Two-wheeler sales skid in April on rural slide

Poor crop realization, slowdown in rural wages pull back rural economy, impacting retail off-takes in major markets

Last month, two-wheeler major Hero MotoCorp’s sales posted the biggest monthly drop of 2015, as April sales marked the third decline for the company in four months of the year.

The Delhi-based company reported sales of 533,305 units in April, a decrease of nearly 7 per cent, compared to 571,054 units sold in the same month a year ago.

Similarly, other players such as Honda Motorcycle and Scooter India, Suzuki Motorycles and Mahindra Two Wheelers have also reported subdued sales performance last month.  

The reason behind this performance can be attributed to the severe slowdown in the rural demand situation. While about half of Hero MotoCorp’s sales get generated from urban and semi-urban markets, other significant half is dependent on rural markets.

“The rural demand for automobiles has been adversely impacted by unseasonal rains in March. Poor crop realisation and slowdown in rural wages have pulled back the rural economy, impacting retail off-takes in markets such as Bihar, Madhya Pradesh and sugarcane growing areas of Uttar Pradesh and Maharashtra,” said a spokesperson from Hero MotoCorp.

Entry level bikes, which make up 50 per cent of the total motorcycle sales, remain the worst hit, as a significant portion of its portfolio is exposed to the rural market. Mileage plays a crucial role in the rural areas.

Y S Guleria, vice-president (sales and marketing), Honda Motorcycle and Scooter India, said, “We see there is a slowdown in the entry segment, impacting sales from semi-urban and rural areas. A few pockets are being disturbed due to inclement weather; standing crops are being destroyed. The buying sentiment is down. Scooters are largely urban-driven; so, there is no impact there.”

For Honda sales of motorcycle in April at 131,291 units stood lower than 131,377 units sold in the same month last year. HMSI generates motorcycle volumes from its Dream series and Shine, all of which are under 125cc engine segment. Scooters, which are primarily sold in the urban markets, make up 58 per cent of its total monthly volume.

Chennai-based TVS Motors defied the trend with a growth of 13 per cent during April to 162,516 units as against 143,434 units sold in the same month last year. Motorcycles as well scooters grew at almost the same pace during the month.