Honda marches past Bajaj Auto in monthly sales; Bajaj remains second in annual sales

Honda has for the first time overtaken Bajaj Auto as the second-largest player in the country's two-wheeler market behind its erstwhile partner Hero by selling 2,429 bikes more than the Indian firm in March.

Honda Motorcycle & Scooters India, makers of CB Unicorn bike and Activa scooter, sold 2.13 lakh two-wheelers in March, some 55% more than last year. For 2011-12, however, Bajaj Auto remained the second-largest player after Hero MotoCorp, selling over 5 lakh units more than Honda.

But the Japanese brand was the largest gainer among the top four companies in FY12, increasing its sales by almost one-third, although a chunk of its sales come from scooters.

Bajaj Auto, which focuses only on motorcycles, preferred to shrug off Honda's steady gain the Indian two-wheeler market.

"As the most profitable motorcycle manufacturer, we are indifferent to someone else's scooter sales," Bajaj Auto President, Motorcycle Business, K Srinivas said.

Bajaj gets around 35% of its volumes come from high-margin export markets, helping it to post consistent operating profit margins of roughly 18%.

THRILLING RACE

While Bajaj continues a large lead on the annual sales over Honda, analysts expect the Japanese to intensify the battle in coming days, particularly with its entry into entry-level segment.



"The bulging market size of the India two wheeler market is throwing opportunity for global players. It has intensified competition and companies offering better products and technology would have a higher stake in the future," Raamdeo Agrawal, joint managing director at Motilal Oswal Financial Services, said.

Honda has made public its aim to become the market leader by 2020 by cornering a third of the Indian two-wheeler market. The company expects around 30% of its global sales to come from India, up from 13% now.

And it's steadily gaining ground. In 2011-12, it beat TVS Motors as the third largest two-wheeler maker. And it is maintaining its stronghold in the scooter segment, which is the fastest growing vehicle segment in India after the light commercial vehicles. Aggregating 25% growth in the fiscal, compared to 13% for bikes, scooter sales crossed 25-lakh mark in 2011-12.

Honda Motorcycle & Scooters is expanding production capacities to around 4 million vehicles by 2014 and plans to increase it further to 10 million.

"We have posted consistent growth in line with out strategic growth in India," a senior company official said.

"We are concentrating on the upcoming launch of our new mass-volume entry-level 110 cc bike that is expected to be a game-changer for Honda," said the person, requesting anonymity for not being authorised to speak to media.

With Honda preparing to launch its first high volume 110 cc bike the Yuga in May and Suzuki bringing its same segment 110 cc Hayate, the largely indigenous TVS Motors may find difficult to handle the new global competition.

Sales of TVS Motors, which has for the first time trailed to the fourth spot, are now largely confined to smaller engine mopeds and scooterettes, while its share is shrinking in the high margin motorbikes market.

HERO GOING STRONG

Market leader Hero MotoCorp, meanwhile, maintains its huge lead and, unlike TVS Motors, has braced both Indian and Japanese competition strongly.

It has demonstrated a robust growth of 16% in the 2012 fiscal year on a high base of 5-million units-a-year and accounted for 56% of all bikes sold in the last fiscal year. It also has forayed into the scooter segment and aims to have a sizeable chunk with its twin offering of Pleasure and Maestro scooters.

"Scooters form a major part of the portfolio and we are looking at increasing the production of at least 50,000 units to cater to the demand," Hero Honda Senior VP (Marketing & Sales) Anil Dua said.

In comparison, Bajaj Auto completely exited the market two years ago. Kotak Institutional Finance analyst Hitesh Goel, in his monthly update on the twowheeler industry, said he expected motorcycle ales to grow slower than car sales. "The slowing market is more prominent in the premium segment as urban demand is slowing more sharply than rural demand that would intensify the competition," Goel said.