A big part of two-wheeler sellers has requested producers to place an entire cease to month-to-month despatches by slicing down manufacturing, as stock ranges have soared to round 60 days because of the persevering with weak retail gross sales.
Normal stock out there needs to be of round 15 days and ideally not cross 30 days, the sellers involved instructed FE. They stated the majority of the stock is of entry-level bikes, other than scooters, the place gross sales have slowed down with shopper desire transferring to electrical variants.
Industry sources stated 75% of the month-to-month two-wheeler gross sales are of entry-level fashions, which has seen misery for over a yr now as a consequence of excessive possession prices. Since Hero MotoCorp is the chief within the entry-level phase of bikes, the corporate’s stock place is the very best with a number of the sellers, virtually touching 90+ days.
Email queries despatched to Hero MotoCorp, Bajaj Auto, TVS Motor Company, and Honda Motorcycle and Scooter India, asking what their respective stock ranges with sellers are and whether or not the latter have urged them to cease despatches, didn’t elicit any response until the time of going to the press.
Though the Federation of Automobile Dealers Associations (Fada), in its gross sales information for May, stated the two-wheeler stock is at 23-25 days, trade sources identified that Fada solely captures stock place from the primary dealerships and never their secondary channels, so there’s a mismatch.
A bulk of such sellers stated producers carry on projecting development potential within the coming days by evaluating gross sales with a yr in the past, which is a defective course of, because the earlier yr noticed repeated Covid-related shutdowns.
Two-wheeler gross sales are nonetheless down in contrast with the 2019 ranges, a pre-pandemic yr. According to May retail gross sales launched by Fada, two-wheeler gross sales fell by 14% in opposition to the identical month in 2019. In truth, despatches by producers have additionally been lower than the 2019 ranges. For occasion, in May all of the three producers – Hero MotoCorp, Bajaj Auto and TVS Motor — reported a decline in despatches in opposition to the identical month in 2019. Hero MotoCorp’s despatches dropped by 28.46%, whereas Bajaj Auto’s fell by 53.28%. Despatches by TVS Motor declined by 19.14%. This is why, the sellers say, an entire stoppage of despatches is required.
Some producers have projected gross sales would choose up throughout the upcoming marriage ceremony season. However, sellers identified that 60% of the marriage season is already over.
One such vendor instructed FE that stopping despatches would even be helpful for producers as their receivables in opposition to them are rising. Normally, sellers take automobiles from producers on a cash-and-carry foundation, however with the pandemic breaking out and demand slowing, the identical has moved on to credit score.
The difficulty of excessive stock of two-wheelers was raised by Fada president Vinkesh Gulati in a LinkedIn submit in January. “The inventory at the dealers’ end are once again at alarming levels and all of us need to talk to our OEMs so that the same can be controlled. Fada through its monthly press release is already highlighting this issue to the entire auto industry community and especially to our two-wheeler principals. Apart from this, we as a fraternity also need to discuss with banks and OEMs to launch easy finance schemes so that we are in a position to revive the demand,” he wrote.
Source: www.financialexpress.com”