There's more to fall in two-wheeler sales than what numbers tell

While two-wheeler sales declined 22 per cent, two other segments, bigger in value while being lower in volume, were much less impacted.

A near-19 per cent crash in December automobile sales made headlines on Tuesday but there is more to the broad picture.

Data issued by the Society of Indian Automobile Manufacturers showed December sales down 18.7 per cent to 1.22 million vehicles, presumably the impact of demonetisation.

However, if from the sales volume one takes out two-wheelers, about 80 per cent of the total, the decline in the rest of the industry is a little less than seven per cent. Two-wheeler sales declined 22 per cent but two other segments, bigger in value while being lower in volume, were much less impacted.

Take passenger vehicles, biggest segment by value. Sales to dealers in December slipped 1.4 per cent, as the two top ones, Maruti Suzuki and Hyundai, posted a decline of about four per cent. A number of others, including Toyota, Tata Motors, Volkswagen and Renault, had high growth.

Commercial vehicles declined by five per cent. Within this, light CVs grew one per cent while medium & heavy CVs declined 12 per cent.

In two-wheelers, the top two, Hero MotoCorp and Honda Motorcycle & Scooter, saw sharp cuts of 34 per cent and 29 per cent in volumes, respectively. However, some bucked the trend. Yamaha Motors posted 28 per cent growth in December to 49,775 units; Royal Enfield's sales zoomed 40 per cent to 56,316 units.

While demonetisation was a prominent reason behind the December performance, some (Maruti, Hero, Honda Motorcyle) also had planned maintenance shutdowns of five-six days. This also impacted volumes to dealers.

December is also different from other months as dealers are wary of building an inventory of vehicles manufactured during the year. Buyers making a purchase in January prefer to buy a product manufactured in the new calendar year. Y S Guleria, senior vice-president (sales & marketing) at Honda Motorcycle said it was a 'traditionally lean month'.

The industry is confident that January will show better performance. "As the macro economic situation post demonetisation is steadily improving, the upcoming festive season and expectations of a growth-propeller Union Budget make us cautiously optimistic for the current quarter," said Guleria.

Demand pick-up in CVs is also anticipated, as fleet owners could make purchases before the April deadline for BS-IV emission norms to apply in for these and prices go up, said Abdul Majeed, partner at consultancy Price Waterhouse.