Two wheeler cos see flat growth in Q3 as economy slows
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India’s two wheeler makers are now facing slowdown this quarter as the slowing economy has now begun to hurt. The two wheeler makers had so far enjoyed a dream run of sorts and grew rapidly even when car sales were hitting a speed bump.
Market leaders Hero MotoCorp, Bajaj Auto and TVS Motor are expecting growth this year to moderate to just 10 per cent or even lower this quarter, from nearly 20 per cent in the last few years.
K Srinivas, President Motorcycles, Bajaj Auto told NDTV Profit that the two-wheeler major saw some negative figures in terms of retail sales in the month of December; but expects the industry to grow at 10 per cent this year.
“In terms of billing, it didn’t happen; but in terms of retail, there was negative growth,” Srinivas said.
He further said that the retail growth has been flat in January.
“So this quarter, the growth would be sub 2 to 3 per cent; maybe more or less flat,” he said.
TVS, meanwhile, said that it is expecting a 10 per cent growth in the industry in the third quarter.
“We will also be in line or marginally better than that growth,” K N Radhakrishnan, President & CEO, TVS said.
The story is, however, different for players like Honda and Yamaha. The two companies are growing at a massive 21 per cent and 31 per cent respectively, much faster than the industry due to a low base effect.
They are also eyeing a bigger share of the market in the year 2012 with new launches in the mass market segment.
But with a large segment of the population still available for potential sales, experts believe the industry will bounce back.
Abdul Majeed, Auto Practice Leader, PwC India says that this is only a temporary phenomenon.
So while softening in rural demand is hurting growth for mass market players now, outlook could improve next year.
In the next financial year, multi-national bike makers will compete with home grown players head on.
Customers will see many big scooters and bike launches from all companies. But until rural customers buy in huge numbers, growth will remain muted around 10 per cent for India's largest two-wheeler makers.