Analysis: Indian Motorcycle Brands Increase Focus On Overseas Markets

Bajaj Auto Limited, India's largest exporter of motorcycles, has made a strong announcement, claiming the top position as India's largest motorcycle maker by sales volumes. Bajaj said that the company has started the April 2021 to March 2022 financial year as India's number one motorcycle manufacturer, with worldwide sales of 3,48,173 units in April 2021, riding on exports of 2,21,603 units, or nearly 64 per cent of overall sales. Bajaj Auto's claim is technically correct, since Hero MotoCorp, India's largest two-wheeler manufacturer despatched only 3,39,329 units in April, although a brief shutdown of Hero's plants due to the ongoing second wave of the COVID-19 pandemic helped Bajaj take the lead.

Also Read: Bajaj Overtakes Hero In April 2021 Monthly Motorcycle Sales

Bajaj Auto is India's largest two-wheeler and automobile exporter

The more pertinent figure though, is the massive exports volumes of Bajaj Auto, which retains its position as India's top automobile exporter. In FY20-21, Bajaj accounted for almost 60 per cent of motorcycle and three-wheeler exports. With 52 per cent of the company's volumes exported to over 79 countries, Bajaj Auto's export income stood at Rs. 12,687 crore. But Bajaj is not alone. Just a month ago, TVS Motor Company, which comes a close second to Bajaj in India's two-wheeler exports, reported its highest-ever monthly two-wheeler exports, crossing the 100,000 unit mark in March 2021.

Also Read: TVS Records Highest-Ever Monthly Two-Wheeler Exports In March 2021

TVS Motor Company is the second largest exporter of two-wheelers from India

Commenting on the milestone, Sudarshan Venu, Joint Managing Director, TVS Motor Company, said, "Along with our industry peers, we look forward to continue playing a role in making Indian two and three-wheelers popular and aspirational in many global markets. Over the past months, we have witnessed growth across various geographies with a definite shift to premiumisation. We will strive to keep this momentum going forward as we seek to delight customers with our exciting range of products. Investments in technology and the future of mobility will be important for us in the next phase of our growth and transformation."

Also Read: Honda Two-Wheelers India Sets Up New Overseas Business Vertical

The made-in-India Honda H'Ness CB350 is now being exported to even Japan

And this focus on overseas markets seems to be a growing trend, across manufacturers. Earlier this month, Honda Motorcycle and Scooter India (HMSI) announced setting up a new Overseas Business vertical with the aim to promote India as a global export hub for Honda. While HMSI has been exporting its two-wheelers to several countries, particularly made-in-India models like the Dio and NAVI to Latin American countries, the new vertical is expected to take Honda's export targets a notch higher. For April 2021, Honda Two-Wheeler India also announced its best-ever export volumes in over three years, with the Honda SP 125 now being exported to Europe, and the made-in-India Honda H'Ness CB350 and Honda CB350RS are now exported to even Honda's home market of Japan.

"With an eye on the future, Honda 2Wheelers India aims to further consolidate its No. 1 position in Honda's global motorcycle business while unlocking the next chapter of 'Make in India, for India & the World' in the BS-VI era. With this major organisational restructuring, the company is strengthening its business constitution and improving competitiveness to meet the high expectations from Global Honda," said Atsushi Ogata, Managing Director, President and CEO, Honda Motorcycle and Scooter India.

Also Read: Royal Enfield Sales Down By 19 Per Cent Month-on-Month

The Royal Enfield Interceptor 650, as well as the Continental GT 650 have been warmly received in overseas markets, including developed markets like Europe and North America

Another of India's most well-known motorcycle brands, Royal Enfield takes pride in calling itself the global leader in the mid-size motorcycle market. The Royal Enfield 650 Twins, launched in 2018, spearheaded Royal Enfield's global aspirations, followed by the launch of the new Meteor 350, and the updated Himalayan, which are all now positioned as global products. In fact, the Himalayan and the 650 Twins have gone on to make quite an impression, even in developed markets like North America. But the numbers belie Royal Enfield's overseas ambitions. The domestic market is where Royal Enfield still gets its lion's share of volumes, with exports accounting for just 6.3 per cent of overall sales in FY2020-21.

Also Read: Bajaj Auto Becomes World's Most Valuable Two-Wheeler Company

"Bajaj Auto is in the fortunate position that half of what we make is exported. As was the case last year, our exports will hold us in good stead; at least we can keep our nose above the water. As far as domestic sales are concerned, for motorcycles in particular, and specifically for the entry-level 100-125 cc motorcycles, the current year is still tracking below last year," Rajiv Bajaj, Managing Director, Bajaj Auto, said in a recent television interview.

"Initially in the festive season, in September and October 2020, basis the exuberance of stock build-up, it was camouflaged. But that camouflage was unraveled in recent months, and this is clear to everyone. And now, in terms of sentiment, if consumers are going to be concerned about their jobs and their wages, it is not going to help any of us. And I can tell you, whether it's Bajaj Auto, or some of the other large two-wheeler makers, all of us, in the last few days, irrespective of which state we're operating in, have reduced our domestic sales forecast by about 15 per cent. There's a lot of chaos at dealerships all over the country," added Bajaj.

Also Read: COVID-19 Delays First Motorcycle From Bajaj-Triumph Alliance To 2023

The Bajaj CT 110 is one of the highest-selling commuter bikes from Bajaj Auto

Clearly, exports may be just one part of the story. The Indian two-wheeler industry is largely dependent on the domestic market, being the world's largest two-wheeler market that it is. And if market challenges, economic conditions and overall consumer sentiment will continue to be low, particularly in high volumes segments, a focus on only exports is not likely to help ease the situation for manufacturers. In fact, the recent spike in exports is seen by many observers as an alternative to push more volumes overseas, rather than have standing inventory in dealerships in the domestic market, where lockdowns are in place in many places.

The Bajaj Pulsar range is one of the most popular Bajaj bikes in export markets

"Export demand has gone up in South African and Nigerian markets along with other parts of the continent, which is a big export market for Indian two-wheeler manufacturers. Then, the pent up demand in export markets post COVID recovery period has also added up to exports. Lastly, since sales in domestic market is impacted due to COVID, automakers are utilising their inventory and supply chain for export markets," said Shamsher Dewan, Auto Analyst, ICRA Limited, an independent Indian investment information and credit rating agency.

With staggered and limited lockdowns across much of India during the ongoing deadly second wave of the COVID-19 pandemic, the next few months could hit domestic two-wheeler sales hard. While March 2021 two-wheeler sales have been promising, the month-on-month decline in April 2021 sales volumes has been cause for concern. And with no signs of the second wave of the pandemic abating in India, and with latest reports of even a third wave hitting India towards the second half of 2021, the automobile industry looks set for a rough ride ahead.