A clear six-month period or two-quarters of no disruption (from Covid variants and associated issues) may help revive demand in the entry-level car and two-wheeler segments, says Vinkesh Gulati, President, Federation of Automobile Dealers Associations (FADA).
While demand in the automotive segment is much better during the first four-month period of this fiscal compared to the Covid-impacted last two years, it will take some more time to reach the pre-Covid level volumes. “Overall, the industry is still not able to come out of the Covid effect,” he said.
Shift in norms
India was always known for cheaper cars and motorcycles as the industry used to sell bikes in the range of ₹40,000-50,000 and mopeds at about ₹30,000. So, our volumes were among the highest in the world. But, everything changed with the shift from BS IV to BS VI. The shift to new norms and the pandemic had a huge impact on entry-level cars and bikes. There are still people who are buying but all are skewed towards premium products, said Gulati.
The continuing sluggish phase in the entry-level segment is mainly due to poor sentiment among the prospective buyers in this category, in particular the rural buyers.
Amid Covid waves, the monsoon in the past three years has been good. MSP prices are best-ever and crop production gets better every year. There are a lot of positive things on the rural front. It means that farmers are in a better position and have more money. They have purchasing power. But they are not buying. Because the sentiments are not right for them to make purchases, he said .
As the people were hugely hurt by the second wave, they want to be sure that there are no such issues in the near term. In the pre-pandemic phase, people bought two-wheelers by paying an initial amount of just ₹5,000. Because sentiments and earning prospects were bright then. So, if sentiments get better, the revival in the entry-level segment will gather pace, he added.
“We need at least 6 months of no pandemic or monkeypox-related disruptions in the market. This will see the start of a revival in rural markets and in the subsequent months volumes will start moving northwards. However, it is likely to take at least two years for the two-wheeler industry to reach the pre-Covid levels,” Gulati pointed out.
Favourable EV ecosystem
Discussing electrification in the two-wheeler segment, he said everyone is of the view that EVs would be the future. But there has been too much hype and noise. Instead of making a huge noise and bashing the ICE segment, the EV industry should focus on creating a favourable ecosystem and delivering quality products.
The impression created is that if you don’t buy an EV, you are a criminal. Actually, most of the pollution is caused by the old vehicles — BS1, BS2 and BS3, and not the current range of ICE vehicles. The EV industry is spending more time criticising the ICE segment rather than making its products worthy of buying,” he added.
Gulati said several auto dealers have taken a plunge into the EV business on a trial basis. If things turn good for EV business, people will go ahead and expand,” he said.
He also said a lot of people without any dealership experience were taking up electric two-wheeler dealerships mostly as “traders”. “A vehicle is not sold as an item. Buyers are offered an experience along with a product. Auto dealers explain the features, and measures for maintenance of parts, fuel etc. But in the case of EVs, it is gathered that buyers were not properly educated about the products,” he added.