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Scores of villages in Maharashtra’s Marathwada are reeling from a severe drought. A few hundred kilometres away, the region of Vidarbha has recorded unseasonal rains and hailstorms. Such events have taken a toll on agriculture and crippled rural incomes. The situation isn’t unique to Maharashtra. Farm output has come under pressure in states such as Madhya Pradesh, Uttar Pradesh, and Haryana, too.
This has hit demand for two-wheelers, especially motorcycles. During the five months ended February, domestic motorcycle sales have fallen six per cent to 4.28 million units. High-mileage entry-level bikes (110-110 cc), a hit in rural areas, have seen a drop in sales in recent months.
Last month, Hero MotoCorp reported a drop of eight per cent in sales. It is India’s largest two-wheeler manufacturer, and generates more than half its volumes from rural markets. From selling more than 500,000 units every month, Hero’s sales were more than 485,000 in February.
“In some rural areas, the market sentiment has been hit by various factors, including the curtailment of the MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) spend, poor crop realisation, and moderating wages. The sector has felt some impact in Bihar and Madhya Pradesh and the sugar cane-growing areas in Uttar Pradesh and Maharashtra,” said a Hero spokesperson.
The fall recorded by Pune-based Bajaj Auto has been the steepest. In February, its motorcycle sales fell 26 per cent to 115,840 units, according to data by the Society of Indian Automobile Manufacturers. Entry-level bikes such as Discover and Platina, which account for more than half of Bajaj’s sales, recorded a fall of 43 per cent.
Eric Vaz, president (motorcycle business), Bajaj Auto, said, “A fall in income in rural areas has led to a decline in the demand for entry-level bikes. Poor weather conditions have led to poor farm output, which has affected bike sales. We sell an average of 70,000 units every month from our 100-cc range, most of which are sold in rural areas.”
Scooters escaped the slowdown. Most scooter sales are in urban areas. The segment has recorded growth of 27 per cent this financial year, selling 4.1 million units in the domestic market during April-February.
Y S Guleria, vice-president (sales and marketing), Honda Motorcycle and Scooter India, said, “We see there is a slowdown in the entry segment, impacting sales from semi-urban and rural areas. A few pockets are being disturbed due to inclement weather; standing crops are being destroyed. The buying sentiment is down. Scooters are largely urban-driven; so, there is no impact there.”
While the kharif crop was lower than expected, unseasonal rains and hailstorms have hit the rabi crop, too, especially in Uttar Pradesh and Maharashtra. This has affected tractor sales, too, with the sector posting a decline of about 30 per cent in the past three months.
Though some say the onset of the marriage season in April will lead to an improvement in market sentiment, some manufacturers aren’t optimistic. “There is no good reason to believe market conditions will improve from next month,” said Vaz.
