Hero MotoCorp, India’s biggest two-wheeler manufacturer, is offering additional commissions to its dealers across the country in order push sales in the traditionally slack month of December.
The company is offering additional commission of Rs750 per vehicle on incremental sales over December last year.
The scheme, however, has received lukewarm response from the dealers, according to market sources.
“Sales are extremely bad. Forget incremental sales, I don’t think I can even touch the last December’s number,” said a Delhi-based dealer.
The targets are different at different regions. For example, in North the target is 100%, while it is 60-65% in Tamil Nadu.
According to the dealers, margins on Hero MotoCorp are currently the lowest in the industry.
“Rs750 on incremental sales is just too less to encourage any dealer. If they were offering the same amount on the entire sales number then dealers would have found it exciting to work harder,” said the dealer.
According to a source, the company has been trying hard to push inventories in the market.
“Market has fallen drastically in December. It is difficult right now,” said an executive at a two-wheeler maker.
Dealers said the company is concerned about the volumes.
“I will not call it a desperate measure to push inventories but they are concerned about volumes. They have a high base and to keep that kind of production running the company will have to push inventory in the market,” said an industry source.
Hero sold 1.1 million plus two-wheelers in the festive months of October and November. “December usually witnesses sluggish retails as customers tend to postpone their purchases to the new year. Our December plans are, therefore, aimed at sustaining our festival momentum by encouraging retail sales. So we have new advertising campaigns infusing energy into the market,”said a Hero MotoCorp spokesperson.
“In addition, as we often do, we are making our dealers a part of this effort. Accordingly, we are running a short-period dealer incentive scheme. This is on incremental retail sales so as to carry forward the retail momentum of October and November into December. This scheme has nothing to do with our despatches as we entered December at absolutely normal inventory levels,” the spokesperson said.