Two-wheelers face tough Q1 as headwinds get stronger

Shortage of critical parts could lead to abig dropin sales though the entry-level segment may end up being unaffected, says Amit Vijay M.

- Amit Vijay M

India's two-wheeler industry is bracing itself for a challenging April-June quarter.

With fuel prices on the rise coupled with cost increases over the last few years following regulatory requirements, cost of ownership has become a huge issue for buyers in the entry-level segment. Registration numbers reflect the pain - they were down four percent year-on-year in March and a steep 37 percent compared with FY20.

For the full year that ended on March 31, sales advanced four per cent but when compared to FY20 the fall is a whopping 29 per cent. "I once again urge all 2W OEMS to introduce special schemes to uplift the morale of this segment to boost sales," Vinkesh Gulati, president, FADA, said.

There could be some sliver of hope in the entry-level space. "This segment is likely to grow in excess of 20-25 per cent as compared to April 2021. This is because the wedding season will push demand" said a Western Uttar Pradesh dealer of Hero MotoCorp.

"Festivals along with marriages will push ridership demand in the entry level commuter segment by 25-30 per cent in the short term," agreed Harshwardhan Sharma, head-auto retail practice at Nomura Research.

CRISIL expects demand for entry level motorcycles and scooters to recover faster than executive and premium segments in Q1 of FY23 with the reopening of educational institutions and offices.

Sales of economy motorcycles (<110cc) declined only six percent in FY22 (Apr-Feb 22) as compared to 13 percent and 14 percent decline for executive (110-150cc) and premium (>150cc) motorcycle segments. For now, the growth forecasts are confined to the first quarter of FY23 since soaring petrol prices are expected to be the dampener going forward.