Two-wheeler retail sales up 5% in festive season: Antique

There could have been something to cheer for two-wheeler companies in the just concluded festive season. According to Antique Stock Broking, dealers indicate retail sales of two-wheelers, which were on the decline just a few months ago, rose 5 percent year-on-year in Oct-Nov period.

The pickup in demand would have surely helped two-wheeler firms reduce their inventory, especially Hero MotoCorp , which is likely to have cleared over 2 lakh units.

"Hero for example, is apparently on course to retail a staggering 12.5 lakh two-wheelers in the two festive months (Oct and Nov), while dispatches during these two months would have been around 10.5 lakh," Antique anaysts Ashish Nigam and Kunal Jhaveri said on Wednesday.  

However, inventory levels post the festive season are still high at 2.5 weeks, compared with 1.5 weeks a year ago, and so two-wheeler dispatches (wholesales) are expected to remain slow over next few months, they say.

Amongst the two-wheeler companies, Honda Motorcycle and Scooter India, has gained market share so far this year (11.5 percent year-to-date, from 7 percent in FY12), with sales growing 65 percent from a year ago. However, Nigam and Jhaveri say Honda's growth seemed to be more a function of increasing channel inventory on a low base and increasing the channel itself.

The Antique analysts, in fact, feel Honda's Dream Yuga motorcycle, which directly competes with Hero's Splendor, has had a little "tepid" response and actually missed internal targets by 15-20 percent. 

Honda also seems to have lost market share in the 110-125 cc segment, where it sells the Shine and Stunner motorcycles, from 37.1 percent in May to 28.8 percent in October. Bajaj Auto  , driven by strong demand for its newly launched Discover 125ST, has gained market share here (about 31.7 percent in Oct from 24.6 percent in May), according to Antique.

While Bajaj Auto may have gained in motorcycles, its lack of presence in scooters, at a time scooter sales are booming, is hurting it, the analysts say. Overall, scooters now account for 21 percent of total two-wheeler sales, compared with 12 percent in 2007.

Honda remains the largest scooter company in India, but Hero has gained market share in recent months, post the launch of Maestro scooter, Nigam and Jhaveri said.

Antique has a "hold" rating on Bajaj Auto and Hero Moto.

Hero Moto shares closed down 0.8 percent at Rs 1,807.30 on NSE on Wednesday. Bajaj Auto closed down 0.5 percent at Rs 1,819.35.