Ratings agency ICRA expects the domestic two-wheeler industry to grow 8-9 per cent in FY-15 as replacement demand will support volumes in the short-term.

Over the medium term, the two-wheeler industry is expected to report a volume CAGR of 8-9 per cent to reach a size of 22-23 million units (domestic plus exports) by 2016-17, a statement from ICRA said.

In the first five months of the current fiscal, sales volumes for the two-wheeler industry have expanded by 14.8 per cent Y-o-Y — the fastest pace of growth since 2010-11.

Subrata Ray, Senior Group Vice-President, ICRA said: “The fast expansion of the scooter segment’s pie has encouraged most OEMs to launch new models to capitalise on the growing opportunity offered by this segment. In 2012-13, three new scooter brands were launched in India, but the count increased to six in 2013-14. In five months in 2014-15, already four new models have been launched by OEMs with more in the pipeline.”

Compared to motorcycles (targeted at males), the penetration of scooters (targeted at both males and females) remains lower by a factor of 3-4 times, which has been one of the primary drivers of demand for scooters as positioning of this product segment has become sharper.

The increased supply push of new scooter launches should add to the growth momentum, he said.

ICRA believes that structural positives in the domestic market such as favourable demographic profile, moderate two-wheeler penetration levels (compared to other emerging markets), under-developed public transport system, growing urbanisation and strong replacement demand remained intact.

Added to these was the large opportunity in overseas markets, mainly Africa and Latin America.

Related Topics
comment COMMENT NOW