Captains of Auto Inc are maintaining prudent inventory levels to align with changing dynamics of the two-wheeler industry despite festive season.
25 Oct 2021 | 4987 Views | By Shahkar Abidi
It is not exactly fair weather across the two-wheeler space even though the industry is in the midst of the festive season. Even as the number of enquiries at two-wheeler showrooms have increased by about 30 percent during the ongoing festive season, not all of them seem to be translating ...
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It is not exactly fair weather across the two-wheeler space even though the industry is in the midst of the festive season. Even as the number of enquiries at two-wheeler showrooms have increased by about 30 percent during the ongoing festive season, not all of them seem to be translating into actual sales. Nevertheless, with Dhanteras and Diwali falling in the first week of November, industry stakeholders remain hopeful of the situation turning around, though not to the 2018-1019 peaks.
Speaking at the inaugural day of Autocar Professional’s mega ‘Two-wheeler Week’, YS Guleria, Director (Sales & Marketing), Honda Motorcycle & Scooter India (HMSI) said that the two-wheeler industry is keenly monitoring the sales dynamics and prepared to realign their business strategies accordingly, “It's prudent for us to take some signal from the market and be prepared in advance and keep further control of our activities.” The two-months long festive season, which begins in October, accounts for over 40-50 percent of the industry's total annual sales.
However, what may seem to be cause of concern is that rural markets are still muted in the road to revival post Covid-19. “Rural markets remain under pressure even today,” Guleria added stressing that top end models of popular two-wheeler brands continue to do brisk business just like SUV segments in four-wheelers.
The two-wheeler industry has been facing multiple headwinds on account of increase in cost due to the spike in commodity prices, regulatory mandate and slowing economy. The pandemic further exacerbated the impact, denting the sales of sub-125 cc category which forms over 70 percent of overall two-wheeler sales. Rising petrol prices, logistic issues, semiconductor shortages have ended up adding to the problems with a significant number of customers avoiding or postponing their purchases. In fact, following a cautious approach, HMSI, similar to many of its peers, has been maintaining inventories for 45-50 days this festive season compared to significantly higher inventory levels in pre-Covid 19 years.
Seconding Guleria the other participants of the panel, Vinkesh Gulati, President, Federation of Automobile Dealers Association (FADA), said that even a Rs 1,000 hike in vehicle price tends to impact the demand for two-wheelers. “In the last year , there have been 4-5 price hikes. This year has been more about survival and a resilient Indian auto industry has done wonders. Theer have been lots of disruptions, but let's hope for the best,” Gulati added.
Deepak Jain, Chairman & MD, of leading Tier-1 supplier Lumax Industries said that presently the auto manufacturing industry is going through several blind-spots. Jain added that at the start of FY2022, two-wheeler sales forecasts were close to double digits, “But I expect sales this fiscal to be stable, single digit by the time FY2022 ends, close to sub- 20 million vehicles.” According to Jain, the Tier 1 suppliers are hand holding Tier 2s and Tier 3s during difficult times, just like OEMs did with their Tier 1 suppliers.
Offering a perspective from the financing side, Srinivas Kantheti, Co-founder & MD, Bike Bazaar however brought in an optimistic spark to the conversation highlighting how vehicle loan collections from the rural segment have gone up, “I am not too pessimistic about it” said Kantheti. The company expects penetration of the rural segment to increase to over 70 percent in their vehicle loan portfolio as compared to about 55 percent at present.
The session concluded with most speakers anticipating a flat sales growth curve for this fiscal and hopes of more pronounced recovery going forward.