motorcycle & Scooter India (HMSI), TVS Motor Company, Bajaj Auto and Suzuki Motorcycle India have registered double-digit YoY growth, Royal Enfield’s momentum seems to have clearly slowed down.

How the OEMs fared 
Hero MotoCorp, India’s largest two-wheeler manufacturer, stands out as the biggest gainer in terms of volumes in October 2018. The company, which had reported wholesale volumes of 631,105 units in October last year, has despatched a total of 734,668 two-wheelers last month from its factories. It has registered a healthy growth of 16.41 percent YoY.

It is to be noted that October was the fourth month in FY2018-19 when Hero MotoCorp registered despatches of more than 700,000 units in a month. The company has registered its best-ever monthly volumes in September 2018, when it reportedly despatched 769,138 units.

Citing slower retails, an official communication from Hero MotoCorp quotes, “Compared to the previous year, retail off-take across the country during the initial few weeks of the festive season have been moderate, primarily on account of the significant increase in insurance cost, followed by the associated confusion over the coverage amount and period in the matter of two-wheeler insurance. We hope to see a positive turnaround in the sentiments and retail sales to pick up in the days leading up to Diwali.”

The company has recently launched its first 125cc scooter, Destini 125 with a starting price tag of Rs 54,650 (ex-showroom, Delhi NCR), thus making it one of the most affordable offerings in its segment. The company hopes to bank upon the surging demand for 25cc scooters during this festive season with the new Destini 125. Further, it plans to roll out yet another 125cc model – Maestro Edge 125 –  later this fiscal to continue its retail momentum in the domestic market.

India’s second largest two-wheeler company, Honda Motorcycle & Scooter India has recorded total domestic despatches of 490,124 units last month, up 12 percent YoY. HMSI had reported dispatches of 437,548 units in October last year. For Honda, October 2018 turned out to be the fifth month that recorded monthly despatches of more than 500,000 units. The company says that its scooter sales grew by about 10 percent from 293,117 units in October last year to 322,108 units in October 2018.

The company has witnessed a legitimate setback owing to the dip in overall scooter retail sales in the domestic market. The senior company officials attribute this slowdown to two major demographic factors – floods in the state of Kerala, a big market for Honda scooters, and RTO advisory in West Bengal that disallows non-license holders from buying two-wheelers.

The October sales numbers, however, suggest restoring demand albeit at a much slower pace when compared to the regular double-digit growth registered by the scooter segment over the past few years.

The past month has also marked a few notable achievements for HMSI. It has surpassed the landmark of 20 million customers for its most popular model – Honda Activa. The 125cc CB Shine, Honda’s bestselling motorcycle in India, has now crossed cumulative sales of 70,00,000 units since its launch in 2006. Its latest 125cc scooter, Grazia has surpassed cumulative sales of 200,000 units in 11 months of its launch. It can be recalled that the company had commercially launched the Grazia in November last year.

Nevertheless, TVS Motor Company and Bajaj Auto, India’s third and fourth largest two-wheeler companies respectively, have recorded bigger YoY gains in terms of additional volumes in October than Honda.

At 338,988 units, TVS Motor Company has reported an impressive YoY growth of 25.38 percent on its October 2017’s despatches, which stood at 270,372 units. The company is able to rake in consistent volumes, thanks to its popular 110cc Jupiter scooter, its latest 125cc NTorq and the barrage of updated models across its motorcycle line-up. The company appears to be picking up aggression in terms of new / updated product roll-outs lately.

In the last two months, TVS Motor has rolled out updated 100cc Sport and 110cc Star City commuter motorcycles for the festive season. To keep up the momentum in its scooter portfolio, it has launched refreshed Wego and Jupiter Grande scooter models. Not just that, the company has also taken a few of its latest products to neighboring markets. These includes the launch of the Apache RTR 160 4V and the NTorq 125 in Sri Lanka. It also took its Apache RR 310 and the 125cc NTorq to Nepal in September.

