Demand for economy segment motorcycles — an indicator of the demand scenario in the rural market — is again on the rise in the first six months of the current financial year after staying subdued in the last three fiscals due to inadequate rainfall, the adverse impact of the demonetisation move and a ban imposed by the Supreme Court over the sale of BS III vehicles. In April-August, most of the Hero MotoCorp and TVS Motor offerings in the segment showed an improvement. Volumes of Hero’s HF Deluxe rose 33.65% year-on-year to 931,046 units, while that of its Splendor rose by 5.88% year-on-year to 139,478 units while for Passion, volumes were up 2.11% at 517,381 units. In September, Hero’s wholesale volumes touched 7 million units for the first time ever.
Hero has been the prime beneficiary of this development since it is the largest player in the segment and accounts for 55-60% of total volumes. The Chennai-based TVS also saw volumes of its economy segment offering, Star City, rise by 10.51% year-on-year to 95,803 units while that of its Sport was up 15.5% at 118,602 units.
For Bajaj Auto’s offering in the segment, Platina volumes were flat while that for CT fell 5.9%. Volumes were expected to rise in FY17 but demonetisation led to a drop in demand in rural markets. In the first quarter of this year, volumes in the segment began to grow on the back of renewed availability of cash in the market. The onset of the marriage season in May and farm loan waivers announced by different states further boosted sentiments in rural markets.
According to sector experts and executives, good rainfall in this year’s monsoon, except for a few parts will lead to a better harvest, which will further boost the sale of economy segment motorcycles.
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“The automobile sector has witnessed gradual volume growth August onward and this was partly led by pre-festive inventory filling and positive rural sentiment in key markets. Our channel checks suggest above-average volume growth in key rural markets during this festive season,” Motilal Oswal analysts said in a report.
According to Society of Indian Automobile Manufacturers data, volumes in the motorcycle segment increased 3% in FY17, while it declined marginally by 0.26% in FY16. Motorcycle volumes in FY15 rose 2.5%. In the April to September period of the current fiscal, volumes in the segment increased 7.7% to 6,508,952 units. Almost 50% of the total volumes in the motorcycle segment is contributed by economy segment models.