Two-wheeler cos growth rate slow down

Two-wheeler cos growth rate slow down

Author | Source: The Economic Times | Monday, Mar 19,2007 10:02 AM

Two-wheeler cos growth rate slow down

For all the aggressive two-wheeler makers talking about robust growth rates, FY2006-07 has been a complete wash out with most two-wheeler makers pushing stocks at the dealer end.

The differential between wholesales and retail volume has reached an all-time high. Result: Contrary to perception that two-wheeler sales will be up 14-15% by the fiscal-end, actual sales will go up by about 10-12%, say sources.

Suzuki Motorcycle and Scooters India VP-marketing Atul Gupta said: “Since November 2006, the differentials between retail sales and primary sales have been growing. Retail sales are almost 7-8% lower than primary sales and the situation won't improve in March either.”

When contacted, a Hero Honda spokesperson said that the company expects to achieve higher retail sales than despatch sales in March. A Delhi-based industry expert believes there is no correction expected in retail sales due to the hardening of interest rates. “There is a huge mismatch that two-wheeler makers are facing in terms of their retail sales and their despatch sales, which will restrict the growth of the motorcycle market to about 10-12% by March 2007-end,” he added.

TVS vice-president marketing Prasad Narsimhan too said that the company is expecting a huge surge in retail sales by March-end. However, he agreed that the differential between retail and despatch sales have been on the higher side. “Around 6-7% differential is on the higher side,” he said. “Besides hardening of interest rates, this is also because of the slump that follows the festival peaks.” Both have been scaling new records. Analysts are of the view that the two-wheeler industry will not end the fiscal on a happy note.

“Though a double-digit growth on such a base is a healthy sign for two-wheelers, hardening interest rates and poor performance of the agricultural sector has had a significant impact on the industry,” says Abdul Majeed, auto analyst, PwC.

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