Honda Motorcycle & Scooter India (HMSI), India’s second-largest two-wheeler company, is banking on an expansion in exclusive channels for its premium bike business to tide over the bleak demand prospects wrought by the Covid-19 pandemic. This is the light at the end of the tunnel in the form of additional business that HMSI is pinning its hopes on, said Yadvinder Singh Guleria, Director – Sales & Marketing, HMSI.

This network will exclusively take care of its mid-range and higher displacement models, he said. In addition, the company will also keep on track all the model launches slated for this fiscal year, as well as expand its overall network, Guleria told BusinessLine , when asked about the company’s strategy to tackle the slowdown beleaguering the automobile industry.

These plans are on, albeit with slight delays owing to the challenges amid the pandemic, he said. HMSI has already had five model launches this year.

The automobile industry is expected to post a double-digit decline in sales this year amid the uncertainties and challenges wrought by the Covid-19 pandemic. Registration of two-wheelers declined by 41 per cent year-on-year to 7,90,118 units in June, against 13,37,462 units in June 2019, according to the Federation of Automobile Dealers Associations (FADA).

This move to expand exclusive channels for its premium bike business is amid the general consensus in the industry that entry-level two-wheeler models are going to witness for an uptake in demand. This is due to the increased focus on personal mobility and dent in personal income brought about by the pandemic. When asked about this, Guleria said that there has been no change in the constitution of its business, with scooters contributing 67 per cent and motorcycles 33 per cent to HMSI’s overall business, which is the same compared to the pre-Covid levels.

But, rural consumption has been on the rise due to more lockdowns and economic activities being restrained in the urban market, he said. HMSI also saw a 4 per cent increase in the contribution from the rural market to its revenue in May and June, though there was no change in motorcycle and scooter sales compared to the past, said Guleria.

However, the acceptability of scooters is bound to increase, particularly in rural areas due to the focus on motorable roads, more working women and the need for means of mobility, the challenges of public transport in these areas, as well as the focus on personal mobility and social distancing brought about by the pandemic, he said.

Another change that is perceptible is more people visiting the company’s workshops and other after-sales service centres, he said. HMSI has seen a four-fold surge in its workshop load during the past two months. Due to social distancing, concerns over hygiene and focus on sanitisation, people are relying less on unauthorised workshops, he explained..

In June, around 95 per cent of the company’s dealership network was open, and retail sales had reached 75-80 per cent of pre-Covid levels. This dropped further in July due to the multiple lockdowns, he said. Now, around 80-95 per cent of the network is open, with sales having dropped by 10-15 per cent from the June level, he said.

While production levels are being ramped up, it remains riddled with challenges like lockdowns, migrant labour issues, the mandatory quarantine requirement for workers and the need to retrain employees before they are put on the assembly lines since they were away for long, said Guleria. Currently, the production level stands at close to 70-75 per cent, he said.

Going forward, a price hike is also inevitable, he pointed out. The price increases due to the transition to BS-6 emission norms have not been fully passed on to the customers, he said. And currently, companies are grappling with their bottomline and are not working at their optimum production efficiency levels. Now, price increases are being made in a stepwise manner across the automobile industry since it’s difficult for companies to absorb it for longer durations, said Guleria.

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