Rising Sales Figure Of Two-Wheelers Fails To Depict Ground Reality While two-wheelers manufacturers posted record high numbers, figures from FADA has a different story to tell

The ongoing COVID-19 pandemic which broke out almost a year ago now has got the better of the fast moving world. The virus which has earned the accolade of one of the most deadly and contagious viruses contracted by humans has wreaked havoc on the economic infrastructure of the world. As Indian Prime Minister rightly said, if not dealt with the virus cautiously, this might take us to the past, which it did for most of the countries as they try to halt the downward graph of the economy.

The pandemic has been ruthless to most of the sectors in the world. However, the auto sector in India which has already been under stress seems to have bounced back on its feets earlier than most expected. Stressing on the two-wheeler sector, the numbers published by the makers stand rather impressive in such less time.

Admirable figures

The latest figures released by top two-wheeler manufacturers have made the heads turn of industrialists, with few experts taking the numbers as an indication of the slow economic recovery of this country in the backdrop of COVID-19 and months long lockdown triggered by the same.

Now let's look at a few sales numbers of top two-wheeler manufacturers for October, 2020.

Hero Motor Corp., the country's leading two-wheeler manufacturer, shined the most with a record-breaking number of sales. The company has recorded its highest ever monthly sales figure of 8.06 lakh units of scooters and motorcycles for October 2020, which is 35 per cent more than than the October of 2019, when the company had sold a total of 599,248 units.

TVS reported a 24 per cent growth in October sales to 382,121 units as against 308,161 units in October 2019. The company's domestic sales grew by 19 per cent with 301,380 units in October 2020 against 252,684 units in October 2019. Its motorcycle sales grew up by 38 per cent to 173,263 units from this October 2020 compared with 125,660 units in the corresponding month of the previous year.

Bajaj Auto reported a 11 per cent increase in its total vehicle sales with motorcycle sales going up by 18 per cent at 470, 290 units compared with 398,913 units in the year-ago month. It further boasted that its flagship brand Pulsar recorded sales of 170,000 units.

Reason

The OEM manufacturers were riding on cruise after achieving such astonishing numbers during the once-in-a-lifetime pandemic. However, the reason behind such push must be attributed to the festive mood and growing need for personal vehicles to avoid crowded public transport amidst the pandemic.

"The demand for two-wheelers have seen an upward swing primarily on account of the desire to have an owned commute, especially in the time of pandemic, and reduce the dependence on public commute to the extent possible. The spend capacity at the rural and semi urban centers have also increased the demand for two-wheelers. The trend seems to be strengthening around the festival period over October and November," said Sridhar V., partner, Grant Thornton Bharat LLP.

He further added that the addition of a new vehicle lineup in the two-wheeler space along with the pent-up demand can also be the reason behind the growing sales number.

Society of Indian Automobile Manufacturers (SIAM) which releases wholesale figures reported that the domestic sales for two-wheelers in October this year was 2,053,814 units compared to 1,757,180 units in October 2019, a growth of 16.88 per cent.

Rajesh Menon, director general of SIAM, commenting on the trend said October saw continuity in sales growth trajectory and there were marked improvements across certain segments due to festival demand.

Mood Of The Consumer

With all that said, does this signify that we are out of economic crisis with people willing to let go cash to buy two-wheelers which is still considered a symbol of wealth at an uncertain time?

Answer is no perhaps. It is a standard practice by the automanufactuers that they reveal wholesale dispatch numbers on a monthly basis. Wholesale dispatch numbers represent dispatches from vehicle manufacturing factories to dealers and not the number of vehicles bought by customers.

It is the retail numbers that typically comprehend the pulse of the consumer behavior as it reveals the number of vehicles sold to consumers by dealers. FADA, an apex national body representing automobile dealers of India, every month comes up with retail figures which are different from the SIAM figures.

According to FADA's latest report, while vehicle registration went up by 5.11 per cent month on month, it actually plunged by 24 per cent on year-on-year basis. Stressing on the two-wheeler segment, the vehicle registration dropped by 26.82 per cent from 14,23,394 in October last year to 10,41,682 this year.

When asked about the reported figures to Vinkesh Gulati, president of FADA, said the numbers don't depict the ground reality.

According to him these figures represent gradual buildup of dealers inventory which was disarrayed due to the lockdown and the conversion of BS-IV to BS-VI emission standards. He added that from August onwards the situation is improving from the supply chain front.

Highlighting the recent record-breaking numbers and wholesale numbers by some OEMs, he said dealers ahead of the festive and wedding seasons try to increase their stocks. However, this cannot be a regular trend he noted.

Citing GDP contraction, job losses, increased pay cuts, he said, "We are not sure that the kind of growth trajectory we are seeing today will continue post the festive season."

FADA's data noted that one of the reasons behind such a dip in vehicle registration numbers compared to last year is because that Navratri and Diwali were in October last year, whereas this year Navratri and Diwali is in November.

The only segment which saw a positive sign was tractor registrations that recorded a 55.53 per cent growth year-on-year.

With all that said, Hero MotorCorp recorded 14 lakh units of motorcycles and scooters in retail sales during the just concluded festive season.