Hero MotoCorp expects its two-wheeler sales to rise during the festivals season in October after two straight months of fall in demand for motorcycles, due to a weak monsoon and high petrol prices.
The firm is also looking to clear accumulated inventories of unsold two-wheelers stacked at dealerships during the month even as the demand outlook for sales remains bleak this month and after the festive season ends.
“We are personally very hopeful that sales will turn positive in October after two slow months (July and August). We are also glad that we have managed to put out stocks that the market requires during the festive season,” Pawan Munjal, managing director and chief executive, Hero MotoCorp.
The largest two-wheeler firm’s sales fell for the first time in many years in the last two months as motorcycle demand waned at the entry-level where it sells best selling bikes such as Splendor and Passion.
In July, Hero MotoCorp’s sales fell one per cent at 484,217 units compared with 491,036 in the year-ago period. In August, the fall was even sharper at 443,801 cars, 12 per cent lower against 503,654 units sold in August 2011.
Hero MotoCorp’s dealers have been grappling with inventories of around six weeks as against the typical industry norm of three to four weeks that is ringing alarm bells for the motorcycle market with no sign of reduction in petrol prices. The market leader notwithstanding, sales of rival Bajaj Auto and fourth-ranked TVS Motor have also been falling over the last two months.
“Thankfully, the fall in two-wheeler sales has happened much later than the rest of the economy. However, it is difficult to give a full year forecast as we have to wait and watch demand after festive season,” Munjal added.
During August, Bajaj Auto’s motorcycle sales plummeted 10 per cent at 304,352 units compared with 338,054 in the year-ago period. Sales of TVS Motor also fell 21 per cent at 154,647 units last month against 194,898 units in August 2011.
However, Honda Motorcycle and Scooter India, which sells more scooters than motorcycles, has seen steady growth. The firm’s sales rose 39 per cent at 222,768 units compared with 160,666 in the year-ago period on the back of newly launched models such as Dream Yuga motorcycle.
