With forecast of a normal South-west monsoon and recovering bike sales after the effects of demonetisation, two-wheeler makers are lining up strong capex plans and a slew of new product launches to drive growth this fiscal.

Hero MotoCorp, Honda Motorcycle and Scooters India (HMSI), TVS, Motor and Bajaj Auto will have combined investments close to ₹5,000 crore, including on capacity expansion.They will also roll out a dozen new products across bike and scooter segments.

The two-wheeler market is projected to grow in single digit for this fiscal. However, HMSI expects to grow by 20 per cent, while TVS Motor seeks to achieve twice the industry growth.

Investment budget HMSI has chalked out an investment budget of ₹1,600 crore. With its new six-lakh unit production line set to commence operations by July, the total annual capacity will reach 6.4 million units. The company has set a sales target of 6 million units (5 million in FY-17) for this fiscal with at least four new model launches.

“With increased capacity, new models introduction and aggressive network expansion, Honda will carry on its strong sales momentum during this year,” said YS Guleria, Senior Vice-President – Sales & Marketing, HMSI.

Two-wheeler market leader Hero, which has lined up a capex of ₹2,500 crore, also expects strong growth on the back of a good monsoon, government’s infrastructure spending, full recovery post demonetisation, six new launches and recovery in the rural market.

A new scooter is expected from Hero in the second-half to spur volumes and strengthen its position.

TVS Motor, which has strengthened its position as the Number 2 player in the scooter market, will roll out a new scooter and a bike this year. Its new scooter is expected to bring in additional volumes and protect its turf in the scooter space.

Companies also expect the bike segment to regain its momentum, which was hit due to the effects of demonetisation, in the next few months.

The two-wheeler industry started 2017-18 with a 7 per cent growth in volumes at 1.67 million units in April. However, motorcycle sales were up just 0.5 per cent at 1.03 million units. But, this increase came after five months of decline.

The volume driver for the motorcycle segment is the 75-110 cc entry level segment, which has been declining since demonetisation. The second largest sub-segment, 110-125cc, recovered from the effects of currency ban and sales are moving northwards from March.

“The motorcycle segment growth (including the entry sub-segment) would revive in FY2018, although the extent and pace of recovery would remain dependent on how the monsoon pans out,” according to Subrata Ray, Group Vice-President – Corporate ratings, Icra.

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