Bike makers fret as numbers fall

Eric Vas admits that he is slightly bewildered by the steady fall in motorcycle sales over the last couple of months. “This festive season was not as strong as what we would have liked it to be,” says the President of Bajaj Auto’s motorcycle business. November was “a jolt and a lot weaker” than the same period last year.

Traditionally, after Diwali, there is a 35 per cent drop in retail sales but it was closer to 47 per cent this year which Vas says was steep and unexpected. “At an industry level, we are surprised because you expect a momentum during the festive season and after but it was just not there this year,” he adds.

Motorcycle sales were up to 9.1 lakh units from 7.9 lakh units in August 2013. and the good showing continued in September when numbers crossed one million motorcycles, from 8.8 lakh at the same time last year.

October sales were also in the million units range, but down from 1.1 million bikes in 2013 while the downward trend continued in November which closed at 8.5 lakh units, compared to 8.8 lakh last year. Only 11 days have gone by in December so far but sources admit that there is little to write home about in terms of improved sentiment.

One school of thought maintains that bike sales have suffered due to late rains and a correspondingly delayed harvest which affected disposable incomes across rural India. This is a big buyer base for all 2-wheeler companies and setbacks here will, naturally, affect volumes.

According to Vas, what is equally puzzling about the falling numbers is that there is no significant difference between the sports and non-sport categories. This was not the case last year which makes the slump even more difficult to understand, he says.

Yet, it is not all gloom and doom in the 2-wheeler space with scooters continuing their good run. Data from the Society of Indian Automobile Manufacturers shows that sales were up nearly 27 per cent in November to 3.86 (3.05) lakh units. This increase was higher than the preceding month when scooter numbers were up 10.89 per cent to 3.83 (3.46) lakh units.

Leading the scooter onslaught is Honda which is comfortably doing over 2.2 lakh units a month followed by TVS Motor and Hero MotoCorp at over 60,000 units each. At present, scooter sales are a third of bike numbers but this is tipped to grow rapidly in the coming years. With Honda scheduled to roll out another 1.2 million scooters from its Gujarat plant in 2016, scooters could just end up accounting for an equal share of the 2-wheeler pie.

There are reports within industry that the situation is even more dire thanks to a huge build up of stocks at dealerships estimated at around two lakh bikes. To that extent, sentiment was perhaps down even in the festive season but nobody really too much notice. Vas, however, reiterates that Bajaj has deliberately cut down inventories and that he is personally determined to “run extremely tight conditions”.

It is also likely that the replacement cycle for bikes has increased since the economy is still not out of the woods and purchases have been deferred as a result. The job market is still not picking up and a plant closure like Nokia in Chennai, for instance, has only made things worse.

Auto ancillary suppliers in some states are also facing the heat of higher power tariffs and wages which are squeezing their margins.