Demand for two-wheelers further slumped in July with Hero MotoCorp, the country’s largest two-wheeler maker reporting a 21.18% year-on-year (y-o-y) decline in wholesales to 5,35,810 units, the ninth consecutive month of subdued sales.
Overall, two-wheeler manufacturers, including Honda Motorcycle, Bajaj Auto and Royal Enfield sold an average of 20% y-o-y less units during the month as high prices and costlier finance kept the customers on the back foot. Demand for two-wheelers was impacted by hike in insurance premium in September 2018 and subsequent price hikes taken by companies on April 1 on account of features provided to comply with the new safety norms.
Among car makers, Tata Motors’ despatches fell 31% y-o-y to 10,485 units in July. This was the 13th consecutive month when car sales remained subdued, as manufacturers, including Maruti Suzuki, Hyundai Motor India, Mahindra & Mahindra (M&M), also reported a double-digit decline in domestic sales in July.
Car manufacturers have been cutting production for several months now, to control inventories. However, inventories remain at levels that are higher than normal. Despite production cuts, dealers have an inventory of 35-40 days and factory stockyards are understood to be short of space. A dull festive demand last year due to increase in insurance premium and costlier finance led to the pile-up, as manufacturers continued to despatch vehicles in anticipation demand would pick up. In May, volumes had plummeted 21% y-o-y — steepest since September 2001 (21.91% y-o-y).