On October 23, the company announced that it has elevated KN Radhakrishnan as whole time director and CEO for a period of five years. In his previous position as the president at TVS Motor, Radhakrishnan is credited for driving the company to become the third largest two-wheeler player in India.

Bajaj Auto, on the other hand, has reported a substantial jump of 33.10 percent YoY in October 2018. The company has reported despatches of 281,582 units last month against 211,553 units in October 2017. According to Bajaj Auto, its October 2018 volumes are its highest-ever monthly dispatches. This performance can be attributed to its mass commuter motorcycle brands such as the CT100 and the Platina, which have recorded a spike in demand responding well to the company’s revised product strategy at play.

Meanwhile, the Pulsar line-up continues to fetch impressive volumes across its dealerships, all thanks to its bestselling 150cc variants. According to the company management, the sales of its Pulsar brand is being driven by the demand for its 150cc models across premium as well as in the affordable categories. While the Twin Disc model (at the premium end within the Pulsar 150 range) has received impressive reception in the market, the more affordable Pulsar Classic variant is garnering price sensitive customers who are willing to join the Pulsar family, says the company management. 

On the export front, the company has shipped out 151,403 motorcycles last month, thereby registering a commendable growth of 33 percent YoY. Bajaj Auto is also understood to be gearing up to launch the Husqvarna brand of motorcycles later this fiscal. All in all, FY2018-19 is turning out to be a good year for the company.

India’s fifth largest two-wheeler manufacturer by monthly (wholesale) dispatches, Royal Enfield is now witnessing a slowdown in its YoY growth momentum that was seen at least for the past four years. The company has reported wholesale domestic dispatches of 70,044 units last month, up only 2.98 percent YoY. In October 2017, Royal Enfield has recorded volumes of 68,014 units as its monthly factory dispatches.

The primary reason of moderating sales at its retail stores can be attributed to the flattening demand for its bestselling motorcycle – the Classic 350, which is powered by its single-cylinder 346cc, 19.8bhp engine. Automotive experts say that Royal Enfield’s air-cooled single-cylinder, 346cc and 499cc powertrains, in their existing forms, won’t comply with the incoming BS VI emission norms, and hence are going to be phased out soon. Nevertheless, the company has been working on adequate plans to replace the existing models with new engines to comply with the law post April 2020.

Meanwhile, Suzuki Motorcycle India continues with its dream run. The company has reported its all-time high despatches of 61,768 units last month, up a commendable 34.14 percent YoY. Suzuki’s 125cc Access 125 scooter has played a central role in gathering the sales momentum. The model is not only Suzuki’s bestselling scooter in India, it also is the leader in the surging 125cc scooter category. On the other hand, Suzuki’s latest Burgman Street scooters, which are also positioned in the 125cc category, are well received among the premium customers across several urban pockets.

Commenting on the festive sales, Satoshi Uchida, managing director, SMIPL said, “Suzuki’s exciting growth-curve has continued into the month of October as well. A strong performance during the festive season is critical to our hope of fulfilling our sales target of 7.5 million sales in this financial year. Not only have we enjoyed our highest-ever retail this month, therefore with a positive consumer sentiments, we are geared up to end this season on a high.”

The company, which has big plans going forward for India, started off deliveries of its latest CKD motorcycle, the V-Strom 650XT ABS last month. The mid-capacity adventure tourer is Suzuki’s third model in its premium motorcycle portfolio for India. The other locally assembled premium motorcycles are its popular Hayabusa and the GSX-S750.

The company is now working on its Gixxer brand of premium commuter motorcycles for India as it plans to offer an upgrade to its existing and new customers as early as mid-2019. On the production side, it continues to expand capacity at its Gurgaon-based facility to meet increasing demands. Expect the company to rake in its best-ever sales during this year’s festive season.

All in all, the October-specific two-wheeler despatches suggest good numbers in the month of November too. All eyes are now on the much-anticipated Dhanteras day, which will be November 5, Monday.

Also read: Passenger Vehicle Sales in October 2018

Commercial Vehicle Sales in October 2018