Two-wheeler makers face bumpy export ride

Two-wheeler exports jumped 18 per cent in the year ended March, to a record 2.45 million units, according to the SIAM

External factors are making foreign rides rougher for two-wheeler makers Bajaj, Honda and TVS, in a market hitherto unaffected and giving some cushion against low domestic sales growth.

Most entities in this segment had a decline in shipments last month. The industry seems likely to have low single-digit export growth this year, against a double-digit increase last year.

Two-wheeler exports jumped 18 per cent in the year ended March, to a record 2.45 million units, according to the Society of Indian Automobile Manufacturers. Exports were a little over 13 per cent of total sales in 2014-15, against 12 per cent the preceding year.

The weakening export growth comes as the industry is struggling to grow its volumes in the home market, with demand for motorcycles subdued due to uncertainty in the rural economy. Domestic two-wheeler sales grew less than two per cent in April-October, with most entities seeing a decline. The small growth is only due to a double-digit increase in demand for scooters (mainly sold in urban markets), while motorcycles continue to show a decline.

"There is no weakness in the overseas market as such. There is also no issue with our products. External factors like elections, foreign exchange availability and geopolitical reasons are the reasons. Export demand in the October-December quarter is in line with expectation but we have no control over these external developments. Our market share has only gone up in markets where we export," said S Ravikumar, president (business development and assurance) at Bajaj Auto.

Bajaj, the largest exporter (60 per cent of these), saw shipments abroad decline 2.6 per cent in April-October, the first seven months of this financial year. In November, export is estimated to have declined 14 per cent; the company had seen exports jump 15 per cent in FY15. Bajaj exports to almost 60 countries; it saw a dip in some of the top markets, like Nigeria and Colombia. Border issues with Nepal affected export to that country.

Ravikumar added he could see some improvement in November, compared to October.

Honda Motorcycle and Scooter India, the second largest two-wheeler company in the country, saw exports increase 11 per cent during the April-October period from a year before. Shipments, however, declined 20 per cent in November, to 14,391 units. The company spokesperson would not comment on the trend.

A Nomura report in November said key export markets for Indian two-wheelers like Nigeria, Colombia and Sri Lanka were 'facing a slowdown and adverse currency movement, likely to impact sales'.

The country's second largest exporter, TVS Motor, which saw export growth a little over 20 per cent during April-October, saw a 13 per cent decline in November.