Company's two-wheeler sales fell 17% in February

Slowly, the two-wheeler landscape is changing and entry-level bikes appear to be the primary reason for that.

Entry level bikes, that cost for less than Rs 40,000 and typically have engine displacements less than 125cc, now comprise a little over half of the total market.

Hero Honda Motors has been the undisputed leader here. But what has happened over the last few months has surprised everyone, including parts suppliers and analysts: Hero Honda has gone from strength to strength in this segment, taking market share away from close competitor Bajaj Auto and this has led to the latter reporting significant overall sales declines.

Bajaj Auto stands to lose the most (from Hero Honda's moves) since its sizeable presence in the entry-level segment has dwindled just when the overall market is also in the midst of a slowdown and the gain in the 125 cc-and-above bike segment has perhaps not been as per expectations.

Sample this: In February, Hero Honda posted a 24% growth in total sales at 329,055 units (265,431 units), consolidating its grip over the two-wheeler market with an over 56% share. But Bajaj Auto sold 132,393 units (159,508 units) in the domestic market last month, a decline of 17%.

As per Society of Indian Automobile Manufacturers' January data for the 75cc-125cc segment, Hero Honda sold 278,147 units in the domestic market whereas Bajaj sold only 17,244 units. During the same month, TVS Motor Co sold 21,939 units while India Yamaha Motor sold 4,106 units.

A prominent parts supplier said Bajaj was doing about one lakh units per month in the entry level space even till October-November last year but only about 40,000 units were sold in this segment last month. The entry level for Bajaj includes Platina 100 as well as Platina 125 cc (domestic sales) besides CT 100 and Boxer (mainly for exports). As per production schedule given to suppliers, Bajaj will again be making about 40,000 units of entry level bikes in March too.

Another supplier said that Hero Honda appears to be focused on evacuating Bajaj Auto from the entry level space with its product line-up which mainly centers around Splendour and Passion brands.

Despite repeated attempts over the last few days, officials from neither Hero Honda nor Bajaj were willing to speak on this issue.

In a press release on Monday, Bajaj's managing director Rajiv Bajaj had claimed over 40% share of the above-125 cc bike space in February, with 80,164 units across brands Platina 125, Discover, XCD 135, Avenger and Pulsar. In this segment, Hero Honda has been relegated to the second position.

Yet another supplier indicated that Bajaj Auto "has begun rationalising engine capacity and could well be thinking of moving away from 100 cc space in the short to medium term".

Sindhu Bhattacharya/ DNA-Daily News & Analysis Source: 3D Syndication