Despite slowdown, Japanese bikes and scooters ride high

Despite slowdown, Japanese bikes and scooters ride high

Mumbai: Japanese two-wheeler manufacturers in India are increasing production to meet rising demand and reduce customer waiting lists even as local rivals such as Bajaj Auto Ltd and TVS Motor Co. Ltd struggle with slowing sales.

Honda Motorcycle and Scooter India Pvt. Ltd, which has a 54% share of the gearless scooter market, has a waiting period for all its scooter and motorcycle models, which include the Activa, Eterno and Dio scooters and Shine, Unicorn and the recently launched CBF Stunner motorcycles

“We have a waiting period of 10-15 days for all our models across the country and are in the process of ramping production to 4,000 per day from the current 3,300 per day," said N.K. Rattan, head of sales and marketing at Honda.

According to figures released by the Society of Indian Automobile Manufacturers (Siam), the company produced 91,399 two wheelers in October, an increase of 16% from a year earlier, while sales rose 22%.

Suzuki Motorcycle India Pvt. Ltd, a relatively new entrant, increased production by 36% and sales by 29%. India Yamaha Motor Pvt. Ltd increased its production to 17,390 units, an increase of 10%, and sales by 44% to 18,614 units.

Joseph George, an analyst at BNP Paribas Securities India Pvt. Ltd, said Honda, Suzuki and Yamaha sales growth had been boosted by a lower base year-on-year and their predominance in the gearless scooter segment.

“Bajaj Auto and TVS sales have grown for the past five years and most of it was generated on the back of increased consumer finance," George said. Banks and consumer finance companies have reduced lending for two-wheeler purchases. High loan costs also deterred borrowing.

Amit Nandi, general manager, marketing, at Bajaj Auto, said motorcycles remained the company’s top priority.

“We are working on some new (scooter) models showcased at the previous auto expo, but in the near term, motorcycles that account for 80% of the two-wheeler market, will be our priority," he said.

Analysts say the increasing sales reflect the aggressive expansion of Japanese manufacturers as much as the low base over which they are growing. Honda has increased the number of branches from 300 last year to 320 this year, said Rattan. Atul Gupta, vice-president for sales and marketing at Suzuki Motorcycles, said his company had doubled sales outlets from 100 last year to 200 this year.

Pankaj Dubey, divisional manager of sales at Yamaha Motor, said it would have 180 sales outlets by end-2009 from 47 now. The company has sold 10,000 units of the FZ 16, a 125cc motorcycle launched in October, and has a waiting list of four to six weeks for the model, he said.

The production and sales numbers of Honda, Suzuki and Yamaha are about one-third those of the top three Indian companies—Hero Honda Motors Ltd, Bajaj Auto and TVS Motor. Still, industry analysts say they are well poised to challenge the supremacy of the home-grown companies.

“This is specially true for companies like Honda that have chosen to play in the premium 125cc plus end of the spectrum, which so far has been the stronghold of Bajaj Auto," said George of BNP Paribas.

Manufacturers are bullish on demand for gearless or automatic scooters. Sales in the segment increased by 4.4% to 103,101 units in October 2008, according to Siam data. But TVS scooter sales declined by 16.5% and Bajaj Auto scooter sales fell 12.9% in October.

Gupta of Suzuki Motorcycles said the increasing sales of scooters has also to do with the segment’s lesser dependence on loans. Close to 80% of scooters are purchased through cash payment, he said. Cities such as Bangalore, Pune, Nagpur and Ahmedabad are among the key growth markets for scooters, partly because they have a larger proportion of working women who commute by scooters, he added.