Two-wheeler makers roll out discounts

Major two-wheeler makers are offering cash discounts and attractive financing options to shore up retail sales, as high fuel prices and a fresh surge in Covid-19 infections hurt purchases of motorcycles and scooters.Enquiries in the two-wheeler segment are down 35%, industry observers said, and discounts are about ₹1,500-5,000. Still, sales have yet to gain traction.This is in sharp contrast to car sales, where there is a shortage of vehicles as demand far outstrips supply and discounts are hard to come by. 81717885“Retail sales of two-wheelers continue to be sluggish at the entry-level,” said Vinkesh Gulati, president of the Federation of Automobile Dealers Association (FADA).Customers – mostly first-time buyers – are not moving out much due to the rising number of cases, he said.“They are worried about job losses, low income levels…With educational institutions closed, employees in most offices are either working from home or on rotation. They are hesitant to make purchases for commuting purposes,” Gulati said.To reduce inventory, Hero MotoCorp is extending benefits of ₹3,500 on its affordable motorcycle HF Deluxe. TVS Motor Company is giving discounts of ₹3,000 on its motorcycles Sport and Radeon, while Suzuki Motorcycle India is offering ₹2,000-Rs 4,000 on some products. Honda Motorcycle & Scooter India (HMSI) is offering 100% finance at a reduced interest rate of 6.5% for those who purchase its SP 125 bike.Hero MotorCorp, Bajaj Auto and TVS Motor Co did not respond to ET’s requests for comment.HMSI has recorded 20% growth in domestic sales, compared with industry growth of 8%. It has also rationalised inventory by 30%, to 30 days, said Yadvinder Singh Guleria, Director (Sales & Marketing).“With new lockdowns, dealer inventory has witnessed a 5 to 7-day uptick in a few pockets, but this is manageable and not worrisome as we are now maintaining lower inventory in our network, compared with pre-Covid-19 levels,” Guleria said.The upcoming marriage season should accelerate buying as weddings were postponed last year. Further, the vaccination drive is expected to bolster consumer sentiment. The re-opening of educational institutions in the next few months, too, should boost sales, he said.“We are hoping that footfalls and sales pick up in the upcoming festive season, starting with the Navratra. Currently, 83% of fresh cases are restricted to five states, the concern is not there in other states,” FADA’s Gulati said. “On the downside though, it is creating a fear psychosis and if infections continue to rise, customers at the entry-level may stop spending, even without a lockdown.”Last month, two-wheeler registrations declined by 16% to 1.09 million units.In fact, retail sales of two-wheelers have declined every month so far in the ongoing fiscal year except in December, data compiled by FADA from the government’s VAHAN portal showed.This includes data from 1,270 out of 1,477 RTOs in the country as Andhra Pradesh, Madhya Pradesh, Lakshadweep and Telangana have yet to migrate to the VAHAN platform.However, wholesale volumes of two-wheelers – a measure of dispatches from factories to dealers – rose 10.2% to 1.43 million units in February - the seventh straight month of growth, according to the Society of Indian Automobile Manufacturers (SIAM).As wholesale races ahead of retail, dealers are now holding up to 6-8 weeks of stock from an average of 4-5 weeks reported by FADA earlier this month. Meanwhile, car dealers have an inventory of just 10-15 days.“Smaller companies, including SMEs, have seen a greater fall in revenues compared to larger companies this fiscal. Income sentiment of a typical two-wheeler buyer in the urban market has been impacted to a greater extent, compared to a typical buyer of a passenger vehicle,” said Hetal Gandhi, Director, CRISIL Research.The decline in interest rates for the two-wheeler segment has been about 60 basis points, or half that for PVs, when compared to pre-Covid-19 rates, she said. “This has aided demand for PVs, less so for two-wheelers.”Retail sales of two-wheelers are, however, expected to show year-on-year growth this month, but that will be on a low base since lockdowns had impacted sales from March onward last year.Real growth will only kick in once the vaccination drive gains pace, with offices and academic institutions becoming fully functional.

from Economic Times https://ift.tt/2O3gY3K
via IFTTT