Hero Honda leads February rise in motorcycle sales

Manufacturers say progress depends on recovery in financing.

February sales for the country’s largest motorcycle manufacturer, Hero Honda, rose by 24 per cent to 329,055 units, against the 265,431 units sold in the same month last year.

Barring a 10 per cent dip in sales for December 2008, the company’s sales have grown since April last year, to post a 11 per cent growth until February 2009. This is against the industry growth of only 1.7 per cent for the period.

Analysts attribute this success to three factors: One, the company's focus on the 75–100 cc segment, where it derives as much as 88 per cent of its sale volumes. Two, its rural marketing initiatives, predominantly a cash-down segment. Three, its bestselling brands like Passion and Splendor, that outsell competitors in the 100 cc and 125 cc segments.The company's market share, a little over 50 per cent at the beginning of 2008, has increased to 56 per cent.
 

TOP GEAR
Company	February 08	February 09	% change
Hero Honda	265,431	329,055	24
Bajaj Auto	159,508	132,393	-17
TVS Motors	60,998	69,191	13.43
Yamaha	5746	15,033	162
Total	491,683	545,672	10.98

Bajaj Auto, the number two, has seen sales for February dipping by 17 per cent, selling 132,393 units against the 159,508 units sold for the same month last year. However, the newly launched Bajaj XCD 135 DTSi motorcycle launched last month has sold 20,668 units in the first month of its launch, making it the largest selling model in this category after Hero Honda's Splendor.

The company has also announced a slew of launches that include two new models in the high-powered motorcycle category for 2009 and four brand refreshes in the 125-plus cc category.

TVS Motors posted a 13 per cent rise in February sales, selling 69,191 units against the 60,998 units in this month last year.

Yamaha India posted a whopping 162 per cent growth in February, selling 15,033 units against the 5,746 units for the same period last year. Much of this came from the runaway success of two brands launched last year, the YZF R15 and FZ16.

Analysts say the single most important driver for the industry in coming months will be the ease with which financing is available. Many of the private banks and NBFCs that contributed almost all the two-wheeler financing have reduced their exposure, following rising loan defaults. Following which, the level of financing that stood at 60 per cent earlier has dropped to about 35 per cent. Of this, private banks like HDFC contributed more than half the loans.

Industry executives say the upcoming RBI guidelines on vehicle repossession will provide the necessary assurance for private financiers to re-enter the segment, which could boost two-wheeler sales.