Motorcycle sales fall for second consecutive month

  • Dec 11, 2014
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Farmers and rural buyers are big sales drivers for the motorcycle sector. A delayed and weak monsoon is said to be the main cause for weak demand in rural areas

Commuter motorcycles

For the second straight month, motorcycle sales have fallen. Data from manufacturers and comments from industry executives suggest a weak and delayed monsoon is the main culprit.

This consecutive decline in sales has come after 14 months of modest gains. Overall, two-wheeler sales are likely to remain in the positive territory, as scooter sales continued to surge.

In October, when bumper sales were expected due to major festivals, motorcycle sales fell 8.8 per cent from a year earlier. The slide continued in November when factory despatches are estimated to have dropped 3.1 per cent.

The month-on-month decline after the festive season has been steeper on the retail front. Retail sales generally fall 35-40% month-on-month in November as October is festival-laden month.

However, this year the drop has been about 45-48%, signalling tough times for the motorcycle segment in the coming quarters as well, a senior executive said.Official industry numbers will be available only when the Society of Indian Automobile Manufacturers (SIAM) releases sales data later in the month.

It was not a great festive season and the market was not as buoyant as expected for the period, said Eric Vas, president of the motorcycle division at Bajaj Auto.

"While the wholesale volumes have de clined, the retail scenario is worse. The buoyancy in rural areas is less as the delayed monsoon has impacted harvest and thereby proceeds from the business," he said. "We are seeing signs of people deferring their purchase and the replacement cycle, which was reducing, is again going up."

100-110cc commuter motorcycles

In India's motorcycle market, farmers and rural buyers are big sales drivers. As much as 46% of sales at local leader Hero MotoCorp, 40% at Bajaj Auto and 35% of Honda Motorcycle & Scooter India (HMSI) come from rural areas, where monsoon has a big influence on consumer sentiment and purchase decisions. In a country where about 60% of the farmland is rain-fed, the June-September monsoon that brings about 70% of its annual rainfall is key to farm output and farmers' income.

Rural demand picks up in the years when rains are plentiful, while when they are less, purchases slacken. This year, overall rainfall was about 12% below what was considered as normal. In big agrarian states like Punjab, Haryana and Uttar Pradesh, the decline in rains was sharper. At the same time, floods in some regions and the cyclone in Andhra Pradesh also affected farm output.

Bajaj Auto is considering increasing prices of its mass-market Discover and Platina range of motorcycles in January because of an increase in costs.

The country's second largest motorcycle maker has already increased the price of its Pulsar range of sports bike by 1.5-1.7%, or about Rs 1,000, after market leader Hero MotoCorp and Honda Motorcycle & Scooters India raised prices by 0.5%-1% in October. 

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