Festive-led demand gives OEMs traction but the months to come will decide if the growth is sustainable.
The two-wheeler segment, the most affordable form of motorised transport in the country, continues to see an uptick in demand but the growth could have been better. Cumulative despatches from six leading OEMs indicate 1.5 million units in November 2020, which marks 15% year-on-year growth. But seen month on month, the numbers are down 22% on October 2020’s 1.97 million units (see data table below). Let’s take a closer look.
Hero MotoCorp: 591,091 units / 14%
Further strengthening its market leadership, the world's largest two-wheeler manufacturer, Hero MotoCorp registered 14% growth with 591,091 units sold. The company sold 516,775 units in November 2019. A total of 541,437 motorcycles and 49,654 scooters were sold during the period. On a month-on-month basis this is a 25% drop as they sold around 791,137 units in October 2020.
This revival post the pandemic was due to the recently concluded festive season. More than 14 lakh units were retailed in the 32-day period starting from Navratras till Bhai-Duj, the company said. The company has been continuously ramping up supply and production across its manufacturing units to cater to the increased demand. Hero MotoCorp believes that the growth in personal mobility post Covid-19 restrictions will further strengthen the demand for two-wheelers. The company intends to further strengthen its product portfolio, as well as consumer offerings to ride this wave further.
Honda Motorcycle & Scooter India: 412,641 units / 11%
Staying on par with the market with regards to festive season, India's No.2 player HMSI posted strong growth. The company's domestic sales grew by 11% with 412,641 units sold in November 2020 (373,283 units in November 2019). The exports also had a growth of 9% with 433,206 units. In October 2020, HMSI sold 494,459 units, a decline of 17% on MoM.
Yadvinder Singh Guleria, Director – Sales & Marketing, Honda Motorcycle & Scooter India said, “If the second quarter was about stabilising the automotive ecosystem, the third quarter is a bit about recovery. Backed by festive sentiments, Honda’s retails crossed the one million units mark yet again in the two crucial festival months (October & November). With more of our exclusive Big Wing network opening, we are seeing increased bookings and delivery momentum for H’ness CB 350."
TVS Motor Co: 247,789 units / 30 %
Chennai-based TVS Motor Co’s two-wheeler domestic sales grew 30%, registering 247,789 units in November 2020 as against 191,222 units in November 2019. This also means that this is a 18% drop when compared to October 2020 sales (301,380 units). The total sales increased 25% YoY recording 311,519 units in November 2020 (249,350 units in Nov 2019)
Both the motorcycle and scooter segment grew by 26%. Two-wheeler exports registered a growth of 10% with 63,730 units in November 2020 as against 58,128 units in November 2019. The company said, exports were adversely affected due to the unavailability of containers and impact on operations of Chennai port on account of Cyclone Nivar in the last week of November 2020.
Bajaj Auto: 188,196 units / 7 %
Pune-based Bajaj two wheeler sales in India registered 7% growth with 188,196 units sold, up from 1,76,337 units sold in November 2019. In the month of October 2020, Bajaj sold around 268,631 units which is a 30% decline month on month. Exports had an 18 percent growth with 196,797 units.
Yamaha Motor India: 53,208 units / 35%
Yamaha Motor India clocked total sales of 53,208 units in November 2020. This is a 35% growth when compared to the same period last year. (39,406 units - Nov 2019). The company sold around 60,176 units in October 2020 registering a sales decline of 12% in a MoM basis. The Japanese manufacturer is hopeful that the sales during December will match its preceding months by a record sale. The company expects overall demand to grow in 2021 owing to a varied demand of personal mobility.
Royal Enfield: 59,084 units / 1%
Chennai-based Royal Enfield posted domestic sale of 59,084 units for the month, posting a 1% growth compared to same period last year (58,292 units). Exports saw 122% growth with 4,698 units sold. The total sale stood at 63,782 units in November 2020 with a growth of 6%. The company's newly launched cruiser is expected to push the sales further up in the coming months.
The recent growth on a YoY basis from OEMs is mainly because of the festive season. But, the scenario is completely different when the MoM sales are looked up. Is this the real growth story or will the growth continue even after the festive season is quite a mystery. According to Shamsher Dewan, Vice-President, ICRA Ltd, "The two-wheeler domestic wholesale volumes reported a 15% YoY growth in November 2020, reflecting a last thrust on sales during the fag end of the festive season. A low base, easing of supply chain constraints, strong rural sentiments and gradual uptick in economic activities, supported this OEM optimism and growth."
"However, retail demand recovery seems to have remained elusive, with 22% lower registrations in November 2020 on YoY basis. As per an ICRA survey, two-wheeler dealers had 55-60 day inventory at the end of the festive period. Fear for a second or third wave of Covid may dampen the already fragile consumer sentiments and impact demand recovery. The wholesale volumes were sequentially 25% lower in November 2020 and with the festive season behind, inventory correction is likely to keep the growth moderate over the next few months.," he added.
On the export front, the industry reported an 18% YoY growth (but a 7% sequential decline) in November 2020. The key export markets – Africa and South East Asia – remain relatively less impacted by the pandemic. “Coupled with relatively stable crude oil prices and forex, and preference for the sector amid the pandemic, the industry is likely to chart a modest recovery trajectory,” he concluded.
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