The Hindu Business Line : Two-wheeler companies watching monsoon closely

New Delhi, July 30 After wrestling with subsequent rounds of interest rate hikes, reduced lending by banks on two-wheeler loans and soaring steel prices, motorcycle companies like Hero Honda, Bajaj and TVS are now keeping a close eye on the monsoon which has been erratic in certain belts of the country.

They fear that a poor monsoon during the peak sowing period could affect cash flow of the farmers, thereby curtailing sales during festive season.

As per industry data, rural markets constitute almost 35-40 per cent of the overall two wheeler market. This year, up to mid July, the peak sowing season, rainfall was lower in parts of Maharastra, Tamil Nadu, certain pockets in central Gujarat along with Kutch and Saurashtra, Kerala amongst others.

With some States like Maharashtra which received lower rainfall accounting for as high as 12 per cent of the country’s overall monthly two-wheeler sales and even Tamil Nadu being the largest market, companies are expecting that there could be a dip in sales.

“The impact of poor monsoon may start showing in one or two months time period,” said a Hero Honda official.

A similar concern was expressed by TVS Motor Co official who said that it was difficult to gauge any impact currently as it would be felt only in the months to come.

“A poor monsoon and a crop failure may render the farmer with less cash-the effect of which would start showing by the end of the year,” said Mr Hardeep Goindi who heads the company’s marketing operations. During April-June of the current fiscal , motorcycles sales grew marginally by 7 per cent at 14.88 lakh units. Scooters and the scooterettee segment also remained sluggish, registering 4 per cent increase at 2.68 lakh units. Industry players attribute the surge in sales mainly due to the lower volume base last year. They point out that while rural markets in numbers may show lesser sales; in reality the potential could be much more.

“Rural market represents a significant chunk of two-wheeler sales. However, in many instances due to lack of dealer network in remote areas, customers buy the vehicle from urban locations. These results said Mr Mahantesh Sabarad, auto analyst with Centrum Broking Pvt Ltd.

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