NEW DELHI: Hero MotoCorp Ltd – the country’s largest two-wheeler manufacturer – on Saturday reported a modest 3.9 % year-on-year (y-o-y) decline in domestic wholesale to 5,14,509 units in July, due to robust recovery in sales of entry level motorcycles in the rural markets after the easing of the lockdown measures. On a sequential basis though, the company continues to witness a sustained jump in dispatches from 4.5 lakh units in June and just 1.2 lakh units in May.
The New Delhi-based manufacturer restarted manufacturing operations at its factories in Haryana and Uttarakhand from May 5. During the month, dispatches of motorcycles decreased by just 2.32% to 4,78,666 units while the same for scooters also declined by 21.65% to 35,843 units, as sales in the urban markets is still subdued due to increase in Covid 19 cases.
Hero’s exports also decreased significantly by 69% to 7,563 units in the month of May.
“The robust volumes have been driven by strong retail sales due to the positive market demand. While there is cautious optimism on the demand trajectory going forward, sales continue to be impacted by the micro-lockdowns in several parts of the country. For the growth momentum to continue, it would be pertinent for state and local authorities to provide a stable and consistent business environment as the situation evolves," the company said in a statement.
Mint reported on June 9 that Hero expects recovery in rural markets to be faster than anticipated in the coming months and plans to increase production to more than 4 lakh units in June.
Investors have been bullish about the prospects of the Pawan Munjal-led company in the near term since it is likely to benefit from a shift in demand towards entry and executive segment motorcycles because of a quicker recovery in demand in the rural areas and increasing preference for personal mobility on fears of contracting infection.
Despite witnessing decent recovery in retail sales, auto makers like Hero MotoCorp are struggling to ramp up manufacturing due to disruption in supply chain networks. Sporadic lockdowns in different states, rising Covid-19 cases and increased scrutiny of imported auto parts from China have also caused major problems for automakers and their suppliers.