The Demand for motorcycles continued to remain muted during March with rural demand weak and the outloook for the next 5-6 months looking dim. That’s because unexpected rainfall in the northern and western parts of the country, which has damaged crops, would further pressure rural incomes.
The worst sales decline was reported by the country's second largest bike maker by volume, Bajaj Auto, which recorded a 22% year-on-year fall at 2,09,937 units. In FY15, Bajaj Auto’s sales declined 4% to 32,92,084 units. Bajaj Auto’s current market share in the domestic market is 21.77%.
Eric Vaz, president, motorcycle business, Bajaj Auto, said that at the industry level, he was expecting some volumes in April and May as it will be the wedding season in north India.
“We are very confident that the two products we launched in January, the Platina electric start and the new CT 100, will give us significant volumes. We would like to do much more in the 100 cc end of the market” added Vaz.
Bajaj Auto has 40% share in the premium motorcycle segment. In the commuter segment, it is losing share, but the the CT 100 and the Platina Electric might help the Pune-based two-wheeler maker arrest the decline.
For Bajaj, the Discover series used to drive 45-50% of total sales. The Discover's contribution to Baja Auto's overall volumes has come down by half, though the Pulsar series has been performing relatively well.
Hero MotoCorp, the country's largest motorcycle manufacturer, also posted muted growth of 1.4% year-on-year at 66,31,026 vehicles in March as sales in the commuter segment (under 110cc) lagged in rural markets. Around 55-60% of Hero’s total motorcycle sales come from the rural market.
Pawan Munjal, managing director and CEO, said that in FY15 the industry continued to remain sluggish due to overall market sentiment and the slowing rural economy.
“Thanks to a series of measures undertaken by the government at the Centre, the economic outlook is definitely better and it is likely to fuel growth and help the industry,” added Munjal.
Though domestic sales have suffered in the last four months, the company still commands 55% share in the domestic market.
Japanese two-wheeler manufacturer Honda Motorcycles’ domestic sales were down 18.27% y-o-y in March. The company refused to comment on its domestic motorcycle sales.
On the other hand, Chennai-based TVS motor registered 13% y-o-y growth in March.
Analysts say rural wages have grown 15-20% each year over the last four years, but in the last one year, it has fallen to single digits.
An auto sector analyst with a foreign brokerage said that a negligible increase in the minimum support price for sugarcane farmers in Uttar Pradesh, Maharashtra and Madhya Pradesh resulted in a decrease in disposable incomes of consumers in these regions, leading to a fall in demand.