While the year 2015 came as a relief for the Indian passenger car market, it gave a halt to the two-wheeler industry which grew tremendously over the last decade or so. The two-wheeler sector recorded an impressive volume CAGR of 10 per cent in the last 10 years, and it had been the driving force of an otherwise dull automobile industry, particularly in the last 5 years. However, the 2-wheeler industry started witnessing a slowdown as soon as the calendar year 2015 began.
In the first quarter of the CY2015, January was the only month when the industry saw a moderate growth of 1.1 per cent year-on-year; in February and March, the industry saw a decline of 1.0 per cent and 0.8 per cent respectively. Slow down in the industry was mainly due to poor demand for motorcycles, accounting almost 70 per cent of the market share in two-wheeler industry, that saw a decline of over 6 per cent in the first quarter of CY2015. The scooter segment, on the other hand, recorded an impressive growth of over 18 per cent in the same period.
The second quarter, too, wasn’t any better for the two-wheeler sector as it recorded a modest 0.6 per cent year-on-year growth. While motorcycle volumes declined by 2 per cent year-on-year in the quarter, scooters recorded 7.3 per cent hike. What is interesting to note here is the fact that the scooter segment which had maintained a double digit growth for months too had come down to single digit growth in this quarter.
The third quarter of this calendar year turned out to be even worse as it recorded an year-on-year decline of 1.4 per cent. Despite low fuel prices and lowered interest rates, the motorcycle volumes remained sluggish in this quarter as well. The motorcycle demand declined by 2.9 per cent year-on-year.
Performance of top 3 Indian two wheeler players:
Despite posting an year-on-year growth of over 6 per cent in the FY’15, Hero MotoCorp recorded 3.44 per cent decline in its net profit for the first quarter of the calendar year 2015, or
Q4 FY’15. The second quarter of the CY’15, however, posted results better-than-expected with 33 per cent increase in profit to Rs 750 crore. Having said that, the net sales of the company dropped 2 per cent to Rs 6,856 crore due to the overall two-wheelers declining 5 per cent to 16.4 lakh units in the quarter due to poor demand in rural areas. Thanks to festive season, the Indian two-wheeler giant saw a rise of 1.14 per cent to Rs 722.06 crore recording almost 2.89 per cent growth on quarter-to-quarter basis. In the second festive month, November, as well, the company recorded a moderate YoY growth of 0.6 per cent. As against November 2014’s 5,47,413 vehicles, the company sold a total of 5,50,731 two-wheelers in the same month this year. The sales in the festive season were mainly drive by demand for the company’s new scooters, Duet and Maestro Edge, and the updated Splendor Pro, Passion Pro and Glambour motorcycles.
In a challenging environment for the Indian two-wheeler industry, Bajaj Auto Ltd recorded a turnover of Rs 4,894 crore in the first quarter of this calendar year – down by Rs 223 crore over the last year. While the commercial vehicles continued to do well for the company in this quarter as well, motorcycle volumes were down by 18.3 per cent. As compared to the Q1 CY15, the second quarter was better as the overall volumes were up by 30 per cent quarter-on-quarter. As against the Q1’s 6,72,969 units, Bajaj sold a total of 8,75,235 motorcycles in Q2. The company’s export revenue too recorded a growth of 17 per cent, and the company increased its overall share in the domestic market by 300bps to 18 per cent in the Q2 CY15.
Thanks to increasing demand for newer vehicles including Pulsar AS 150, Pulsar AS200, RS200 and the 2015 CT100, Bajaj Auto sold over 9 lakh motorcycles in the third quarter of CY15. This quarter, the company also recorded its highest ever turnover and profit after tax of Rs 6,250 crore and Rs 933 crore respectively. Though volumes in October 2015 also showed the signs of progress, the motorcycle segment of the company recorded an year-on-year decline of 8 percent at 3,08,733 units. November, however, was slightly better with 3 per cent increase in sales over the last year.
Honda Motorcycle and Scooter India
While the overall two-wheeler industry was struggling to get numbers in the first quarter of this calendar year, Honda Motorcycle & Scooter India (HMSi) continued to post growth. Thanks to great demand for Activa range, the company sold a total of 11,54,458 units recording an growth of 8.68 per cent. However, motorcycle segment remained a cause of worry for the Japanese two-wheeler maker in this quarter since it recorded a decline of 7.89 per cent in motorcycle volumes. The growth continued in the Q2 CY15 as well, as the company’s volumes were up by 6.5 percent year-on-year with a total sales of over 10.14 lakh units between April-June 2015. Similar to the industry trend, HMSI too saw drop in its volumes in CY15 third quarter (July-September) as it recorded almost flattened growth. For the first time this year, the Japanese maker saw a decline of 2.13 per cent in its volumes in September. While the festive month October helped the company achieve a record sales of 4,31,887, up by 13.31 per cent, the company saw its steepest fall of 11.82 per cent at 3,11,946 units in November 2015.