Meanwhile, registration of two-wheelers in January doesn’t paint a positive picture. It dropped 7 per cent to 698,586 units in the domestic market, compared to the same month a year ago. Also, the inventory remains high. “Unlike passenger vehicle makers, most of whom curtailed dispatches in December to rein in excess inventory in dealerships, one hasn’t seen a similar trend in the two-wheeler segment, and dispatches remained high in December,” said a source. As a result, inventory continues to be in excess of 45 to 60 days, against the norm of 30 to 35 days, he said.
Registration volumes have been dragged down by market leader Hero MotoCorp that sells a two-wheeler in the rural market every second, said a dealer. Spokespersons at Hero MotoCorp and Honda Motorcycle and Scooters India, the country’s two biggest two-wheeler manufacturers, declined to comment.
Analysts bearish on the sector
“We remain extremely cautious of the two-wheeler segment,” said Nitesh Sharma, analyst at Phillip Capital.
Sharma said inventory at Hero MotoCorp and Honda Motorcycle dealerships were likely to be as high as 60 days. “A high pile of the unsold stock has forced some of the Hero dealers to rent warehousing space,” said Sharma.
This is mounting further pressure on their margins and profitability, he said. He expected sales to remain under pressure on all companies as the new safety legislation and emission norms were expected to push up prices by 13 to 15 per cent.
Low volumes are an indicator of poor rural sentiment, wrote Soumya Kanti Ghosh, group chief economic advisor at State Bank of India’s Ecowrap research report on January 21. “There is a significant decline in sales and registration of two-wheelers, which suggests rural sentiments are quite low in the past couple of months because of falling rural demand, led by low farm income,” wrote Ghosh.
Overall, registration of automobiles, including passenger vehicles, heavy and light goods vehicles, and two-wheelers, dropped 21.8 per cent in December from the November figures.