Bike Stoppie: Depressed rural market hits two-wheeler sales

By Rohit Vaid

New Delhi, Sep 3 (IANS) Liquidity constraints along with depressed farm incomes and natural calamities have continued to decelerate two-wheeler sales.

The segment is considered to be a barometer for rural demand but has been dented along with the overall automobile sector from a consumption slowdown which is a culmination of several factors like high GST rates, farm distress, stagnant wages and liquidity constraints.

Besides, inventory pile-up at the dealership level and stock management of unsold BS-IV vehicles have become a problem for the sector.

"The lag effect in rural turnaround is imminent from the sales figures of several two wheeler companies for August," Grant Thornton India LLP Partner Sridhar V. told IANS.

"Festive season could provide a revival in consumer sentiments. However, it will take a few months to see an upturn."

According to Madhavi Arora, Economist with Edelweiss Securities: "Depressed farm income along with natural calamities in several parts of the country has hit the rural market hard and the impact has percolated to two- and three-wheeler sales."

"However, healthy monsoon rains and festive seasons might bring in some respite to the sector."

Company-wise, Bajaj Auto's overall sales including motorcycles and commercial vehicles plummeted by 11 per cent to 390,026 units sold in August from 437,092 units off-take in the corresponding period of last year.

Similarly, TVS Motor Company registered sales of 290,455 units during the month under review from 343,217 units in August 2018.

Honda Motorcycle & Scooter India closed August 2019 with total sales of 452,389 units down from an off-take of 614,476 units during the corresponding period of last year.

Two-wheeler major Hero MotoCorp sold 543,406 units of motorcycles and scooters during the month under review from 685,047 units sold in the month of August 2018.

On Monday, the Society of Indian Automobile Manufacturers said the market has still not responded to the various measures initiated by the government to reverse the slowdown that has dented the industry.

Reacting to the dismal sales numbers of various companies for August, SIAM President Rajan Wadhera said the series of announcements on credit availability and reducing the cost of credit that were made do not seem to have percolated down to the NBFCs which support the bulk of finance for the automotive industry.

To help revive the sector, Finance Minister Nirmala Sitharaman on August 23 had announced that the government departments would be allowed to buy new vehicles, automobiles purchased till March 31, 2020 could avail the benefit of additional depreciation of 15 per cent, with total depreciation up to 30 per cent, and BS-IV vehicles bought till March 31, 2020 would remain operational for their entire registration period.

(Rohit Vaid can be contacted at rohit.v@ians.in)