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Home >Auto News >Two-wheeler sales continue to lag behind PVs despite economic recovery

As the country witnesses marked improvement in economic activity with gradual pickup in manufacturing and infrastructure sector, domestic passenger and commercial vehicle dispatches has shown signs of a sharp recovery in February. On the other hand, the two-wheeler segment especially the entry level motorcycles has been showing signs of a contraction in consumer demand as cases of covid-19 in rural and semi urban areas show sharp decline and public transport resumes in full capacity.

Driven by a marked shift in customer preference in urban areas towards personal mobility to avoid covid infections, Maruti Suzuki India, reported a robust 9.9% year-on-year growth in domestic wholesale to 147483 units in February. Hyundai Motor India – the second largest – as vehicle dispatches to dealerships increased by 29% to 51600 units. Mumbai based Tata Motors witnessed a whopping 119% increase in wholesale to 22725 units during the month, while Mahindra and Mahindra also improved its monthly dispatches by 22% to 15391 units on the back of increased demand for its new Thar.

Wholesale of commercial vehicles also reported a sharp rebound with the three leading manufacturers – Tata Motors Ltd, Ashok Leyland Ltd and Volvo Eicher Ltd – reporting double digit increase in dispatches.

The growth in dispatches across segments comes as a result of low base in the corresponding period when auto makers witnessed contraction in consumer demand as a consequence of the economic slowdown and increase in vehicle prices due to change in emission and safety norms.

Compare this with the dispatches in the two-wheeler segment. Country’s largest manufacturer – Hero MotoCorp Ltd reported a mere 0.88% increase in domestic dispatches of motorcycle and scooters. Overall, Hero’s wholesale of motorcycles declined by 3.2% in February on the low base of last year. Bajaj Auto Ltd – the second largest manufacturer – also reported just 1% growth in domestic dispatches to 148934 units.

“Feb’21 saw sustained demand across segments (excluding two-wheelers) as 2Ws saw some tapering in growth. Current valuations are largely factoring in sustained recovery (in our base case), leaving a limited margin of safety for any negative surprises. We prefer companies with higher visibility in terms of a demand recovery, a strong competitive positioning, margin drivers, and balance sheet strength," said analysts of Motilal Oswal Institutional Equities.

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