Can the marriage season bring back bike sales for Hero MotoCorp?
The company expects FY18 growth to be in the range of 8-10%, with double-digit growth in 2HFY18.
The largest two-wheeler manufacturers in India Hero MotoCorp expects festive and marriage season to drive demand for its two-wheelers and bikes.
In February, Hero MotoCorp sales declined by 4.8% to 5,24,766 units during the month from 5,50,992 units in the same month last year. Like all two-wheeler companies in the country, the company has been struggling to push sales as they have been declining due to demonetisation.
While there is still some pain left the demand continues to improve on a month on month (MoM) basis. The company expects FY18 growth to be in the range of 8-10%, with double-digit growth in 2HFY18, said a Nirmal Bang Research report.
It said that rural sales of the company account for 50% of the overall sales. Some rural areas had higher dependence on cash and hence demand was hit post demonetisation. However, after 2017 there was an improvement in demand across India.
“People in rural areas invest in two-wheelers or tractors when they the get some extra cash. This happens when there is a good monsoon or at the time of marriages. Buying a two-wheeler is luxury after all for them,” said an automobile analyst on the condition of anonymity.
With a good marriage season expected this season this is expected to push two-wheeler sales into recovery. A reason why the analyst expected two-wheeler sales to recover by April or May this year.
Hero MotoCorp said that it has started rolling out BS IV compliant two-wheelers in the current month of March. It further said that the new vehicles adhering to BS IV emission norms will see a price hike of Rs 400 to Rs 600 per vehicle. It further said that adhering to BS VI emission norms by 2020 will result in a big price hike of about Rs 5,000 per vehicle.
It further said that it has around one month of BS III vehicles in inventory and a bulk of which will be cleared in March or April 2017.
Hero MotoCorp is working on new vehicle launches in the premium segment and will introduce a new premium motorcycle by the end of CY18. It will launch another premium motorcycle by the end of CY19.
Besides this, the company said that it will continue to launch refreshed versions of its existing models.