Motorcycle sales continue to flounder

The silver lining in the cloud is that floating stocks are in check.

Autocar Pro News DeskBy Autocar Pro News Desk calendar 09 Aug 2007 Views icon3000 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Motorcycle sales continue to flounder
Steep interest rates and an erratic monsoon season continued to hammer two-wheeler sales in July. Market leader Hero Honda saw a dip of 14.5 percent at 2.01 lakh units, while Bajaj Auto’s numbers were down seven percent at close to 1.6 lakh motorcycles. The worst hit was TVS Motor which suffered a 35 percent fall in its bike sales at 44,392 units, while scooterettes were down six percent to 23,841 units. On the whole though, TVS’ two-wheeler sales in July decreased 13 percent to a little over 1.05 lakh units.

Hero Honda’s disappointing performance follows a 3.6 percent drop to over eight lakh motorcycles and scooters sold in the last quarter. However, the company is confident that sales will improve during the festive season. “Despite the industry slowdown, Hero Honda has strengthened its market share over the year. The company believes that the fundamentals of the market are strong and is optimistic about the industry coming back on growth path closer to the festival season,” the company stated in a press release.

Bajaj Auto, however, faults the slowdown to the consumer’s disinterest in the 100cc bike segment, which still makes up the largest portion of two-wheeler sales in the country. “The motorcycle industry continued to degrow owing primarily to product fatigue as consumer disinterest in uninspiring 100cc motorcycles continued to translate into postponement of purchase,” Bajaj said in a statement.

Managing director, Rajiv Bajaj has long stated his company’s strategy to try to shift consumers out of the 100cc segment and offer more value at the same price. Hence, the two-wheeler maker is coming out with a non-100cc bike equipped with its path-breaking technology DTS-Si in September. This vehicle is ready and will be shown to analysts and media persons next week.

Meanwhile, the fortunes of TVS did not improve too much. Firstly, its net profit has nosedived 65 percent to Rs 7.55 crore, while its topline too disappointed as it crashed 15 percent to roughly Rs 802 crore. TVS has blamed falling sales to reduced availability of finance and increased costs. However, the company’s management is positive it will turn around the situation and has set a target of selling 1.7 million units this fiscal, according to president KN Radhakrishnan.

The strategy is to introduce more than 11 new models. These will be six new motorcycles in the entry, executive and premium segments as well as a new electric scooter, a gearless scooter and 2 three-wheelers. “From October, the company will sell more than 90,000 motorcycles a month as against the current 45,000 to 50,000 vehicles,” CMD, Venu Srinivasan told reporters in Chennai.

Although launching new models will be the mantra for growth, manufacturers have also realised that the situation cannot be improved by simply dumping stock at the dealer end. For instance, unconfirmed reports put the figure of Hero Honda’s unsold stocks at the dealer end at over 2.5 lakh units.

Hence, this prompted the company to quickly cut production in June. At the same time, it has also delayed the opening of its third plant by six months. TVS too is cutting its stock at the dealers. Ideally, it would appear that manufacturers should keep their stock levels with dealers at less than four weeks.

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