After the margin crunch of the last quarter, motorcycle companies are rushing in to protect their bottomline growth. Hence, discounting is on the decline with the big volume companies like Hero Honda and Bajaj cutting out the amount of subvention benefits.
While smaller players like Yamaha and LML may still be offering discounts, for the biggies, topline growth at the cost of bottomline health is out. The big three are, instead, pushing sales through new products and variants.
According to auto analysts, the trend was being kick-started by marketleader Hero Honda, which faced significant margin pressure last quarter. The company has recently hiked the prices for all its products, except Splendor Plus and CD-Dawn.
No direct or indirect discounts are now on offer on its product portfolio. Instead the company rolled out the 125 cc Super Splendor with a new, more fuel-efficient and powerful engine combo to take on arch rival Bajaj's Discover.
It has also withdrawn the 'Ambition' and launched a new version of the CD Dawn, CD Deluxe, at an aggressive Rs 38,991 to take on the Bajaj CT100. The company plans to roll in 4-5 new models, including variant upgrades this year.
Said Hero Honda MD Pawan Kant Munjal: “In FY05, margins were under pressure for all two-wheeler companies. That will continue this year as well. We will keep a keen eye on both topline and bottomline growth. We have withdrawn all our discounts and introduced new products. The Super Splendor has already been selling 45,000-odd units a month and it will be a bigger blockbuster than the Splendor.”
Bajaj has also been in new-product mode. It has just rolled out its 180 cc Avenger DTS-i cruiser at a competitive Rs 60,000 price tag, substantially lower than stablemate Eliminator which sports a Rs 69,000 tag. Also on the anvil are facelift variants of the Discover and Pulsar. The discounts, offered by dealers has been brought down to free RTO-insurance policies worth Rs 500.
The third big player in the bike mart, TVS, is also in new model mode this fiscal. It has launched new versions of its entry-level bikes, Star and Centra. Like Bajaj, TVS too has cut discounts to free RTO-insurance policies and free accessories worth Rs 500-700.
Meanwhile, lower volume players like Yamaha and LML are offering fairly big discounts. The cash discount on Yamaha's Crux and Libero models is around Rs 2,000 with free accessories thrown in as an option. LML is offering a cash discount of Rs 1,500-2,000 on all its models. However here too, the new product push is clear: Yamaha has just launched face-lifts of its 125 cc Fazer - the Fazer DX and Fazer LX.
Around five to six new models are expected in the next fiscal.