Industry analysts think that the current wedding season is likely to see a higher offtake as compared to the April-March wedding season.
04 Nov 2022 | 5417 Views | By Amit Vijay M
While the marginal recovery of two-wheeler sales may have brought back the smile at dealerships, the long-term outlook for two-wheelers, especially in the commuter segment, continues to remain grim. Rising inflation, fuel prices being relatively higher and overall consumption getting hit at the bottom of the pyramid has kept a large chunk of ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
While the marginal recovery of two-wheeler sales may have brought back the smile at dealerships, the long-term outlook for two-wheelers, especially in the commuter segment, continues to remain grim. Rising inflation, fuel prices being relatively higher and overall consumption getting hit at the bottom of the pyramid has kept a large chunk of the overall market away.
Moving forward, discounts and incentive schemes from dealerships, besides stock clearance, will continue to keep the consumer interested closer to the end of the year. The wedding season is expected to help carry forward the demand for two-wheelers.
The government taking forward digitisation of the Vehicle identification numbers (VIN), tied to the chassis of the vehicle is likely to keep customers away from the dealerships with purchases getting postponed to the months of Jan-Feb 2023.
“This however will not impact the wedding season gift category of buyers for whom even a saving of three to five thousand matters when you are looking at a Rs three to five lakh wedding cost in the rural areas.” opined industry veteran Nikunj Sanghi, former Federation of Automobile Dealers Association (FADA) President and CEO of JS4 wheels, Alawar.
“Such buyers are happy to lap up the discounts being offered from now till mid-December without worrying about the date change for commuter bikes. The premium adventure bikes will also have the consumer's fancy in Tier Two markets where a premium branded bike model in the wedding mandap amps up the celebratory spirit,” says Sanghi.
Industry analysts are of the view that the current wedding season is likely to see a higher offtake as compared to the April-March wedding season where the sales needle more or less remained stagnated.
On the overall, short revival of fortunes in the two-wheeler industry, Sanghi says: “Diwali and Dussera falling in the same month, came to the rescue of the already stressed two-wheeler supply chain as dealers were holding stocks over eight weeks just before the festive season.”
“With the Diwali rush, we have been able to offload a huge chunk of our inventories, and we are back to a month's inventory. This year's double treat has put back the smile on the dealerships,” he adds.
It’s no secret that the month of October has been a record year not just for passenger car makers but also for trucks and three-wheelers with overall Vahan registrations crossing 22.5 lakhs which is even higher than October 2018 numbers.
Usually, the November numbers are higher than October but this year demand is expected to consolidate around mid-December when the wedding season comes to a close as customers have largely pre-booked their vehicles, added a research analyst from a leading brokerage firm.
A similar sentiment is being echoed by Hemal Thakker, Director of CRISIL Research who says that with post Covid personal mobility at its peak, people are back to traveling for leisure and so “the replacement demand and demand for premium vehicles taking over. This is a common thread being observed in both scooter and passenger car sales.”
Thakker says that both two-wheelers and the passenger car market are seeing stress at the entry-level and there are several reasons for this; overall energy costs are not likely to come down and increase in interest rates will lower the consumers purchasing power, impacting demand.
According to FADA, Northern states like Himachal Pradesh, Haryana, Uttarakhand, Uttar Pradesh, and Jharkhand, which are traditional strong markets for entry-level two-wheelers, continue to show weakness, which also explains the sharp 16 percent drop in Hero MotoCorp sales which largely depends on models like the Splendor.
While the overall cost dynamics has gone for a toss, there is a sharp shift in Tier Two and Tier Three markets making a rapid shift to EVs as the cost of day-to-day transport by ICE has become unbearable for the common man, added Thakkar of Crisil.
This has seen the share of budget motorcycles, having engines up to 110cc register an overall 33 percent drop in growth in the domestic market till the end of September. The lost share almost entirely moved to motorcycles with bigger engines as their share grew to slightly over 30 percent for the same period according to the data from the Society of Indian Automobile Manufacturers. HMSI and Royal Enfield were the largest gainers.
Broadway headquartered Global investment management firm Morgan Stanley, in its forecast for the Indian two-wheeler market said that Indian two-wheeler sales will grow eight percent by 2031, while the EV sector is expected to constitute 70 percent of this growth. “The consumer acceptance of EVs is rising and adding to this is the government's push to decarbonisation which is leading the shift,” said the brokerage firm.