Sanket Maheshwari, assistant vice president at ICICI Securities, talks about the challenges facing India's motorcycle industry.
Why has growth in India's motorcycle industry slowed from double-digit levels?
One [factor] is obviously the slowdown in the economy. We have seen high interest rates. Now, what happens in India is interest rates actually do not really impact the two-wheeler sector directly because most of the customers do not purchase two-wheelers on loan. However, what it does is it increases the [monthly payments] which customers are paying on something like a house loan of other loans they have. That leads to a cut in other discretionary expenditure, for example two-wheelers. Also, higher fuel prices have an impact. If you look at pure, pure luxury bikes, the market is actually growing. There's not a significant problem there.
Is there a lot of discounting in the market to try to boost sales?
The two-wheeler market hasn't seen too much discounting. I have not seen any company giving official discounts to dealers. There are some indirect discounts. I think companies on the two-wheeler side have become very conscious of the brands which they have.
How has the sector evolved?
The difference between the Indian two-wheeler of five years ago and now is that premium segment motorcycles have a significantly higher share and people are shifting. It's just that in a slowdown, you see that shift is not happening, but when the economy picks up again, I believe that segment will emerge as a stronger segment again.
Is competition between different companies increasing?
Competition is increasing. Five years ago, you essentially had two players - Hero Honda and Bajaj. Today you have Hero, Honda and Bajaj competing against each other, and you have TVS and Yamaha also becoming very aggressive.
* Rebecca Bundhun
