Two-Wheeler the only segment in Indian Automotive Industry which is likely to report 8-10% volume growth in H1FY15

Hero-MotoCorp-Hastur-SideIndian-two-wheeler-manufacturers-sales-report-for-January-201320140319141825308

Scooter segment accounted for 25.3% of the two-wheeler market in Apr ’14: Led by new launches from Honda (New Activa), Hero (Maestro), and TVS (Jupiter), the scooter segment grew at a faster clip of 26.1% YoY for Apr’14 against a 8.1% growth in the motorcycle segment. The faster volume growth of the scooter segment led to a 290bps improvement to 25.3% in its share of the two-wheeler market. The main drivers for this growth are (a) growing acceptability of gearless scooters, particularly by women, (b) rising urbanization and increasing proportion of working women and (c) new launches. We expect 13-15% CAGR in scooter volumes for the next three years. TVS Motor Company   (TVS) gains 253bps market share in the scooter segment: Led by the success of its new offering ‘Jupiter’, TVS reported growth of 55.2% YoY for Apr’14, thereby, gaining market share to the tune of 250bps to 13.5%. Motorcycle sales growth at 8.1% YoY: Led by new launches, both,  Hero Motocorp  (HMCL) and Honda Motorcycle and Scooter India (HMSI) reported a growth of 13-14%. Bajaj Auto  ‘s (BJA) decline of 16.5% YoY led to an overall drag on the volumes. Hence, the overall growth for the motorcycle segment was restricted at 8.1% YoY for the month of Apr’14. Hero Moto Corp Ltd (HMCL) gains 309bps market share at the cost of 538bps market share loss of BJA in the motorcycle segment: Driven by new launches and wedding season, HMCL reported 14.6% YoY growth, thereby, leading to a 310bps market share gain to 54.4% in Apr’14. BJA reported a decline of 16.5%, thereby, losing market share to the tune of 538bps to 18.3% for the month. At the same time, HMSI and Royal Enfield reported a 13.7% and 87.4% YoY increase respectively for Apr’14. Our channel checks suggest strong traction for HMCL products, both in scooters as well as motorcycle segments. Also, HMSI has not been able to make a dent in the traditionally strong market for Hero (mainly the northern market). BJA concedes 262bps and 567bps market share in both key segments i.e. 110-125cc as well as 125-150cc segment, respectively: On account of lower sales of ‘Discover’ and ‘Platina’, BJA’s volumes declined by 9.2% YoY in the 110-125cc segment as against 9.0% YoY growth in the segment. This led to 262bps loss in market share to 13.2% for the month. On the other hand, HMCL gained 260bps in this segment, given the strong demand for HMCL’s ‘Ignitor’ and ‘Super Splendor’; and HMSI gained 290bps. BJA continues to face the heat from competition in the 125-150cc segment. HMCL gained ~600bps in market share on account of new launches. HMCL’s gain was Bajaj Auto’s loss (570bps decline in market share).

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