The current fiscal may turn out to be the third consecutive subdued year for the domestic two-wheeler industry as total sales are likely to be flat or may see a single digit decline on the back of persisting weak demand across rural and urban markets.

The domestic two-wheeler volumes (wholesale) declined by 13 per cent to 15.12 million units in FY21 with bikes reporting an 11 per cent drop to 10.02 million units, and scooters dropping by 20 per cent to 4.48 million units. In FY20, total two-wheeler sales were down 18 per cent at 17.42 million units. Bikes and scooters reported 18 per cent and 17 per cent decline respectively.

This fiscal, scooter sales were down 5 per cent, while bike volumes were down 6 per cent during April-December 2021 period. Industry representatives point out that there was about 11 per cent drop in retail sales of two-wheelers in the December 2021 quarter.

Rakesh Sharma, Executive Director of Bajaj Auto, India’s second largest motorcycle manufacturer, has indicated that domestic demand remains weak and the current month also exhibited a declining sales trend. Both rural and semi-urban markets reported sluggish demand. The decline in demand was witnessed across commuter, executive and sport categories.

Rising input prices

“FY22 has been a challenging year for the two-wheeler industry, recording a subdued demand across categories, due to the increased cost of ownership resulting from increasing fuel prices, as well as price hikes undertaken by original equipment manufacturers (OEMs) amid rising input prices, says a report of India Ratings & Research.

Demand from the rural/semi-urban sector, which accounts for a major chunk of the motorcycles sales, remained subdued this fiscal.

Decline in purchasing power

The demand revival has been severely impacted amid the second Covid wave which has affected the purchasing power of consumers, particularly the buyers of entry-level vehicles, forcing them to defer their discretionary purchases, and by the erratic monsoons, it added.

Although the consumer confidence survey has shown some recovery since the first Covid wave, it is significantly below the pre-Covid levels. Premium bike segment (more than 200cc) has also been impacted, but mainly due to chip shortages.

Now that the third wave has deferred the re-opening of colleges and offices by another few months, the prospect of demand recovery in two wheelers has further been affected.

‘Cut GST rates’

Federation of Automobile Dealers Association (FADA) has made a plea to the Union Finance Ministry to consider cutting the GST rate for two wheelers to 18 per cent from 28 per cent, since two-wheeler is a necessity to travel distances by lower class and rural people for their daily working needs.

“At a time when vehicle prices are increasing after a gap of every 3-4 months due to continuous price hike in metals and various other factors, a reduction in GST rate will counter the price hike and help spur demand,” pointed out the auto dealers’ body. 

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