Despite healthy off-take in June on a sequential basis, two-wheeler major Honda Motorcycle & Scooter India is ‘cautiously optimistic’ about future sales prospects given the uncertainties over local lockdowns.
In a conversation with IANS, Yadvinder Singh Guleria, Director, Sales and Marketing, HMSI, cited challenges like local lockdowns, rising Covid-19 cases and seasonality of rural consumption as detrimental to a consistent sales’ off-take.
“Even though our June sales performance from May has been encouraging, the company and the industry face severe challenges in terms of the new normal of Covid-19 and the impact that it has had on the economy as a whole,” he said.
“We are far away from matching last year’s numbers in terms of dispatch and there will be challenges to ramping up production and aligning supply chain, issues of migrant labour and of social distancing on the assembly lines.”
Accordingly, Guleria pointed out the company’s sales activity had only kicked off in earnest during June, when 95 per cent of the network was opened-up across the country.
“We can say that only in June did we see the business activities start in terms of sales and aftersales in our network,” Guleria said.
“With only one month, we reached 75 per cent of pre-Covid retail sales level. This was a good confidence building result for us and our network that we could reach this level even with so many restrictions and challenges.”
The two-wheeler giant had reported a sequential increase of 156 per cent in retail sales for June.
Honda’s retails jumped to nearly 3 lakh units in June 2020 from 1.15 lakh units in May.
The company’s dispatches shot-up nearly four times to 210,879 units in June compared to 54,820 units in May.
However, Guleria credited the healthy off-take to pent-up demand.
“We must not forget that there is a massive pent up demand momentum. When we followed up with customers, who had shown intent to purchase a two-wheeler before the Covid era, almost 85 per cent were still willing (to purchase). So we are seeing a lot of pent up demand.”
“However, it is too early to predict sales’ trend, since we are chasing a moving target. Everyday, a lot of changes are happening in the towns and districts like extended local lockdowns.”
Besides, Guleria worried about the impact of pandemic on rural consumption as Covid-19 cases have risen in these areas.
“It (pandemic) has started to reach the rural areas as well. Earlier, because of the healthy rabi crop, higher MSP, transfer of benefits of social security schemes to farmers’ accounts and the marriage season allowed some consumption in the rural area,” Guleria said.
“Now with the cases reaching there, we cant predict how far will the off-take go. So we have to be cautious.”
He pointed out that seasonality of two-wheeler off-take in the rural markets was another factor which might impact sales’ revival.
“Sales pick-up takes place around the festivals, around the crop patterns and in the marriage season. When the season is of Kharif crop, the sentiments are positive because of healthy monsoon prediction which is ultimately good for sowing and for the crop but buying doesn’t happen,” he said.
“It is once the crop comes during the festive season and if the MSP is good the purchasing rate will pick-up. So, here the consumption depends on the working activities and periods.”
On a more optimistic note, Guleria said trends from Honda’s international markets have shown customers’ increased preference to move away from public transport to their own personal vehicle.
“When we see customers who bought a two wheeler in these challenging times, close to 1/3rd of them made the purchase because they wanted to move away from public transport infrastructure as they had serious anxiety around the low level of cleanliness and no assurance of safety measures being taken.”
It is widely expected that the two-wheeler segment in India is expected to perform better than other sub-segments of the country’s automobile sector due to a number of factors such as healthy monsoon, rural demand and product affordability.
At present, HMSI is India’s 2nd largest two-wheeler company with over 46 million customers.