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November may finally bring India's two-wheeler market out of the red, but post-Diwali period to be critical

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After a 27 percent decline in two-wheeler registrations reported by the country's auto dealers' association in the month of October, November looks poised to be a month that arrests this decline. On a yearly basis, auto dealers and OEMs anticipate November will bring back some traction in the commuter segment of two-wheelers, forming about 75 percent of total two-wheeler sales - however, with an important caveat.

November may finally bring India's two-wheeler market out of the red, but post-Diwali period to be critical
After a 27 percent decline in two-wheeler registrations reported by the country's auto dealers' association in the month of October, November looks poised to be a month that arrests this decline. On a yearly basis, auto dealers and OEMs anticipate November will bring back some traction in the commuter segment of two-wheelers, forming about 75 percent of total two-wheeler sales - however, with an important caveat.
Because the auspicious days of Dhanteras and Diwali, on which the bulk of deliveries during the festive season take place, fell in the month of November this time, the North and Central regions saw muted retails in October. The commuter segment of two-wheelers draws the bulk of its buyers from states in this region, including Uttar Pradesh and Bihar. Owing also to this fact, retail registrations will report a definite pick-up as against November last year.
Dealers in Maharashtra, Tamil Nadu under severe supply constraints, don't have vehicles to deliver on Dhanteras
However, retail sales in November show two acutely different trends depending on the region we consider. In Maharashtra, Tamil Nadu and the capital city Delhi, two-wheeler sales, especially for scooters and premium models are poised to go up further in November.
Lack of viable transport options in major metro cities such as Mumbai and Chennai are also pushing up sales for the entry-level segment which has been seeing muted demand.
In fact, two-wheeler dealers for OEMs such as Honda 2wheelers are also facing a demand-supply mismatch, and don't have enough stocks to deliver to customers on Dhanteras and Diwali.
"We will not even open our showroom on Dhanteras, because we have no vehicles. We've already done our month's targets", a Honda 2wheelers dealer told CNBC-TV18.
High inventory in North, Central India
Festive demand story isn't anywhere close to positive in major commuter markets, a dominant play of Hero Motorcycles, in the central and northern regions of the country.
Sources indicate that demand is severely battered in these states, owing to job losses in the buyer profile, uncertain incomes, and therefore, poor availability of finance. Dealers in the region are saddled with 55-60 days inventory, even as festive season bookings have been much lower vis-a-vis the stock-build up in showrooms. The Federation of Auto Dealers Association (FADA) has requested OEMs to curtail production in light of the heavy stock pile-up.
Despite the festive demand in the region, the states are likely to report higher deliveries of vehicles in November versus October, and also on a yearly basis, as Diwali and Dhanteras are festivals of higher traction than Dussehra or Vijayadashmi, which in turn is bigger in the Western and Southern states.
There are bigger concerns still. After Diwali on November 14, dealers are wary of the sustenance in demand for two-wheelers, which is already on the tenterhooks. For context, in October, two-wheeler registrations were less than half of the wholesale dispatches OEMs had reported. While November, which is usually a dull period after the festive month of October is rescued by Diwali this time, the two weeks that follow the festival are most critical for the whole picture to become clear.

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