First-time buyers, rural demand to drive two-wheeler sales in India
What's the story
India's top two-wheeler manufacturers, Hero MotoCorp and TVS Motor Company, are expecting a potential market boom, with increased first-time buyers and rural demand.
Their confidence is fueled by favorable monsoon forecasts, an impressive array of forthcoming products, and government incentives targeting the electric vehicle (EV) sector.
Both companies have showcased strong financial performance in the fourth quarter of FY24.
Financial performance
Companies outperformed financial predictions
Hero MotoCorp reported revenues of ₹9,519 crore in the final quarter of FY24, slightly exceeding Bloomberg's forecast of ₹9,401 crore.
The company's net income was ₹1,016 crore against a predicted ₹1,048 crore.
Meanwhile, TVS Motor Company posted revenues of ₹8,169 crore for the same period, surpassing the expected ₹7,975 crore.
However, its net income fell short at ₹485 crore due to a fair valuation loss on certain investments.
Market trends
CEOs highlight positive consumer sentiment and rural recovery
In a post-earnings conference call, Hero MotoCorp's CEO Niranjan Gupta noted "March was definitely positive. April was positive...There is something happening in terms of consumer sentiment that people are prioritizing their personal mobility."
TVS Motor Company's CEO K.N. Radhakrishnan expressed optimism about rural market recovery, stating "The rural market is slowly and steadily changing; I'm able to see some recovery happening...I'm expecting the monsoon to be normal. I think that will definitely help the rural (sales) to move much faster."
EV expansion
Manufacturers plan growth in electric two-wheeler sector
Despite a reduction in consumer demand-related subsidies, both Hero MotoCorp and TVS Motor Company remain optimistic about growth in the electric two-wheeler sector.
They plan to leverage benefits from the production-linked incentive (PLI) scheme for the auto industry.
Hero MotoCorp's upcoming products, due in the first half of FY25, will meet these criteria, making it eligible for PLI benefits.
TVS Motor Company plans to expand its existing iQube electric scooter range and launch an electric three-wheeler.