Two-wheeler makers cut production

Motorcycle sales dropped 8.46% in August, the first since January 2009, when offtake had declined 5.81%

With sales in the motorcycle segment declining for the first time in three-and-a-half years, in a market saddled by surging interest rates and fuel prices, two-wheeler makers slashed production sharply last month to prevent build-up of inventory.

Motorcycle sales dropped 8.46 per cent in August, the first since January 2009, when offtake had declined 5.81 per cent.

According to data available with industry body Society of Indian Automobile Manufac-turers (Siam), the nine key players in the segment together rationalised production by over seven per cent to 11,99,832 units in August.

While Hero MotoCorp, the country’s largest two-wheeler maker, reduced production by around 14 per cent to 443,026 units, rival Bajaj Auto brought down output by 11.8 per cent to 297,487 units. However, Honda Motorcycle and Scooter India (HMSI), Royal Enfield and Suzuki Motorcyle India bucked the trend, on the back of strong rise in sales numbers.

While HMSI recorded robust sales of scooters as well as motorcycles, driven by the newly launched commuter bike ‘Dream Yuga’, Royal Enfield sells premium motorcycles (with engine capacity higher than 250 cc) which are relatively insulated from the slowdown. Suzuki, in the meantime, grew strong on a low base.

“Retail sales have been slow in the two-wheeler industry in July and August. I do not expect September to be better. We already have stocks for the festive season. We are correcting production to prevent build-up of inventory,” Pawan Munjal, MD and CEO of Hero MotoCorp, had said last week. Two-wheeler sales of the company declined 12 per cent to 431,739 units last month.

K Srinivas, president (motorcycle division), Bajaj Auto, shared the same concern “The motorcycle industry has been showing signs of the slowdown right from November 2011. Bajaj read the signs early and as per our policy, we have been billing only what finally gets retailed. Both urban and rural markets have slowed down,” he said.

Overall, two-wheeler sales declined 4.50 per cent to 10,57,925 units in August. The sagging sales, ahead of the festive season, have come as a shock to the industry which had been hoping for a revival in consumer sentiments starting October. Munjal said: “I expect sales to revive in the festive season. But the outlook for the year will now depend of how sales are in October.”

Added Yadvinder Singh Guleria, operating head (sales and marketing), HMSI: “Despite the slowdown, HMSI has grown phenomenally by 51% (April-Aug, 2012) y-o-y. With the increased production capacity, the launch of seven new products including Honda’s first mass motorcycle Dream Yuga, we are growing across all motorcycle and scooter segments. With our strategy to offer new products and reach closer to the customers by adding more touch points as well as new zonal offices, we are confident of achieving the target of 2.75 million in the current fiscal.”