As the entry-level motorcycle segment reports fragile recovery, two-wheeler makers are stepping up their focus on  bike categories with higher cubic capacity (CC), which present better growth outlook amid easing supply-chain constraints.

Though there has been positive growth in the entry-level bike segment this fiscal compared with the second wave-hit previous fiscal, the recovery in demand has not been stable. For instance, the 110 CC and below category, which accounts for more than 50 per cent of the motorcycle market in India, reported a decline in July, but in August, the volumes grew. Continuing weak sentiments among rural buyers, which account for the bulk of sales in this category, impacted volumes in this category.

Besides, higher vehicle costs and a spike in fuel prices in this price-sensitive category have also impacted the demand. CRISIL Research estimates that two-wheelers’ cost of ownership is expected to increase 6-8 per cent this fiscal due to price hikes by OEMs to offset material price increases, interest rate hikes and fuel costs.

As a result of demand issues in the entry bike segment, the overall volumes of the bike market are expected to be 25-26 per cent lower than FY19 levels.

However, there has been a respite for the two-wheeler makers on account of the shift in two-wheeler customer preferences, particularly the young buyers, to higher CC or premium bikes.

The higher CC market has seen a lot of action with several new launches in the past few months despite chip shortages.

The 125 CC-500 CC segment, which has multiple sub-segments, has reported an increase of about 27 per cent at 8.5 lakh units during April-August 2022 as against 6.7 units in the year-ago period.

Of late, TVS Motor Company has been rolling out products in the higher CC segment, as the leading two-wheeler maker seeks to take advantage of the ‘premiumisation’ trend in the motorcycle market. In addition to launching new variants of its Apache brand, which is the leader in the 150 CC-200 CC bike category, the company has also introduced a new premium bike, Ronin, to further strengthen its premium play. The new launches have helped the company gain market share. Its objective is to secure a 15 per cent market share in the premium bike segment.

Similarly, Royal Enfield, the leader in a few categories of the higher CC bike segment, has also introduced new models to protect its sales and share in light of increasing competition. Its recently launched Hunter 350, which is lighter than its comparable models, seeks to attract a new set of young buyers, including college-going students, women riders, and people who want to upgrade from lower CC bikes.

Other players such as Bajaj, Yamaha, and Hero have also been giving stronger thrusts on the premium bike market. With the festive season setting in and supply chain issues easing, two-wheelers makers hope to garner good volumes supported by the new products. Overall, the premium bike segment is expected to end this with strong growth.

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