Weak demand drives Hero, Bajaj to offer discount in key segments

A stockpile of unsold inventory and weak demand have prompted twowheeler makers including Hero Motocorp and Bajaj Auto to offer steep discounts on their entry and executive models. This comes as a contrast to the January price hike meant to offset a sharp increase in input costs.

The trend reflects that the pain is far from over for the world’s largest two-wheeler market. Together, the two segments (entry and executive) account for 75 per cent volumes, said dealers. To some extent, the discount further dilutes the growth in February sales numbers reported by companies. The growth had anyway come on last year’s low base.

Ahead of the transition to BS VI emission norms in April 2020, companies had started curtailing dispatches to dealers. Auto firms report dispatches to dealers as sales. Therefore, this year's discount trend is not comparable to last year's. But according to dealers, the quantum is higher than what is seen during festivals.

Bajaj Auto, the third largest in the pecking order, is doling out consumer offers of up to ~5,000 on its CT110 and Platina models. The offers are valid till March 15.

Hero Motocorp, the two-wheeler market leader, is offering incentives to buyers on select models across the range, including premium motorcycles. The company has also extended the scheme meant for government employees till March 15.

A Hero Motocorp spokesperson didn’t respond to an email on the subject till the time of going to press.

Honda Motorcycle and Scooter India (HMSI), the second largest two-wheeler maker, does not have any consumer offer, a top official said.

“If you look at the last two to three years, it is indeed a bit unusual for major players to offer discounts,” said Rakesh Sharma, executive director at Bajaj Auto. In the super premium segment (above ~100,000), the supplies are chasing demand due to shortage of semiconductors, he pointed out. ‘’The demand is holding up even in the 150cc and above segment.’’

The pain will continue till mid-april. OEMS (Original Equipment Manufacturers) increased discounts for entry-level models to push sales, Jinesh Gandhi, analyst at Motilal Oswal, wrote in a recent research report.

HMSI, that has a relatively small presence in the entry level of the market as compared to Hero, Bajaj and TVS, is striking a different note. “We haven’t been into the war of buying market share and are moving cautiously, said Y S Guleria, director— sales and marketing, HMSI.

“We will end the current fiscal with a growth on last year’s low base,” Guleria said. The company will maintain a stock level of 30-35 days unlike historical levels of 4045 days in the past. ‘’There have been no offers in the last two to three months and we don’t have any intention either,’’ he added.

Hero has been offering discounts regularly for the last couple of months. Bajaj has focussed on gaining market share and gain volumes. In mid-february, it offered a discount of ~5,000 even on a hot selling model like Pulsar, said a source. “The consumer offers we are seeing in the market now exceeds the festive discounts,” he said.