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Honda Activa scooters at HMSI’s Karnataka plant. (Photo: Hemant Mishra/Mint)
Honda Activa scooters at HMSI’s Karnataka plant. (Photo: Hemant Mishra/Mint)

HMSI’s retail sales almost 80% of pre-lockdown level but futures looks uncertain

  • Vehicle sales have been subdued for the last year and half due to economic slowdown, which was exacerbated by covid-19
  • Despite a pick-up in sales, the company wants to be cautious in ramping up production

NEW DELHI: Honda Motorcycle and Scooter India Pvt Ltd (HMSI), the country's second largest two-wheeler manufacturer, has witnessed significant revival in demand for its motorcycles and scooters after the easing of lockdown curbs. Share of first-time buyers has also risen compared to pre-lockdown levels, indicating a shift towards personal mobility, said a senior company executive.

The management though is uncertain about future demand, given restrictions still in place, and the disruptions caused by the pandemic.

By the end of May and early June, the Japanese vehicle manufacturer had witnessed retail sales close to 80% of the pre-Covid-19 sales.

"Demand in the initial one week to fortnight (after the lockdown was relaxed) was tepid since customers also had some fear and anxiety of coming to the dealerships. By the end of the month, we touched almost 70-75% of our retail sales before the lockdown was announced. Now, it has gone to more than 80%. That way demand has come up quite well but it’s too early to say when it go back to the pre-lockdown level," said YS Guleria, director, sales and marketing, HMSI.

Vehicle sales have been subdued for the last year and half due to the economic slowdown, which was exacerbated by the pandemic.

Despite the healthy pick-up in sales, the company wants to be cautious in ramping up production due to the uncertainty in the in the coming months.

"As you are aware that there lockdown measures are imposed in Chennai from June 19. So this on and off is very difficult, and some reports say November will be the peak. If that is so what happens to Diwali because it is also in November. So we need to go in a step-wise manner because it has to be a sustainable business for having a good efficiency of the supply chain," added Guleria.

"While 95% if the network is open, some of them still have restrictions on working hours and some of them cannot open on all days like the Greater Mumbai area. It means my dealers are practically open for just three days. So, these uncertainties need to be considered in our demand forecast."

The steady increase in first-time buyers is encouraging, though, as many customers might choose to buy a scooter or a motorcycle to avoid public transport. A decline in customers' affordability due to the slowdown, in the wake of the covid-19, may also push two-wheeler sales.

"According to our survey, close to 32% of the customers bought two-wheelers to avoid public transport. There is also an increase of 15% in first-time buyers. The number of first time buyers in pre-lockdown period has increased compared to the pre-lockdown period," said Guleria.

"Retail has been quite good and encouraging for us and we are breaching that gap with the pre-lockdown level. Sustainable demand reading is important for us and then in as step wise manner we will be ramping up our production."

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