Two-wheeler prices rise 16-22 per cent in 2 years on BS-VI norms, spike in commodity prices

Two-wheeler segment has not shown any robust revival in demand

A spike in fuel prices and a 16-22 per cent increase in cost of of new vehicles were key factors that led to fall in sales of two-wheelers in the country. 

Industry analysts and representatives say the two-wheeler industry is expected to end this fiscal with a high single-digit decline. For the third year in a row, the industry will report a fall in annual volumes. 

In the post-second Covid wave period, every segment of the automotive industry reported a gradual increase in volumes. Passenger vehicle volumes showed a strong revival, but the poor supply of chip played spoilsport and the manufacturers are still battling to improve production. Sales of commercial vehicles have been on the rise though there is an increasing shift to CNG models.

But the two-wheeler segment has not shown any robust revival in demand during this period. Several factors are cited for the fall in volumes, but major ones are the higher prices of two-wheelers and a huge increase in fuel prices. 

A Crisil report said the two-wheeler industry has increased prices thrice so far in this fiscal, resulting in 6-7 per cent higher prices , adding to the 10-15 per cent increase seen last fiscal (because of BS-VI norms).

Multiple price hikes

Companies such as Hero MotoCorp, Honda, TVS Motor and Bajaj Auto have all undertaken multiple price hikes this fiscal citing a huge increase in commodity prices. Bajaj Auto, the second-largest motorcycle manufacturer in India, has effected a price hike to the tune of 5 per cent, higher than its peers, during the nine months of the current fiscal. 

More than half of the motorcycle volumes come from the price-sensitive economy segment, which is driven by rural markets.

“The second, third Covid waves and delayed harvest impacted rural demand for two-wheelers this fiscal. Besides higher vehicle and fuel prices also affected rural demand, unlike last fiscal, when rural India was less impacted by the first Covid wave. This sharp increase in prices has delayed recovery in two-wheelers sales during the current fiscal, any incremental hike may delay recovery in sales further,” said Anuj Sethi, Senior Director, Crisil Ratings. 

Electric push

While ICE two-wheeler sales continue to be subdued, an increasing number of two-wheeler buyers in cities and big towns are shifting to electric two-wheelers. The surge in monthly sales of electric scooters indicates the growing acceptance of electric two-wheelers.

The only silver lining for the home-grown two-wheeler makers is the robust demand for their products in the international markets such as Africa and Latin America where shipments have been on the rise.