The domestic two-wheeler industry, which has been going through a rough patch, is likely to get some temporary respite in terms of a surge in sales this quarter, while signals for some real recovery in demand are yet to manifest.

Industry representatives and analysts state that domestic 2W volumes are expected to grow in the near term driven by the marriage season and the opening up of colleges and offices.

Awaiting turnaround

“While in the immediate term, driven by the marriage season, there will be some surge in retail sales in April and May, we would like to watch the months of June, July and August to fundamentally understand whether there is a genuine and structural turnaround in the two-wheeler industry,” said Rakesh Sharma, Executive Director-Sales, Bajaj Auto Ltd.

“Our interaction with leading industry channel partners indicates a recovery in 2Ws owing to the marriage season and improved cash flows in the hands of consumers due to the harvesting of the Rabi crop,” said analysts at Motilal Oswal Financial Services.

“Demand improved in April 2022 amid the festive (Navratri) and ongoing marriage season (which started around Apr 20). It is improvement in cash flows in the rural economy due to harvesting of the Rabi crop that is supporting the demand revival. ICE Scooters are benefitting from the e-2W fire incidents. Inventory in the system has normalised to 30-45 days (v/s an average of 40-60 days in the last few months), they added.

FY22 lowest year in decade

With poor offtake in rural markets, the overall demand for motorcycles in the country remains weak. With a double-digit decline, FY22 has been the lowest year for the two-wheeler industry in a decade. This was on account of subdued domestic demand, both in rural as well as in urban markets on the back of higher fuel prices, a steep increase in the acquisition cost of the vehicle driven by higher commodity prices and insurance costs.

Meanwhile, on a sequential basis, two-wheeler sales increased by about 14 per cent in March 2022 due to pent-up demand with the opening up of offices and educational institutions, festivals and marriage season. April is also likely to have a decent number of sales .

Price hikes

Since two-wheeler buyers are mostly from weaker and low-income sections, the price hikes on account of spikes in commodity prices and other regulatory measures continue to impact the demand recovery.

Although the rural market is a major driver of motorcycles sales, the higher cost of acquisitions has daunted buyers. It remains to be seen whether the favourable monsoon predicted for this year and consequent impact on the rural population by way of adequate cash flow in their hands leads to a stable recovery in two-wheeler demand.

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