Home/ Markets / Mark To Market/  Two-wheelers are riding at different speeds, shows channel check

The two-wheeler industry is witnessing a sequential up-tick in demand after a severe downturn over the past few years. In the entry level segment, enquiries in February are being led by wedding related demands, show channel checks conducted by JM Financial Institutional Securities.

Though there has been a pick-up in demand, the pace of growth has been varied across segments indicating the premiumization trend. “Demand trends are relatively better in urban region," said the JM Financial report. Also, scooters performed relatively better than motorcycles, they added.

Enquiries were skewed towards premium vehicles among motorcycles. Eicher Motors Ltd’s Royal Enfield Hunter 350 continues to see good traction.

As such, for rural demand to rise, a healthy crop season is crucial. Hero MotoCorp Ltd would be a key beneficiary of improving rural demand given its significant presence in the entry level segment.

Overall, multiple price hikes and elevated fuel prices are a drag on demand. Be that as it may, further price increases cannot be ruled out. This is on the back of upcoming real driving emission norms. “Hero MotoCorp reported price hikes of up to Rs800-1,000 per unit on E20 & Bharat Stage - VI phase-2 compliant models," said the JM Financial report. E20 indicates the proportion of ethanol and petrol blend in the fuel with the latter share at 80%.

Hero and TVS Motor Co. Ltd dealers are providing promotional offers to boost sales, added the report. On the other hand, given the strong demand for Royal Enfield products, dealers are not running any promotional schemes.

Meanwhile, demand for electric two-wheelers continue to see healthy momentum due to rising cost of ownership of internal combustion engine vehicles. Among listed two-wheelers, TVS iQube is currently leading the pack followed by Bajaj Auto Ltd’s electric vehicle, Chetak, in terms of sales volumes. Hero’s Vida is currently present in only limited cities.

Shares of the above-mentioned two-wheelers are down 5-16% from their respective 52-week highs. Continued improvement in volumes would act as upside triggers for the stocks.

Vineetha Sampath
Vineetha Sampath is a chartered accountant and is experienced in the field of research analysis. She joined Mint's Mark to Market team recently and this is her first stint in journalism.
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Updated: 23 Feb 2023, 11:43 AM IST
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