A liquidity crunch and increased insurance cost weighed on the sales performance of two-wheeler manufacturers in December, reflecting a mixed picture of the industry.
While Hero Honda and Royal Enfield saw contraction in sales volumes in December 2018 on a year-on-year basis, the other biggies, such as Bajaj Auto and TVS Motor Company, recorded growth in varying degrees. Suzuki Motorcycle India witnessed strong growth.
Market leader Hero MotoCop on Wednesday reported a 4 per cent decrease in its December sales YoY to 4,53,985 units, compared with 4,72,731 units in the corresponding month in 2017.
The increased cost of two-wheeler insurance ahead of the Diwali season, and the prevailing liquidity crunch in the market, impacted the overall growth momentum in the industry during the third quarter, according to Hero MotoCop.
Currency volatility
“The year 2018 was a challenging one for the global economy,” said Pawan Munjal, Chairman, Managing Director and Chief Executive Officer, Hero MotoCorp. “While the continuing volatility in currency and commodities slowed down the pace of growth, the global geopolitical and trade conflicts also affected sentiments in markets and industries across the world.”
Transition to BS-VI
He said the cost of two-wheelers will further go up once the new set of safety regulations comes into force, followed by the transition to BS-VI emission norms. All these will put severe stress on the cost-sensitive segments, he added.
Munjal also pitched for a reduction in GST rates. “Given that two-wheelers provide basic mobility to the masses, there is an urgent need to reduce the GST rate from the 28 per cent bracket of ‘luxury goods’ to that of 18 per cent for mass usage items,” he said.
Going forward, he said, the industry expects a turnaround in the fourth quarter with improved liquidity in the market and the upcoming festival season in many parts of the country.
Meanwhile, Bajaj Auto reported a 39 per cent jump YoY in its domestic motorcycle sales in December to 1,57,252 units, against 1,12,930 units in December 2017.
Suzuki Motorcycle India reported 34 per cent growth YoY to 43,874 units from 32,786 units.
However, TVS Motor saw just marginal growth, at 2,09,906 units, during December 2018, against 2,07,739 units in December 2017. Scooter major Honda Motorcycle & Scooter India said it will declare its sales numbers on Friday as the company is closed till then.