2-wheeler sales suggest large destocking by dealers, but Q4 will roar: ICICI Securities

November sales for two-wheelers in the month of November took a bit of a hit. Two-wheeler sales at TVS Motor Co rose marginally to 2.64 units, while rival Bajaj's dropped 22.6 percent to 2.62 lakh. With 70,766 units sold, Eicher, which makes Royal Enfield motorcycles, saw a 37 percent increase in sales. Hero Moto Corp total sales rose 12 percent to 3.9 lakh units from 3.49 lakh units in the corresponding period a year ago.

Notably, in the last four months there has been a gaping divergence in retail and wholesale numbers, resulting in a month-on-month decline for two-wheeler sales.

“In the past four months there has been a huge divergence between retail and wholesale. Earlier in pre-festive season, retails used to be two-and-a-half-lakh units a week and now post-festive season, even in the month of November, December retail units are like three lakh units plus a week, so almost 20 percent better. And you can see from the numbers published on the first of the month that October was 30 percent lower than September and November was 30 percent lower than October, which implies a huge destocking activity is going on, which I suppose will happen in December also,” Basudeb Banerjee, analyst at ICICI Securities, told CNBC-TV18.

With the level of retail consumer sentiment gradually recovering in rural areas, from January itself wholesale will start roaring for two-wheelers, according to Banerjee. Normally, December  is not a great month for wholesales.