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Old 2nd August 2013, 16:28   #1
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Default Honda moves past Bajaj Auto in July 2013 two wheeler sales

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Honda Motorcycles and Scooters India is on a roll what with the Japanese two wheeler major registering big gains in monthly numbers. Honda has moved ahead of Bajaj Auto to emerge as the second largest two wheeler maker in India, in terms of July 2013 sales numbers. The Dream series of 110cc commuter motorcycles has been at the forefront of Honda's sales growth. Honda managed to sell 2.87 lakh units of its two wheelers in July 2013, compared to Bajaj Auto's 2.81 lakh units in the same period.

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The key difference between the two companies is that Honda managed to achieve a 20% growth in monthly volumes when compared to last year's figures while Bajaj Auto lost 20% in terms of volumes. Hero MotoCorp continues to lead the field, outselling its nearest competitor, with monthly sales figures of 4.88 lakh units. TVS Motors continues it laggard performance, with the South Indian two wheeler maker closing July with 1.54 lakh units, a decline of 5% from last July's numbers.

Honda, by far, has been the biggest gainer in the two wheeler sector with consistent sales increased each passing month, buoyed by new product launches. Honda's strong sales growth is at odds with the overall gloomy outlook in the two wheeler sector despite India getting copious monsoons this year. Two wheeler companies in the country are looking forward to the festive season for cheer, a time when two wheeler sales peak each year.

Honda's launch blitzkrieg will include a new product launch each quarter for the next couple of years, and this frenetic pace of product launches will be accompanied by a rapid expansion of dealerships across urban and rural India. A 125cc Activa could be the next big launch for the Japanese major. Recently, Honda launched the Activa-i, the least priced scooter in its portfolio, and the Dream Neo 110, its least priced commuter motorcycle.

Honda moves past Bajaj Auto in July 2013 two wheeler sales-bajaj-discover-125-t.jpg

After its exit from the Hero-Honda joint venture, Honda has aimed at usurping Hero MotoCorp's place from the top of the hustings by 2020, the year by which the Japanese two wheeler maker plans to sell 10 million units per annum in India. Even as Honda is showing signs of moving past Bajaj Auto in the volumes game, the latter has shown no inclination to enter the fast growing automatic scooter segment.

Instead, the Indian company prefers to focus on a high EBITDA margin of 20%, an industry leading figure according to Mr. Rajiv Bajaj, the managing director of Bajaj Auto. The Indian motorcycle major plans to launch 5 more Discover motorcycles to boost its presence in the commuter segment. This festive season, Bajaj Auto will also launch a new flagship motorcycle in the form of the Pulsar 375. Clearly, Bajaj's strategy is sharply focused on the motorcycle market, which is said to yield higher margins than the automatic scooter segment.

Last edited by JayPrashanth : 2nd August 2013 at 16:30. Reason: News Link Added
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Old 2nd August 2013, 18:46   #2
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Default Re: Honda moves past Bajaj Auto in July 2013 two wheeler sales

Suppose this was to be expected and am sure the labor unrest problems Bajaj had to face in their chakan plant has also added to Bajaj's downfall. End of the day would we get their operating profit which would actually mean more rather than just the motorcycle numbers?
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Old 2nd August 2013, 19:45   #3
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Default Re: Honda moves past Bajaj Auto in July 2013 two wheeler sales

at this rate Honda will be no.1 soon, and Mr. Munjal will take back his words and say being No.1 is really a joke. 20% growth is phenomenal considering there is no baseline effect.
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Old 2nd August 2013, 20:58   #4
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Default Re: Honda moves past Bajaj Auto in July 2013 two wheeler sales

With petrol prices sky-rocketing it is good to see sales of 2-wheelers increasing. It is good that Honda is gaining on the market share but it would be better if they maintain the quality of the bikes and their service centres.

Growing is difficult but falling down is pretty ease. Maintaining that level is tougher so Honda has a lot of work behind to do.

Anurag.
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Old 3rd August 2013, 09:24   #5
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Default Re: Honda moves past Bajaj Auto in July 2013 two wheeler sales

Though Honda's aim is not that very difficult to achieve, I think their sales and service network is not capable to handle that kind of volume. Though there are many dealerships and service centers, they too crowded.

As an example, there is a Honda dealership in PCMC area where people used to wait from 08:00AM to get appointment for servicing.
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Old 3rd August 2013, 15:43   #6
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Default Re: Honda moves past Bajaj Auto in July 2013 two wheeler sales

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Originally Posted by MaxTorque View Post
Though there are many dealerships and service centers, they too crowded.
Exactly this what I wanted to say. They have to open up more showrooms to deal with the daily service traffic.

I have seen the feedback form at one Honda Showroom in Hyderabad, it said "service the bike's internals too and not just wash, polish and print the bill". Was smiling reading this so I asked the SA why should a customer write such complaints. Why don't you improve your staff and train them better to do things better and faster. The SA was standing like a tree silent without any answer.

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Where people used to wait from 08:00AM to get appointment for servicing.
Waiting from 8 AM! Buddy I would say that as a luxury. Here in Hyderabad I used to reach the service centre by 7:15-7:30AM even then I used to get a number of 04 in the queue. This scenario is of 2009.

Now it would be worse.

Cheers,
Anurag.
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Old 3rd August 2013, 18:53   #7
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Default Re: Honda moves past Bajaj Auto in July 2013 two wheeler sales

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Originally Posted by ku69rd View Post
Suppose this was to be expected and am sure the labor unrest problems Bajaj had to face in their chakan plant has also added to Bajaj's downfall. End of the day would we get their operating profit which would actually mean more rather than just the motorcycle numbers?
Labour problems, according to Mr Rajiv Bajaj hasn't impacted sales. Quite believable, as the bulk of Pulsar production has been shifted to Waluj, Aurangabad. So, impact in terms of dealer dispatches would have been minimal, to the tune of a few thousand bikes at best.

Operating profit and numbers are two different things as automatic scooters, I've heard deliver about 8-12% EBITDA. Motorcycles, Bajaj Auto claims, deliver about 20%. So, a situation wherein the operating profits are lower despite the higher numbers isn't out of the realm of possibilities.

I've watched Mr Bajaj in most of his interviews/analyst conferences. Bajaj Auto has been sticking to the, "we want to be number one not just in numbers, but also in operating profits" stand. And they seem to be quite prepared to cede market share by not having a presence in the fast moving automatic scooter market.

Another point here is that Honda has only recently begun expanding its reach to semi-urban India, traditional strongholds of Hero MotoCorp and Bajaj Auto. As Honda sets shop in more parts of the Indian hinterland, sales of the 110cc commuters could maintain the upward momentum until Honda reaches some sort of critical mass in terms of having a nation wide footprint.

After that happens, the battles could become more pitched in terms of differentiation. Right now, both Honda and Hero MotoCorp have products that are pretty similar in the 100cc segment. So, Honda seems to be eating up Hero's market share steadily as it expands. Only Bajaj is offering new features but then, I'm not sure whether a buyer in the rural market actually places much value in a four valve engine head over a 2 valve head.

Cheers,

Jay

Last edited by JayPrashanth : 3rd August 2013 at 18:55.
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