We're reading too much into weak two-wheeler demand: Hero Moto exec

The optimism is in contrast with the dealers' confidence, which flagged the recovery in motorcycles and scooters "as an area of concern"

Hero MotoCorp, the two-wheeler market leader expects demand to come back strongly during the festive season and the industry that has been reeling under slowing sales to be out of the woods.  

“My sense is that we are reading too much into it (the slowdown). If you look at how the beginning of the festive season has been, we get a lot of confidence. We see the urban markets coming back strongly in Q2,” Ashutosh Varma, head of national sales at the firm, told Business Standard on the sidelines of the Fourth Auto Retail Conclave hosted by Federation of Automobile Dealers Association (FADA).  

Varma’s optimism on the road ahead is in contrast with the dealer body’s confidence, which flagged the recovery in motorcycles and scooters “as an area of concern” in its monthly retail sales update earlier this month.

Two-wheeler sales in the world’s largest market have been in a slow lane for over two years amid poor demand. Though the volumes have started looking up during the past 3-4 months, they are way below the volumes the industry clocked in the pre-pandemic period. Retail sales for the month of August rose 8.5 per cent year on year to 1,074,266 units, but contracted 16 per cent when compared to August 2019, FADA said in a release earlier this month.  

On an average, a Hero dealer has two months' inventory and fears that ahead of the peak festive season, the stockpile will only grow as the company pumps in more vehicles.

“Ideally, the inventory at this time of the year should be 40-45 days, its higher by 15 to 20 days,” said a person familiar with stock levels.

Dismissing the fears, Varma said, “The inventory is always in line with our retail plans. Inventory is the function of the retail plans of the company and it’s very much in line,” he said.

Hero is expected to launch attractive schemes during the upcoming season as it seeks to attract buyers amid a lack-lustre demand.  Varma said the schemes are not out of the ordinary and in line with what the company and industry offers every year. “We still have to finalise the schemes,” he said.

In the slow lane

1. 1,074,266 two-wheelers sold in August
2. 16 per cent fewer two-wheelers sold last month than in August 2019; the figure is up 8.5 per cent YoY
3. 2-month inventory with Hero dealers; it should have been for 40-45 days