Two-wheeler makers roll out discounts | Economic Times

India’s leading two-wheeler makers are offering cash discounts and attractive financing schemes to shore up retail sales of motorcycles and scooters, which have been hit due to high fuel prices and a fresh surge in Covid-19 infections across the country.“Retail sales of two-wheelers continue to be sluggish at the entry-level. These customers are mostly first-time buyers, who are not moving out much due to the spread of Covid-19 cases”, said Vinkesh Gulati, President at Federation of Automobile Dealers Association (FADA). “They are worried about job losses, low income levels…With educational institutions closed, employees in most offices are either working from home or on a rotational basis. They are hesitant to make purchases for commuting purposes.” 81717885Enquiry levels in the two-wheeler segment are down 35%, said industry observers. There are discounts in the range of Rs 1,500-5,000 across motorcycles and scooters available in the local market. However, traction remains low.This is in sharp contrast to car sales, where there is a shortage of vehicles as demand has far outstripped the supply and discounts are hard to come by.Industry sources said that to reduce stocks, Hero MotoCorp is extending benefits of Rs 3,500 on its affordable motorcycle HF Deluxe. TVS Motor Company has discounts of Rs 3,000 on its motorcycles Sport and Radeon, and Suzuki Motorcycle India is offering benefits in the range of Rs 2,000-4,000 on some products. Meanwhile, Honda Motorcycle & Scooter India (HMSI) is offering 100% finance at a reduced interest rate of 6.5% to customers of SP 125.“We are hoping that footfalls and sales pick up in the upcoming festive season, starting with the Navratra. Currently, 83% of the fresh cases are restricted to five states, the concern is not there in other states. 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”, informed Gulati.Hero MotorCorp, Bajaj Auto and TVS Motor did not respond to ET’s queries.Yadvinder Singh Guleria, Director (Sales & Marketing), Honda Motorcycle & Scooter India (HMSI), said the company has started the new year on a strong note, recording 20% growth in domestic sales, compared with industry growth of 8%. HMSI has rationalised inventory by 30% to 30 days.“With new lockdowns, dealer inventory has witnessed a 5-7 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 levels,” said Guleria.Guleria added the upcoming marriage season should accelerate buying as many weddings were postponed last year. Further, the vaccination drive is expected to bolster consumer sentiment. The re-opening of educational institutes in a few months, too, should boost sales, he said.Last month, two-wheeler registrations had declined by 16% to 1.09 million units. In fact, retail sales of two-wheelers have declined every month so far this fiscal year except December, show data compiled by FADA from the government’s VAHAN portal. This includes data from 1,270 out of 1,477 RTOs in the country as Andhra Pradesh, Madhya Pradesh, Lakshadweep and Telangana are yet to migrate to the VAHAN platform.Wholesale volumes of two-wheelers – a measure of dispatches from factories to dealers - however, went up by 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, passenger vehicle (car) dealers have an inventory of just 10-15 days.“Smaller companies, including SMEs, have seen a greater fall in revenues as compared to larger companies this fiscal. Thus, income sentiments of a typical two-wheeler buyer in the urban market has been impacted to a greater extent as compared to a typical buyer of a passenger vehicle (PV),” said Hetal Gandhi, Director, CRISIL Research.Meanwhile, the decline in interest rates for the two-wheeler segment was about 60 basis points, or half that for PVs, when compared to pre-Covid rates, she said. “This has aided demand for PVs, less so for two-wheelers.”To be sure, retail sales of two-wheelers will show a year-on-year growth this month, but that will be on a low base since lockdowns impacted sales March onward last year. Real growth will only kick in once the vaccination drive gains pace, with offices and academic institutions becoming fully functional.“Affordability is an issue. Prices of two-wheelers have almost gone up by 20% in the last 1.5-2 years," a two-wheeler dealer based in North India told ET, on the condition of anonymity. "With fuel prices being high, the cost of ownership has increased even further. Inventory is expected to rise further by the end of the month.”