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      Motorcycle industry foresees struggle post festive season

      CarTrade Editorial Team

      CarTrade Editorial Team

      The heydays do not seem to be in a mood to entertain the two-wheeler companies post the festive season, which will soon come to its conclusion, as the auspicious day of Diwali passes out. Two-wheeler giants Bajaj Auto and TVS Motor are already bearing the brunt of dismal sales, and are subsequently experiencing creeping overall market growth. With the expiry of the festive season soon reaching its crescendo, it is speculated that even the two-wheeler industry leader Hero MotoCorp would not be spared from the unbidden trend.

      Amit Mishra and Priya Ranjan, analysts at Macquarie explained the reason behind the discouraging change in trend which would crop up after the booming festive season. In a report dated 27th September, they have been quoted as saying, “India’s motorcycle market grew 15% in August, with Hero MotoCorp growing at 20%, TVS at 13% and Bajaj at 8%. Since April this year, Hero has grown ahead of the market, while Bajaj and TVS have been weaker. Some of Hero’s outperformance can be attributed to the much lower base last year; hence we expect a moderation post October 2011.”

       

      Motorcycle Industry
       

      While the sales of Bajaj’s economy bike Platina hiked by 46% in August, its premium bike segment represented by bikes like Pulsar suffered a downfall of 10%, Mishra and Ranjan reported. According to the two analysts, the contribution of premium bikes in the overall Bajaj’s sales has reduced from 35% in August last year to 29% this August. However, the fact that deserves more attention is that the growth rate of Discover sales has shown immense laxity, with just 3% to 4% increase in the last two months. Moreover, Boxer 150 accounts for 9,251 units in the total Bajaj’s sales, the bike that is not amongst the most profitable products of the company. 

      K Srinivas, President, Motorcycle Business, Bajaj Auto, expressed sincere concerns regarding the untoward trend that is levying its ill-effects on the two-wheeler industry. “We have adopted different strategy for branding the Boxer. It will take some time for the product to soak in the market,” he was quoted as saying.

      If Srinivas is to be believed, the growth of the bike industry has been satisfactory during the time of Dusshera. He said, “We have grown 15% more as compared to last festival season. We will have to wait and see the coming quarter, which is generally slow for the industry.” Srinivas confirmed that Bajaj plans to create a new segment with the launch of the new Boxer 150cc.

      However, contrary to the claims made by the Bajaj's President, Motorcyle Business, analysts do not foresee any boost after the launch of Boxer 150cc. “We do not expect Bajaj to create any additional demand with the launch of its Boxer. At best it will cannibalise the demand of the existing products in the segment,” said an analyst.

      Aditya Makharia and Ritesh Gupta of J P Morgan reported that Honda Motorcycle and Scooter India (HMSI) is already preparing to expand its capacity to 4 million units by 2013 and thus appears to have aggressive plans in India after the split with its local partner, Hero, and the competitive intensity is rising in this space. While HMSI is currently the market leader in scooters, it is launching new products in the mass market motorcycle segment to expand its product portfolio.