Companies & Sectors
Honda, Bajaj mere spectators, as sales of new-gen scooters soar

TVS Motors, Hero Honda enjoy over 100% sales growth in December, but market leader Honda manages just 9%. Mahindra, Suzuki also achieve over 70% rise

Scooter manufacturers, especially those who have introduced new-generation gearless scooters, are enjoying the fruits of their labour, as sales have continued in top gear in December.

Surprisingly, December sales have made current market leader Honda Motorcycle & Scooter and Bajaj Auto, the erstwhile leader in the scooter segment, mere spectators, as other manufacturers enjoyed bumper sales, that too in the last month of 2010. Auto sales in December are often lower compared with previous months.

In December, TVS Motor and Hero Honda Motors witnessed sales growth of over 100%, while sales for current market leader Honda grew by just 9%. Others, like Mahindra Two Wheelers and Suzuki Motorcycle India saw their scooter sales increase by 72% and 71%, respectively. However, looking at these bumper sales figures, one cannot but help feel bad for Hamara Bajaj, which last year decided to exit the scooter market.

Honda remained the market leader with sales of 76,307 units, taking its nine-month sales (April to December 2010) to 6,65,051 units from 5,22,399 units in the previous corresponding period. However, despite finding favour with customers, the company is still finding it difficult to deliver scooters in time. According to sources, Honda Activa has a waiting period of six to eight months.

This waiting period for an Activa is proving to be beneficial for others like Hero Honda and TVS Motors. Especially TVS, which has seen demand soar for its newly-launched Wego scooter, on easy availability and a loyal customer base built around its Scooty brand. Hero Honda, on the other hand, has benefitted from its brand image and large dealer network. Increased demand and non-availability of Activa may have played an important role in people trying out the models of other manufacturers.

While, TVS's Wego, Mahindra's Rodeo and Duro and Suzuki's Access do have features similar to Activa, people did not think much about these products previously. But since the delivery time for an Activa has increased, those not prepared to wait long are turning to other models, and this is propelling sales of Wego, Access, Rodeo and Duro.

During the nine months do December, scooter sales rose 49.2% to 14,92,342 units, while motorcycle sales increased 24.6% to 66,54,280 units. This makes one wonder about the decision by Bajaj to 'sacrifice' scooters to push its motorcycle business.

One of the problems has been that while all scooter makers launched products based on fresh R&D and improved features (such as auto gears), performance and mileage, Bajaj did not make much of an effort on this front. The company continued with its iconic (now defunct) geared scooters.

In effect, Bajaj's scooter segment appears to have died an unnatural and untimely death, mainly due to the lack of support from the family. Last heard, managing director Rajiv Bajaj has said that the company would drop the name 'Bajaj' from its products, showrooms and service centres and re-brand them as 'Pulsar' or 'Discover', after the names of two of the company's best-selling motorcycle variants.

Come 2014, Hero will have to drop 'Honda' from its name. Bajaj seems to have gone one step further to drop the family name from its products. Whether this move will succeed or not only time will tell. Nevertheless, Bajaj's presence in scooters would have been a different game altogether.

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COMMENTS

SMSheth

6 years ago

Bajaj has surely committed a mistake by eliminating itself from the scooter market. However, it may also jump in again to recapture this treasure hunt game. Keeping in mind this alongwith other hidden benefits, it is trying hard with all the tactics to acquuire 27% from WMDC from the joint venture in Maharashtra Scooters Ltd.

Unfortunately, the matter is dragged to the court, for the greedy mentality of BAJAJ. Had it offered the intrinsic value for the above stake, it would have got the treasure at the peanuts price. Even now, BAL is tryign hard to usurp WMDC's stake at throw away price under all the options available. After all evey greed has its limit BUT Bajaj is not ready to accept this. MSL has all the necessary infra through which scooter manufacturing can be started immediately.

Chander

6 years ago

Sir,
Really sorry to inform that if Mahindra scooter has touched 72% increase in sales, but the scooter is just a garbage scooter. Ask one who is having the scooter? Ask who is driving the scooter? Ask those who have complaint against the said scooter? I am having one Mahindra Flyte it is just a shit? Purchased in 2010 Feb. thrice the new battery was replaced it means there was problem with the new battery? Now after one year even the mileage of the scooter is 35 and promise was of 45 I do not want 45 but at least the mileage should be 40. Let the big guns say what they like about Mahindra but the truth is this that Mahindra scooter is just a garbage a total wasteage of your hard earned money. My advice is not to go for Mahindra, never ever dream of Mahindra I am the sufferer. If any top shot reads my mail I want to speak to him on mobile. My e-mail id is chanderbhushan17@gmail.com. Nobody is helping me to get rid of my complaint. I want that my scooter be changed with a new one or else my hard earned money be refunded.
Chander Bhushan.

pogo

6 years ago

I guess the new management is the reason for such a situation today. One thing which is really bad and dangerous about new management is "dictating the market"..

