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Mumbai/New Delhi, Jan. 2: Two-wheeler sales have started to wobble sending a new frisson of panic through the automobile industry where car sales have been on the skids for most of this year.
Just when car sales started to stabilise with strong growth reported in December, the two-wheeler giants Bajaj Auto and TVS have reported lower-than-expected sales in the same month.
Unlike passenger cars, the sales of two-wheelers have not been impacted by the relentless interest rate hikes over the past 20 months, or costlier fuel, since most of these vehicles are self-financed and they are fuel efficient.
Over the past few years, two-wheeler sales have roared down the fast lane with the industry showing an average volume growth of over 28 per cent last fiscal year.
But the latest wobble in sales at Bajaj Auto and TVS has thrown up a stark question: Is the current economic slowdown also beginning to bite the two-wheeler sector?
It now appears that these companies are indeed facing the slowdown bump. These signs were evident today when Bajaj Auto and TVS Motor reported disappointing sales for the month of December.
Bajaj Auto said it sold 305,690 units in December, which is a sharp 18 per cent fall from the 374,477 units sold in the previous month.
On a year-on-year basis, the number represents a growth of 10 per cent over 276,803 in December last year. The Street was, however, expecting a 20 per cent growth in year-on-year sales.
TVS Motor reported sales at 170,428 units compared with 175,535 units in the preceding month.
On a year-on-year basis, it was marginally down against 171,790 units in the same month last year.
After market hours, Hero MotoCorp Ltd (HMCL), the world’s largest two-wheeler manufacturer, said that December sales stood at 540,276 units in the month, higher than 536,772 vehicles in November and a growth of nearly 8 per cent from a year earlier.
However, last month, it had registered a year-on-year growth of 27.4 per cent.
The stocks of Bajaj Auto and TVS Motors were clobbered after their disappointing performance in December. The bearish trend spilled over to the Hero MotorCorp counter.
On the Bombay Stock Exchange, Bajaj Auto tanked 7.40 per cent, or Rs 117.80, to Rs 1,475, TVS Motor plunged 7.32 per cent to Rs 48.10, and HMCL by 3.50 per cent to Rs 1,838.55.
Analysts say the robust growth seen in the past won’t be seen for a while.
“The growth rate that the sector has seen over the past three years is unsustainable,” Vineet Hetamasaria at PINC Research told The Telegraph. Hetamasaria added that the industry could post a volume growth of around 16 per cent this fiscal, and this could come down further to 13 per cent next year.
Yaresh Kothari, auto analyst at Angel Broking, added that one of the reasons for the disappointing numbers in December could be the slowdown in retail sales.
“The base effect will certainly catch up with the sector. Some companies such as Hero MotoCorp have been posting average sales of over 5 lakh vehicles per month. This may now moderate,” Kothari, who also expects volume growth to slow down to 15-16 per cent this fiscal, felt.
However, unlike two wheelers, auto companies such as Tata Motors and Mahindra & Mahindra reported better-than-expected numbers amid a jump in passenger car sales. This is surprising since December is usually a month that sees customers postponing their purchases.
Analysts said one of the reasons for the good performance was the discounts offered by many of these players.
Auto makers have been grappling with a slowdown in demand since July 2011 as soaring fuel costs, expensive loans and prolonged inflationary pressures made customers defer purchases. This had prompted car makers to offer discounts, which helped to drive up sales in December.
Maruti Suzuki, however, could not benefit from the rise in demand as it struggled with capacity constraints to meet the higher demand for diesel cars. The car maker also shut factories for maintenance for six days in December.
Maruti sold 92,161 vehicles in December, down 7 per cent from a year earlier.
Local sales fell 13 per cent to 77,475 vehicles, but exports rose 50.5 per cent to 14,686 vehicles.
Hyundai Motor’s local unit said December sales in India rose 13 per cent to 29,516 vehicles.
Ford Motor posted a 39 per cent rise in December sales to 5,979 vehicles. In 2011, the company sold 96,270 vehicles, up 15 per cent from the year before, while it exported more than 22,000 autos.
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