Pune-based, India’s third largest two-wheeler manufacturer, Bajaj Auto plans to increase prices of its Discover and Platina models in January to off-set the cost hike it witnessed in the last few months.
The company will toe the line of its peers Hero MotoCorp and Honda Motorcycle and Scooter India which increased their prices in the range of Rs 250-550 of their motorcycles.
Bajaj Auto had increased the prices of its Pulsar range by Rs 1,000 a few weeks ago but had left its economy range untouched.
Eric Vaz, president (motorcycles business unit), Bajaj Auto said, “We will take a price increase in January on the Discover and Platina range. We will disclose the exact quantum of the hike next month but it will be in line with the industry standard. This increase is brought about due to the hike in minimum wages in Maharashtra to Rs 3,500 and rise in power costs”.
While Bajaj Auto is not directly impacted with changes in minimum wages but its component suppliers had to bring about this change and also pass it on to original equipment manufacturers like Bajaj Auto.
The company does not expect any significant impact on its sales due to the hike. “Prices of scooters were also increased but that did not have any impact on their demand”, added Vaz.
The senior official also mentioned that November proved to be a very disappointing month for all manufacturers because of a higher than expected drop in retail sales (from dealers to customer). According to sources there is a supply glut of around 155,000 motorcycles in the industry.
“We were expecting the drop to be in the region of 38-40% but in reality it was 45-48%. In camparison the retail sales drop in November last year stood at 30-40%”, added Vaz.
According to Vaz October recorded retail sales of around 1 million units powered by the festive demand. However sales dipped to 0.85 million in November lower than last November when retail sales stood at 0.88 million. Some of reasons behind this poor off-take is due to delayed rains resulting into delayed harvesting. “Rural markets have been very sluggish”, said Vaz.
In addition the replacement cycle of motorcycles has been larger resulting into prolonged ownership of current vehicle, longer than the usual estimation of around 4-5 years.
The January hike will be the first hike by Bajaj Auto on its economy range in at least two years. Last year the company only carried out a hike of Rs 1500 on its money spinning Pulsar range.
HMSI increased prices of motorcycles such as Shine, Unicorn, Trigger and the Dream series with effect from September 22. Motorcycles generate half of the company’s sales, while Activa, India’s top-selling scooter, constitutes two-third of HMSI’s domestic scooter sales. The increase in input costs and freight costs led to the increase in prices.
Hero MotoCorp had increased prices partially to recover input costs and offset the cascading effect of the consistently-rising diesel costs, which have impacted costs of in-bound and out-bound logistics, power generation and overall transportation.