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Bike sales skid but new cars still find buyers

Bike sales skid but new cars still find buyers
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First Published: Tue, Oct 02 2007. 12 37 AM IST

Updated: Tue, Oct 02 2007. 12 37 AM IST
Bajaj Auto Ltd and TVS Motor Co., India’s second and third largest motorcycle makers, saw September sales plummet, the worst monthly decline in five years, even as they hope new models will drum up sales in the peak sales season ahead.
Bajaj Auto’s sales declined 23% last month from a year ago, while TVS Motor’s sales fell 29% as it sold 50% fewer motorcycles in September from the year-ago period.
Bucking the industry trend, Hero Honda Motors Ltd sold 4.3% more bikes in September. Hero Honda, the country’s biggest bike maker, has built up stocks before the festive months of October and November, Ravi Sud, chief financial officer said.
Bajaj Auto will produce more of its XCD DTS-Si motorcycles that it started selling last month and TVS will unveil a new 110cc StaR City.
These companies, in the world’s second largest motorcycle market, aim to revive sales during the festive season after five-year-high interest rates curbed demand in the past six months. Higher auto loan rates slow orders in a country where three-fifths of all motorcycles and scooters are bought on credit.
“There will be excitement among customers” for new models, said Amit Kasat, an analyst at Motilal Oswal Securities Ltd in Mumbai, who has “neutral” rating on TVS Motor and Hero Honda, and a “buy” rating on Bajaj Auto. “As we move into the festival period, you will see financing being readily available for the customer.”
Pune-based Bajaj Auto has reported eight consecutive months of lower sales and TVS Motor seven straight months of decline, as customers postponed purchases because of higher rates.
Indian consumers are paying as much as 23% to finance a motorcycle, the main mode of personal transport in the country, Hero Honda’s Sud said. That compared with 18% a year earlier.
Car sales, however, rose in September, led mostly by the new models launched in the market. General Motors India Ltd, registered a growth of 64% in sales in September compared with a year ago. It sold 5,751 units in September 2007 as against 3,506 units in September last year. It sold 1,501 units of the newly launched Chevrolet Spark.
“Most of the sales growth in the auto industry is coming from the new product launches,” said Rishab Bagaria, an automobile analyst with Infinity.com Financial Securities Ltd.
Sales at India’s top seller of cars, Maruti Suzuki India Ltd, grew 11.4% September, but that was nearly half the pace of the previous year. It recently launched the SX4, a mid-sized sedan. The company’s sales grew by 22% in September 2006 over the corresponding period of 2005.
“Maruti’s growth rate slowed down on account of some production constraints at their plant,” said S. Ramnath, vice-president, research, at SSKI Securities Pvt. Ltd, a Mumbai-based brokerage.
Maruti sold 63,086 passenger vehicles in September.
The second largest car maker in the country Hyundai Motor India Ltd, saw a 9.7% growth in sales in September led by promotional offers. “It is a combination of cash discounts, exchange offers and promotional freebies that has helped us boost sales,” said Arvind Saxena, vice-president, sales and marketing, Hyundai Motor.
Mahindra & Mahindra Ltd, the largest utility vehicle maker in the country, sold 14,431 passenger vehicles in September, registering a 31% growth in sales, which included 2,185 units of the Logan, a passenger car launched in April this year. India’s third largest car maker Tata Motors Ltd, however, witnessed a decline of 8.6% in sales.
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Subramanim Sharma is with Bloomberg News
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First Published: Tue, Oct 02 2007. 12 37 AM IST
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