Royal Enfield CEO Vinod Dasari on Wednesday said that the enquiries for the two-wheelers are now back to the pre-COVID levels and that the bookings too are catching up well. The backlog in the production, however, continues, he added.
“April to June - we were 66 percent lesser. In July, we were about 25-30 percent lesser. Our enquiry rates are now back to pre-COVID levels, our bookings are almost at pre-COVID levels but our production is yet to catch up," he said in an interview with CNBC-TV18.
The company has launched a new mobile application and buyers are now booking motorcycles directly using the app.
On the possibility of a rate cut in GST, Dasari said that any positive move from the government in terms of rate revision will be helpful for the entire industry as it will boost the short-term demand.
“While in the short term we see some green shoots, but that is from a really low point. FY20 - the two-wheeler industry was down about 20 percent and the year before was also a little bit down or flat... Now we are seeing a little bit of uptick in the market but that is because there was such a huge downtrend in the past. So if anything the government can do to help boost short-term demand, that would be truly helpful to the entire industry," said Dasari.
Finance Minister Nirmala Sitharaman on Tuesday said the GST Council may consider a rate revision for the segment. While responding to a question at a CII forum on the need for lowering GST rates on 2-wheelers, the FM said, "This was indeed a good suggestion as this category is (of) neither a luxury nor a sin good and hence merits a rate revision." She added that this will be, consequently, taken up with the GST Council.
“We appreciate and welcome the FM’s clarification that this is an essential tool for personal mobility and not a luxury good in that sense. So I think for many of our customers, particularly those in rural areas and broader section, it could be very useful to have these GST cut. It will also provide a spur in demand which we need at this point," said Sudarshan Venu, joint MD of TVS Motor.
On enquiry levels, Venu added, “August is definitely better than the previous months. There is a recovery in demand and enquiry. Hope this continues as well. Things have picked up and we hope to do better volumes in August.”
When asked about margins, Dasari replied, “It has been a declining trend and it is coming down even more. The fact of the matter is more than 60 percent of what we sell goes to the rest of the industry to produce more. So it is a ripple effect that you see across the industry that jobs are created at times like these.”
On price hikes, Dasari added, “We have not passed on the full margins of BS-VI.”
Dasari further said that the government banning imports of tyres was not a good idea as some tyres were being imported by the company exclusively for exports.
“Domestic tyre makers are very good, I understand that and they need support... We buy all the tyres from them but there are certain markets which require a specific tyre – to shut that down unilaterally without listening is wrong,” he said.