India two-wheeler sales to grow 6-8% over next 5 years
Most companies had reported record increase in production in October, expecting high retail demand during Diwali. Retail sales, however, fell short of expectations and factory dispatches were reduced in subsequent months
NEW DELHI: Notwithstanding the recent slump in demand, domestic two-wheeler sales are likely to grow 6-8% over the next five years as the economy comes out of the covid-19 induced downturn, said analysts.
“The underlying demand drivers for two-wheelers is still intact. We expect two-wheeler demand to return to 6-8% CAGR over the next five years," said analysts of Motilal Oswal Institutional Equities in a note.
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Since the unlocking of economy began in May, demand for two-wheelers especially, that of entry level motorcycles, have risen as consumers preferred personal mobility. The trend was more evident in rural centres despite limited impact of covid-19 in such areas.
There has been a marginal decline in demand since September, when public transport resumed in rural and semi-urban areas. Most companies such as Hero MotoCorp, Bajaj Auto, TVS Motor Co, among others, had reported record increase in production in October expecting high retail demand during Diwali. Showroom sales, however, fell short of expectations and factory dispatches were reduced in subsequent months to manage inventory at dealerships.
With improvement in economic activity in urban areas, sales of scooters have started to improve, albeit on a very low base. Honda Motorcycle and Scooter India Ltd, the country’s largest scooter manufacturer, reported a 31% increase in sales of scooters to 41,1578 units in February.
“While the industry growth is expected to hover near the double digits in Q4 and upcoming Q1 due to the low base of BSVI transition, Honda continues to drive the two-wheeler demand recovery for second straight month of 2021. Backed by robust demand for our models across both Red Wing and Silver Wing (300cc+ premium motorcycles)," said YS Guleria, director, sales and marketing, HMSI.
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