The news reports of Economic Times have reported that Hero MotoCorp – the largest two wheeler producer of the country, will be bringing down the production by about 15 per cent to 18 per cent for the current month of September. The cut will be done according to the average figures for April to August – the first five months of the current fiscal.
The cut has been implemented with a view to normalizing the inventory levels at both the plants as well as the dealers. The retail sales for the company have gone down for the last couple of months and Hero expects it to continue for this month too. As per the plans that have been sent to the vendors, Hero will manufacture about 4.48 lakh units in this month.
The need to cut down the production has arisen due to the company’s premier and model – the Splendor. The demand for Splendor has dipped to its lowest in this year. The company has decided to send 1.20 lakh units for September as compared to 2.2 to 2.4 lakh units from April to July.
Mr. Pawan Munjal, who is the MD & CEO of Hero Motocorp, also spoke about the cut in the production. The slowdown is expected to continue in this month as well and that is the reason why the production needed to be slashed, he said. That would also avoid the inventory from piling up. However, he said that the stock will be in sufficient proportions available.
The slowdown for the two wheeler segment was started to show up from April itself. However, the company kept dispatching more and more units during the period from April up to July. The company was of the view that the demand will perk up during the monsoon season at least. However, the weak monsoon also deteriorated the demand for the bikes, resulting in lower sales.
It also looks like consumers are now more inclined towards owning a Honda Dream Yuga and the Hero MotoCorp’s Splendor. It now remains to be seen how the ensuing months fair for the largest two wheeler company in India.