Out of all the vehicles registered in the country, the share of two-wheelers has dipped below 74% for the first time since FY13, data show. In fact, during the months of August and September, it has dipped to just 70% which could be one of the lowest ever.
The data were sourced from the road transport and highways ministry’s VAHAN platform by the Federation of Automobile Dealers’ Associations (FADA). Vehicle registration data are a proxy for the retail sales of automobiles in the country.
“Demand in two-wheelers has become challenging. The lower-middle class has been highly impacted financially by the pandemic,” FADA President Vinkesh Gulati told ET.
Sales of two-wheelers in the country were languishing even before the Covid-19 pandemic. From a peak of 21 million units sold in FY19, sales dropped to just 15 million units in FY21.
This was primarily due to a dip in demand for the entry-level motorcycle, experts said, that have witnessed price increases upwards of 20% in the past two years due to regulatory compliance.
High fuel prices and uncertainties caused by the pandemic for the economically less-privileged has added to the woes of this segment. Petrol prices have breached the Rs 100-mark in several states in the country. Education institutions like colleges being closed also worsens the situation as students form a significant consumer base for two-wheelers.
Meanwhile, since the country opened post the lockdowns, the recovery in the passenger vehicle segment, or cars, has far outpaced that in the two-wheeler segment.
For perspective, registrations of two-wheelers in India during the month of August lagged pre-pandemic figures of August 2019 by 23%. Meanwhile, passenger vehicle registrations grew 32% last month when compared to August 2019.
In fact, carmakers are looking at second-best sales in a decade this fiscal year despite a shortage of semiconductor chips limiting production. Meanwhile, the two-wheeler market is expected to end this financial year at 16.5-16.8 million units, a growth of 10-12% over FY21 but significantly lower than the peak of FY19, according to a recent note from Crisil.
“Significantly, this volume growth would come on a low base – after a tumble of 13.2% last fiscal and 17.2% in (FY20),” Crisil analysts wrote in their report.
Financial lenders to the automotive segment like HDFC Bank and Mahindra Finance expect a sharp recovery in sales of two-wheelers too during the next 90 days, ET reported last week.
Gulati said that all hopes for the sector are pinned on the festive season.
“The upcoming festive season could be a trigger for the segment,” he said. “If not, then we have little hopes for the segment in the near future.”
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