2-wheeler sales rise in April after 10 months

But road ahead bumpy because of inflation and continuing chip shortage

Motorcycle and scooter dispatches rose year-on-year (YOY) in April for the first time in 10 months, shows monthly sales data released by manufacturers. This was aided by an early harvest and pent-up demand from the wedding and festive seasons, industry insiders said. Last year’s low base added made the performance look more impressive.

Cumulative dispatches at the top six firms — including Hero Motocorp, Honda Motorcycle and Scooter India, TVS Motor, Bajaj Auto, Suzuki Motorcycle, Royal Enfield, and Suzuki Motorcycle India — increased 19.8 per cent to 11,19,299 units from 9,34,221 units in the corresponding period last year. Auto firms in India count dispatches to dealers as sales.

However, the good show is unlikely to continue beyond a few months. High raw material prices, which in turn would force companies to jack up prices, will weigh on demand. Besides, the continuing shortage of semiconductors will plague supplies. Meanwhile, income earners are yet to recover from the economic impact of the pandemic.

“Sales are likely to remain under pressure as the demand and supply side issues, including impending price hikes by manufacturers, will come back to haunt buyers,” said Mitul Shah, head of research at Reliance Securities.

He expects margins of two-wheeler companies to drop as manufacturers reeling under cost pressures due to high commodity prices will have limited headroom to pass on costs.

Others agree. “The momentum is unlikely to last beyond a couple of months,” said Hemal Thakkar, director, Crisil. The agency expects the fiscal to end on a flattish note for the segment. The pressure could be higher if the monsoon is not normal, said Thakkar.

Two-wheeler market leader Hero Motocorp led the sales rally. The firm saw its monthly dispatches advance 12.4 per cent YOY. It attributed the growth to the opening up of the economy and government support.

TVS Motor, the third largest in the pecking order, saw dispatches jump 37 per cent YOY. The shortage in the supply of semiconductors has impacted the production and sales of premium two-wheelers, the company said in a statement.

“Our new products have been well received by customers and we are optimistic that volumes will revive once the semiconductor supplies improve,” it said.

The semiconductor shortage hit Bajaj Auto, whose sales skidded 26 per cent YOY. April was one of the worst months for the company in terms of semiconductor availability, Rakesh Sharma, executive director, Bajaj Auto, said last week. Bajaj has guided for a 15-20 per cent impact on domestic volumes.

Sales at Suzuki Motorcycle declined 8 per cent YOY. Satoshi Uchida, managing director, Suzuki Motorcycle India, said the industry continues to navigate through the challenges thrown by the pandemic and semiconductor shortage.

“We look forward to easing out of the supply limitations so that we can cater to the ever increasing demand for Suzuki two-wheelers both from the domestic and overseas markets,” he said.