The two-wheeler volumes in domestic market grew at a healthy rate of 14.8% Y-o-Y during FY2018 – the highest growth since FY2011, with multiple factors influencing the growth trends as the year progressed. The highlight of the growth during the current year was a robust demand in the scooters segment that outpaced the industry growth and also a strong recovery in rural demand, which reflected in a pick-up in motorcycle volumes, especially at the entry level.
Says Ms. Anupama Arora, Vice President and Sector Head- Corporate ratings, ICRA, “the year was marked by sharp fluctuations in the wholesale volumes, with multiple one-time events unfolding. Channel-filling and inventory correction by original equipment manufacturers (OEMs) to replenish dealerships with BS IV compliant stock post massive discounting in March 2017 (just prior to the transition), supported wholesale volumes during the first two months of the fiscal. Subsequently, the growth slowed down in June 2017 as the dealers de-stocked to transition to the new tax regime, which was offset in the subsequent quarter post GST implementation. With the early arrival of festive season in the current fiscal, there was a slight moderation in sales in October 2017; however, the overall growth momentum in the fiscal continued to be maintained. Moreover, the growth rate during November- March 2018 benefitted from the contracted base of previous fiscal (post demonetisation)”
According to ICRA, as for the performance of various segments, scooters reported positive demand trends throughout the year with 19.9% growth in volumes during FY2018, continuing to outpace the industry growth and gain share in the overall domestic two-wheeler mix. The growth has been derived majorly from urban areas while rural and semi-urban areas have also witnessed increased acceptance of scooters with improved road quality, unisex appeal as well as growing women participation in work force. This is also supported by deepening product portfolios of the OEMs who have launched products targeting different customer segments. Continuing this trend, in the last few months there has been increased activity on the higher end of 90-125cc sub-segment of scooters with various OEMs launching new 125cc models. These new models are aimed at customers who are looking for a more powerful and feature rich scooter and demand is expected mostly from urban areas.
For the motorcycle segment that had witnessed stable to muted volume growth during FY2013-2017, FY2018 turned out to be year characterised by secular growth across most sub segments with overall domestic sales growing by 13.7% Y-o-Y during FY2018, a double-digit growth for the segment after a hiatus of five years. The growth has been driven notably by the 75-110cc sub-segment supported by general improvement in rural demand sentiment on the back of near normal monsoon.
Except for the 125-150cc sub-segment, that witnessed some demand transition to 150- 200 cc driven by new products/ variants by major OEMs with engines displacement of ~160cc segment offering higher power, all other sub-segments reported growth during FY2018. Moreover, the higher displacement premium motorcycles continue to expand their share in the domestic motorcycle pie and accounted for 7% of the total volumes in FY2018 from mere 2% in FY2014. This trend is expected to continue with the premiumisation being driven by improvement in disposable incomes.
Even though the two major segments of the two-wheeler industry grew handsomely, the volumes of mopeds contracted by 3.5% during FY2018. This is a single product segment and with shift of consumer demand towards lower displacement motorcycles that witnessed various refreshes, this segment suffered during the current fiscal.
Overall for FY2018 the two-wheeler volume growth for domestic market surpassed ICRA’s expectations, riding on demand recovery from rural households and healthy urban demand. The demand recovery from rural households drew strength from improved farm sentiments as well as cash flows following two seasons of near normal monsoons and resultant healthy crop output. This optimism exhibited by farm community is being complemented by Government’s increased focused on financial inclusion, increased budgetary support towards investments in infrastructure, especially irrigation, roads as well as housing and their ripple effects on employment generation. Moreover, Government’s vision to double farmer’s income by 2022 bode well for the sentiments supported by expectations of higher Government expenditure in FY2019 in the backdrop of this fiscal being the election year. In the near term, consumption demand from rural sector is also driving support from an expectation of normal monsoon precipitation as indicated by weather forecasting agencies, even as spatial distribution can create disparity in demand trends. Moreover, pay revision by 3-9 state governments should support urban demand.
“Going forward, ICRA expects domestic two-wheeler volumes to grow at 8-10% during FY2019, on an expanded base of FY2018. In terms of segment wise growth trend, we expect scooters to continue to outpace the overall two wheeler volume growth in domestic market in FY2019. Motorcycles are expected to register high single digit growth in FY2019 with a broad based volume recovery across various sub segments with Premium segment continuing to find favor. Additionally, the recovery in oil prices has resulted in higher demand from select international markets, which coupled with new markets explored by OEMs would drive export growth in the current fiscal,” adds Ms Arora.
Your email address will not be published. Required fields are marked *
Save my name, email, and website in this browser for the next time I comment.
Sign me up for the newsletter!
Notify me of follow-up comments by email.
Notify me of new posts by email.
Ranbir Kapoor decides to go ‘SINGLE’
Get ready for a unique experience that will leave you awestruck and take you in a state of tranquility
Unique experiences at Lodha Belmondo
INDIA’S TOP STUDENT VOLUNTEERS FELICITATED AT THE 10th ANNUAL PRAMERICA SPIRIT OF COMMUNITY AWARDS
‘Indian parents and children have varied views on health & well-being, reveals Aditya Birla Health Insurance’s – ‘Indian Parental Care Survey’
2014 The Global Indian New Network (TGINN)