History has shown no one is emperor in market. Customer is the king. If customers like it, customer takes it.

Mistake 1: New management said there is no future in 100cc bikes. As such they even phased out best selling 100cc bike, CT100, Boxer etc.. Also, dictated the market that future is 150cc or more..

Result: Lost valuable market share/business opportunity in 100cc segment..

But after three year, came back again with 100cc discover and now what we hear, Boxer brand is going to be back..

WHO THE HELL IS AT TOP MANAGMENT IN THAT COMPANY..An idiot who thinks he is the GOD?

Scooter segment: Most sorry show:..
New management said, scooter market is going to die and hence there is no future in scooter segment..

Result:
Honda making tons of profit..Suzuki making tons of profit..

At Bangalore a fully loaded access costs nothing short of 60,000Rs..

Now, which fool in the world tells me that a product costing 55 to 60K Rs, with over 1million units per year as an insignificant market, which is going to die.. (800K from Honda activa, 300K from access 125.. forget TVS, Mahindra....)

Hell with the new management. I simply pity this company for making so much mistakes in direction (and also surprised to see this company being alive, if not for two lucky products pulsar, discover 100cc...

Roopsingh Solanki

6 years ago

The article hurt me deeply as i always admired the easy designing of bajaj scooters(former vespa,italy design) which is one of most easily repairable and very cost effective,and having worked as bajaj auto service engineer in their akurdi ,pune plant when Rajiv bajaj just joined the R & D team as new team leader after completing engineering,(which is closed now),i really felt sorry for the decision last year when bajaj auto quit for scooter mfg,
that is sheer mistake on part of bajaj family which in 90's was market leader and rahul bajaj was called as King of scooters-
and having worked in the Bajaj campus enviorment i never doubted their expertise on cost effectiveness and quantitative approach to reduce costs,
i am not aware about the mindset of present management(new gen),but i really admired and liked the simplicity of the bajaj family (one of cousin of rahul bajaj never used a private car(only company bus to commute) and always had Khadi shirt -
I really feel sorry for bajaj group which could be another honda in global scenario.

SMSheth

6 years ago

The article aims at some bias attitude in favour of BAJAJ. Like the BOSS, the subordinates are too dancing at the signs of 2 wheeler market leader!!!!

"A black sheep in the jounalist world"- would be absolutely wrong to say. A star amongst the group. This will be OK.

REPLY

Aakash Parekh

In Reply to SMSheth 6 years ago

SMS...get your basics right. The article speaks about Bajaj's sorry decision to leave scooter segment. And how? Look at the bumper sales of others, excluding Honda.

Tuesday’s Market Preview: Global cues indicate positive opening

Cues from the Asian markets indicate an opening in the green for the Indian market. The regional bourses were mixed in early trade today, brushing aside fears of possible policy tightening initiatives. Absence of cues from the US also led to the cautiousness in the minds of investors. The SGX Nifty was 10.50 points higher at 5,670.50 compared to its previous close of 5,660. Wall Street was closed on Monday for the Dr Martin Luther King Jr holiday.

The local market opened weak yesterday on mixed cues from its Asian peers, then skidded further early in the day, after which the indices popped in and out of the red in choppy trade. While the market crawled into the green in mid-morning trade, volatility put a cap on the gains pushing the gauges lower again. The indices continued to swing in the post-noon session, weighed by a huge decline of over 3% on the Shanghai Composite, the biggest decline since mid-November, following Friday's 50 basis point increase in the reserve requirement for banks.

The Sensex moved in a range of 239 points (107 points up and 132 points down) and ended in the positive (22 points higher) at 18,882. The Nifty ended flat at 5,655. We expect the market volatility to reduce and the indices to trade in a narrow range before the next move.

Markets in Asia were mixed in early trade on Tuesday, brushing aside possible policy tightening measures. Technology stocks were dampened following news that Steve Jobs, the CEO of Apple Inc, took a leave of absence citing health reasons. The Chinese market continued its decline, after plunging over 3% yesterday following a hike in reserve requirements for banks.

The Hang Seng was up 0.23%, the Nikkei 225 gained 0.18%, the Straits Times rose 0.14%, the Seoul Composite advanced 0.30% and the Taiwan weighted surged 0.67%. On the other hand, the Shanghai Composite was down 0.27% and the KLSE Composite shed 0.25%.

Back home, oil minister Murli Deora has sought a meeting with finance minister Pranab Mukherjee to discuss precarious finances of state-owned oil firms, as crude prices inch towards the $100 per barrel mark. Officials however said the meeting has so far not been fixed.

