Hero MotoCorp Sees Demand Momentum Going Beyond Festive Season
India’s largest two-wheeler maker expects the demand momentum to continue beyond the festive season amid a rebound after the pandemic decimated sales in the first few months of this fiscal.
“The inquiries and call trends are very encouraging and we are confident of a good festive season, as we clearly see now that semi-urban and urban also are catching up and this wave of growth is not going to end,” Niranjan Gupta, chief financial officer, Hero MotoCorp Ltd. said in a post-earnings conference call. In the 10-day Navratri festival which accounts for a third of entire festive season sales, he said, the company registered 96% of last year's demand.
Recovery during the festive season is crucial for India’s auto industry that was battling a slowdown even before the pandemic, which completely stalled production and led to a complete washout earlier. Sales picked up after the nation—fighting the worst economic downturn in decades—restarted most activities to revive sentiment and growth. Dealers even expressed concerns about aggressive inventory push by manufacturers.
The maker of XPluse and Splendor has been producing a record 30,000 vehicles daily for the last 10 days. This, Gupta said, is happening simply on dealers' own demand and whatever the firm is producing is getting dispatched immediately.
In the quarter ended September, Hero MotoCorp reported a 7% year-on-year rise in volumes at 18,14,683 units. The quarterly performance was driven by a sharp pick-up in rural demand, followed by recovery in urban and semi-urban markets.
Not everyone is too optimistic of the sales. Peer Bajaj Auto Ltd. said the fog of uncertainty is still around for the domestic motorcycle business, and expressed concerns.
Even Gupta cautioned that demand will continue until a rise in Covid-19 cases lead to another round of lockdown. “I see the positivity would continue as we move forward. So we are cautiously optimistic."