Sales in the sub-125 cc motorcycles segment are witnessing a faster growth as consumers shift their preference towards cheaper and fuel efficient bikes work around an higher levels of petrol prices, brokerage BRICS has said in a report.
The rise in inventory levels at the dealer level is not that significant, analyst Umesh Karne said. Generally, for the two-wheeler industry the inventory levels are two weeks, but are currently around 3-4 weeks, the note said.
According to the research report, the increase in sales was 23 percent year on year in April-June against 15 percent in the previous quarter.
Hero MotoCorp, which has a higher exposure to entry and executive level motorcycles, will be better placed to take advantage of the trend compared with premium segment player Bajaj Auto, it said.
The brokerage expects some improvement during the festival season, but it is unlikely to help.
Due to high inflation real income has been declining substantially over the last one year. Apart from the shifting preference, consumers have also started postponing their purchases, it said.
The deficiency in monsoon will add to the worries as income in the rural area, a key market for the two-wheeler sector, falls.
Shares of Hero MotoCorp was down 0.6 percent on the BSE, while Bajaj Auto was down 1.7 percent.