Hero MotoCorp, the country’s largest two-wheeler manufacturer, announced on Friday that it will raise prices across its range of motorcycles and scooters from December 1, the fourth such price hike in the ongoing fiscal. Other Leading OEMs such as TVS & Bajaj Auto are likely to follow suit. Hero MotoCorp last raised prices by upto ₹1000 ex-showroom in September.
Regular price hikes are keeping pressure on the entry-level segment of two-wheelers particularly high, as customers stay away due to rising unaffordability of the vehicles.
While TVS Motor Company announced its latest round of price hikes as recently as October, Bajaj Auto hasn’t raised prices since July as it presses on to regain share it has lost in the domestic motorcycle market.
Hero MotoCorp has cited overall inflationary costs as the reason behind the hikes. Prices will be revised upwards by upto ₹1500 ex-showroom depending on the model and market, the company said.
“We will continue to provide innovative financing solutions in order to cushion the impact on the customers. We have also put in place accelerated savings programs, which will help us to offset any further cost impact, and drive improvement in margins. Moving forward the economic indicators are favorable to a growth in demand, and we expect industry volumes to pick up in coming quarters”, Niranjan Gupta, chief financial officer, Hero MotoCorp said.
“Regular price hikes are detrimental for the market and dealers as such and create a negative impact on the mind space of the customer. They usually impact the entry level segment more where even small price hikes matter. We had decent festive retails but before going for a price hike, companies should ensure continuity of sales. It could have been better if the hikes were delayed to let’s say the last quarter of the fiscal,” Manish Raj Singhania, President, Federation of Automobile Dealers’ Association (FADA) told Mint.
“It has been the trend when market leaders hike prices, others follow. We have been seeing input costs & other factors on costs stay stable for the last 2-3 months. We may see OEMs introduce schemes to lure back customers”, he added.
“Normally, if the market leader announces a price hike, most OEMs want to leverage the opportunity to earn a better margin. Although the 42-day festive period was positive for two-wheelers, it was nowhere near as glorious as the other segments. We see enquiries have dropped in November and I suspect we are again coming back to the same level of de-growth as before the festive season. When compared to pre-Covid-19 levels, we will see two-wheeler sales in the red again”, Vinkesh Gulati, Chairman, Research & Academy at FADA said. Gulati is also a Bajaj Auto dealer.
Hero MotoCorp’s EBITDA margins saw a 117 basis points dip to 11.4% in Q2FY23 from 12.7% in Q2FY22.
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