Motorcycle sales hit speedbreaker

The two-wheeler sales figures for June 2007 clearly indicate that the industry is in the midst of a slowdown. And a combination of factors, including high interest rates, stringent norms being followed by retailers, and perhaps a shift away from 100cc motorcycles are at play.

The sales figures show that all the three big motorcycle makers – Hero Honda, Bajaj Auto and TVS Motors – saw a month-on-month decline in sales. Of the three, the worst hit was TVS Motor, whose motorcycle dipped more than 35 percent clocking 47,380 units versus 74, 373 units in June 2006. Sales at Bajaj Auto dipped 12 percent. The company sold 162,253 units against 183,549 units in June last year.

EXPORT THRUST

This figure could have been worse had exports not come to the rescue. The company exported 48,675 two- and three-wheelers. If one assumes that a majority of these were motorcycles, then domestic sales figures would be substantially lower than the 162,253 units reported. Over April and May 2007, the company exported an average of 37,000 motorcycles per month, and if this trend held true for June as well, then domestic sales of motorcycles would be in the region of 125,000 units!

That number is not very comforting as Bajaj Auto prepares to launch an all new non-100cc 4-stroke motorcycle in September. Bajaj Auto plans to make 50,000 units of the new motorcycle in Waluj, but this will be achieved only by January 2008. This capacity may not win back market share because the new bike may well end up cannibalising sales from Bajaj’s own stable.

And a truly outstanding new offering could also compel potential buyers of the Platina or the CT100 into opting for the new bike, thus hitting overall numbers even further. Industry experts believe that Bajaj’s market share will edge up only if two conditions are met: firstly that the new bike is a stunning success and secondly that the company is able to quickly ramp up additional production capacity for the bike. And that may not happen until next fiscal.

LACK OF CHOICE

If Bajaj Auto has been hit by the choices it has made, TVS has been a victim of a lack of choice in product offering. The company has been unable to refresh its product line up, or even add to it, as often as the competition and this is beginning to tell. Today, the situation is such that it is left to the StarCity to make up a bulk of TVS Motor’s motorcycle sales. The other offerings like the Apache and the Victor have been left behind to make up the numbers.

Therefore, there is a lot riding on the new 160cc Apache RTR. But whether this can upset the applecart of Pulsar, the entrenched segment leader remains to be seen. Which brings us to Hero Honda, the undisputed leader with over 50 percent share of the motorcycles market. The slowdown that is ravaging the market share of both Bajaj Auto and TVS Motor seems to be having little effect on the company’s sales.

Its best-selling 100cc Splendor seems impregnable, and together with the CD Deluxe, Passion and the 125cc Glamour accounts for more than 70 percent of the 245,000 motorcycles sold by the company. This is the huge reality that confronts both TVS Motor and Bajaj Auto as they look for products and strategies to claw back market share.

SANDEEP BELAGAJEE