2-wheeler companies soup up for the rough road

Two-wheeler manufacturers are lining up new models and focusing on segments they are not strong in to beat slowdown that has crimped motorcycle segment growth to single digit in the first quarter.

Bajaj Auto, which saw motorcycle sales fall 1% in the last fiscal, sees volumes reviving in coming quarters with a full-fledged launch of its new products – Pulsar 200 NS and Discover 125 ST— this fiscal. Currently, the new vehicle in the Pulsar family is launched in Maharashtra region. The country’s second-largest bikemaker is also ramping up capacity to meet the growing demand and plans to launch a bike in the commuter segment (125cc and less category) this fiscal.

Bajaj Auto, which dominates the premium bike segment with a 46% market share, seeks to boost share in the commuter segment as growth in the premium bikes category remains flat. The commuter segment is growing by 22%.

“With these new launches (Pulsar 200 NS and Discover 125 ST), we are expecting an additional volume of 15,000 units a month and from August we are expecting 35,000 plus units. These will be high-margin, costlier products, which will help boost profitability,” said S Ravikumar, senior vice-president (business development), Bajaj Auto.

“Q1 has been the worst-ever quarter for the company and we are expecting things to improve with the new products,” he said.

Hero MotoCorp, the biggest two-wheeler manufacturer, on the other hand, is looking at increasing its market share in premium bikes as it plans to launch refreshes of its entire range of such bikes. The company has Hunk, CBZ and Karizma bikes in the premium category.

“We did not focus on ad spends in the first quarter. With new launches, we will have model-focused ads. With new products, we are expecting some increase in share from urban customers,” said Anil Dua, senior vice-president (marketing & sales), Hero MotoCorp, on an earnings call.

However, rising competition and weak demand remain major headwinds.

Companies such as Honda Motorcycle and Scooter India (HMSI) and Mahindra 2 wheelers have already announced major plans for the Indian market.

While the entire two-wheeler industry, backed by the scooter segment, registered a growth of 10.51% during April-June 2012, the motorcycle segment grew only 7%, according to the Society of Indian Automobile Manufacturers data.

Though the overall two-wheeler industry is estimated to grow at 10% this fiscal, industry players feel the growth may be limited to 7-8%.

Abhishek Banerjee, senior analyst with Asian Market Securities, said, “In the current market scenario, even if the industry grows at mid-level single-digit growth, there is a scope for a decent volume growth. The second half of the year should be good for the industry with new launches and festive season.”