Home / Auto News / Two-wheeler makers may witness sequential growth in sales

Two-wheeler manufacturers may witness sequential growth in retail sales of motorcycles and scooters as India’s rural economy is expected to bounce back on the hopes of a good monsoon, bountiful summer harvest and pent up demand, according to analysts at brokerages and rating firms.

The steady decline in covid-19 cases in rural India and preference for personal mobility might also push sales.

However, increase in fuel prices and the decision of automakers to go for another round of price hikes may hamper retail sales in the run-up to the festive season, cautioned analysts.

Though demand for entry-level two-wheelers witnessed contraction in the October-March period following the price hikes due to an increase in input costs, with covid cases now in control, analysts expect pent up demand and the marriage season to help engineer a recovery on a month-on-month basis.

Despite a gradual recovery in retail sales, wholesale dispatches may remain under pressure due to high inventory levels at dealerships.

According to Rohan Kanwar Gupta, vice-president and sector head, corporate ratings, ICRA, two-wheeler registrations, at 930,000 units, saw 126% sequential growth in June (but at a 30% discount to June 2019 levels), despite expectations of muted demand due to the massive impact of the pandemic in rural and semi-urban markets. It could be attributable to pent-up demand, he said.

“Going forward, the industry is banking on a good festive season to revive growth momentum. Expectation of a normal monsoon and personal mobility needs are likely to support sentiments and translate into demand for two-wheelers," he added.

In the two-wheeler segment, Hero MotoCorp Ltd, India’s largest manufacturer, increased its vehicle dispatches to 438,541 units in June compared to 159,561 units in May. Bajaj Auto, the second largest motorcycle manufacturer, reported a substantial increase in domestic wholesale dispatches in June to 155,640 units, compared to 60,342 in May. Honda Motorcycles and Scooter India dispatched 234,029 units during the month compared to just 58,168 units in the previous month.

The entry-level motorcycle segment was the first to recover after the first wave of covid infections last year, with retail sales picking up in rural and semi-urban markets due to limited impact of the pandemic. As a result companies such as Hero MotoCorp and Bajaj Auto increased production to record levels before the festive season.

“We expect improvement in domestic demand in Q2FY22, while export demand is likely to remain elevated," said brokerage Emkay Global in a note.

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