State-owned Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation are losing about Rs290 crore a day in revenues on selling diesel, domestic LPG and kerosene below the imported cost.
.

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Monday Market Report: Market to move in a range

Sensex and Nifty may even try to make a recovery

The local market opened weak on mixed cues from its Asian peers, then skidded further early in the day, after which the indices popped in and out of the red in choppy trade. The early decline was led by selling in rate-sensitive sectors like realty, power, auto and capital goods. While the market crawled into the green in mid-morning trade, the volatility put a cap on the gains pushing the gauges lower again.

The indices continued to swing in the post-noon session, weighed by a huge decline of over 3% on the Shanghai Composite, the biggest decline since mid-November, following Friday's 50 basis point increase in the reserve requirement for banks.

The Sensex opened with a gap-up of 23 points at 18,883, but the Nifty made a negative opening, down six points at 5,649. The market remained volatile throughout the day. The Sensex moved in a range of 239 points (107 points up and 132 points down) and ended in the positive (22 points higher) at 18,882. The Nifty ended flat at 5,655. We expect the market volatility to reduce and the indices to trade in a narrow range before the next move.

Foreign institutional investors have been booking profits continuously since 5th January. But the volume of outflow has slowed down. Last week, we expected the market to fall, which it did. The decline will lose momentum as time passes and we may witness a rally soon. It remains to be seen whether the rally is a strong or a weak one.

The market breadth was tilted in favour of the losers. The Sensex had 17 declining stocks and 13 gainers, while the Nifty settled with 30 stocks in the red and 20 in the green. Selling was more rampant in the broader markets as the BSE Mid-cap index declined 1.39% and the BSE Small-cap index fell 1.40%.

The top sectoral gainers were BSE IT index (up 1.73%), BSE TECk (up 1.33%) and BSE Consumer Durables (up 0.25%). The main losers were BSE Realty (down 2.37%), BSE Metal (down 1.32%) and BSE Capital Goods (down 1.17%).

The top performers in the Sensex list were HDFC (up 3.15%), Infosys (up 2.06%), Cipla (up 1.87%), TCS (up 1.74%) and Bajaj Auto (up 1.62%). The laggards included Reliance Infra (down 7.84%), Jaiprakash Associates (down 5.55%), Reliance Communications (down 4.77%), Sterlite Industries (down 3.80%) and DLF (down 3.19%).

The government is likely to take a decision on the $9.6-billion Cairn-Vedanta deal in the next few weeks and the decision would be taken on merits. "There is absolutely no delay on the part of the government regarding the Cairn-Vedanta deal. We will come to a decision on this (deal) in the course of the next few weeks. The decision will be taken on merits," said oil secretary S Sundareshan.

Asian markets closed mostly in the red today, on fears that various nations in the region might tighten policy measures to rein in prices, following the Chinese example. Profit-taking after recent gains was also seen as a reason for today's decline.

The Shanghai Composite plunged 3.02%, the Hang Seng fell 0.52%, the Jakarta Composite slid 0.94%, the Straits Times lost 0.23%, the Seoul Composite was down 0.39% and the Taiwan Weighted declined 0.83%. On the other hand, the KLSE Composite gained 0.29% and the Nikkei 225 added 0.04%.

Back home, cooking oil prices are reported to have surged by up to 62% in last one year, according to Solvent Extractors Association. They expect retail prices of edible oils to remain firm in the wake of high global prices.

Foreign institutional investors were net sellers of stocks worth Rs748 crore on Friday. On the other hand, domestic institutional investors were net buyers of equities worth Rs290.11 crore.

Triveni Engineering & Industries (down 4.71%) has signed a renewal of its license agreement for a term of 12 years with US-based Lufkin Industries Inc, to manufacture high-speed gear and gear boxes. The geographical coverage under the agreement has also been extended to cover major markets in South-East Asia such as Malaysia, Indonesia, Singapore and Thailand.

Steel Strips Wheels (SSWL) (down 0.02%), has bagged a prestigious contract from Peugeot Citroen (PSA) group, one of the major car makers in Europe. The Indian major has been a supplier of its products to the European car major for the past four years. The new business involves supply of nearly 0.6 million wheels in the next five years and foreign exchange earning of almost $9 million.
Sensex and Nifty may even try to make a recovery
IT hardware major HCL Infosystems (up 2.45%) has received a contract from Kerala State Electronics Development Corporation (Keltron) to provide laptops and netbooks to the state government's IT@School project. However, the deal value was not disclosed. The project has been initiated by the Kerala government to foster IT education and facilitate information and communication technologies-enabled education delivery in schools across the state.

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