August reveals true picture of domestic two wheeler market

The first four months of the financial year 2012-13 seem to be encouraging for the domestic two wheeler market as country’s largest two wheeler manufacturer Hero Motocorp had aggressively built up inventory at dealer level. However, the company did the major production cut in the month of August to cut the inventory at dealership level. The company reported sales of 4,43,801 units  in August 2012 compared to 5,03,654 in August 2011. The figures are down by 11.88% compared to last year and down by 8.35% compared to month of July 2012. The company sold 4,84,217 units in the month of July 2012.

Mr. Anil Dua, Senior Vice-President (Marketing & Sales), Hero MotoCorp Ltd said, “The dispatch numbers of August reflect the market sentiment. The two-wheeler industry in the country has been facing a challenging time due to the overall macro-economic situation which has adversely affected retail sales, both in the urban and the rural markets. We, as the market leader, have been making our efforts at lifting the market sentiment, through both ground-level activation as also on-air category saliency through our model campaigns. In August, we also created excitement around Olympics, leveraging our association with sports. We remain optimistic that the market scenario should improve with the upcoming festive season when retail sales generally pick pace.”

The domestic two wheeler market was sluggish start from the April month of financial year 2012-13. TVS Motor and Bajaj Auto accepted the trend and started showing flat growth while Hero Motocorp had aggressively built up inventory at dealer level in anticipation of increasing demand in monsoon season. However, the weak monsoon has worsened the demand scenario of domestic two wheeler market.  Lastly, Hero Motocorp also accepted this trend and did a major production cut in August to normalize the inventory level.

August is bad month for all the domestic two wheeler players. Bajaj Auto reported 10% lower sales while TVS Motors reported more than 20% lower sales compare to last year. Month on month basis Bajaj Auto remain nearly flat while TVS Motors was down by nearly 5%.  It is to be noted that only Honda Motorcycle and Scooters India ltd. has beaten the overall trend of domestic two wheeler market and still growing in the territory of 50% due to outstanding response to its mass motorcycle  Dream Yuga. This is followed by Suzuki Motorcycle who has reported relatively good growth compared to domestic players and Yamaha India.

As we are about to enter into festive seasons, the September and October months are looking promising, however after the month of November the industry could face huge slowdown.

-Mahavir Kothari