Hero MotoCorp reports robust recovery in sales in Sept as rural demand improves

Hero MotoCorp Ltd on Thursday reported a 16.11% year-on-year rise in its domestic wholesales for September to 6,97,293 units due to robust recovery in sales of entry-level motorcycles in rural and semi-urban markets after the easing of lockdown measures.

On a sequential basis, the company's dispatches were higher than 568674 units in August and 514509 units in July. The New Delhi-based manufacturer restarted operations at its Haryana and Uttarakhand factories from 5 May, selling 1,20,000 units in the month.

In September, dispatches of motorcycles, including exports, increased 18.30% to 660948 units while that of scooters rose 2.35% to 54770 units.

Overall exports jumped by 57.54% to 18425 units during the month.

“With the peak festival season coming up in the months of October and November, Hero MotoCorp remains cautiously confident of achieving yet another benchmark in post-Covid retail sales with the help of positive consumer sentiments and continued government policy support," the company said in a statement.

To offset the increase in commodity cost the company has raised prices of its vehicles by 2%, across the product portfolio.

In July, Mint had reported that expecting sales recovery to continue, especially in rural and semi urban markets, during the upcoming festival season, Hero plans to increase production to 6.5 lakh units or more from September.

Investors have been bullish about near-term prospects of the Pawan Munjal-led company since it is likely to benefit from a shift in preference to entry and executive segment motorcycles because of a quicker recovery in demand in rural areas and increasing preference for personal mobility on fears of contracting infection.

Despite witnessing decent recovery in retail sales, automakers like Hero MotoCorp are struggling to ramp up manufacturing due to disruption in supply chain network. Regional lockdowns due to rising covid-19 cases and increased inspection of imported parts from China have also added to their production woes.