Honda Motorcycle and Scooter India Ltd (HMSI) is bringing down its inventory with its dealers because of depressed market conditions.
“We had started evaluating our dispatches and correcting inventory levels from November last year. By end of April 2019, we have 35 day inventory at our dealerships (from around 45),” said Yadvinder Singh Guleria, senior vice-president at HMSCI.
Earlier, the company used to maintain an inventory of around 45 days.
The company recently crossed the 30 lakh sales milestone for its 110cc scooter Dio.
Guleria said the company’s sales had hit a rough patch over the last two years. Sales growth in 2017-18 was just 5 per cent, which was one-third of target growth. The situation worsened last fiscal, with the company reporting negative growth.
“And conditions have not improved in the first month of the first quarter of FY20,” said Guleria.
He expects the situation to improve from the second quarter. “We hope there will be policy decisions with a new government in place. We are looking at the budget and normal monsoons are predicted.” Guleria said.
“The industry never really recovered from the hike in insurance premium last year. We hoped that the festival season would kick off a revival. The industry usually builds up during that time. But that unfortunately never happened. Last year, festival sales were also not up to the expectations,” said Guleria.
The current financial year will be difficult for the industry as the first half witnessed a slowdown of sales because of the elections and depressed market sentiments. Even if demand picks up, the mandatory anti-lock braking system regulation for two-wheelers will have a negative impact on sales as prices will jump by Rs 6,500-8,000 for vehicles above 125cc. Thereafter, in the third and fourth quarters, the industry will begin the transition to BS-VI.
“Going by our experience, during the BS-III to BS-IV transition when we were stockpiled with inventories, we will begin the transition this time by the late third quarter,” Guleria said.
