Two-wheeler sales still not at pre-pandemic levels: Report

Domestic sales of two-wheelers - scooters and motorcycles both - which exhibited a sharp decline between fiscal years 2018-19 and 2021-22, are yet to recover to pre-pandemic levels, a study by research and ratings firm CareEdge shows.

The reason for this, as per the report, is that a bulk of two-wheeler sales happen in price sensitive rural markets, whose economic recovery is still uneven and uncertain, even though sales improved marginally in 2022-23.

“The decline in sales volumes of the mainstay models can be attributed to an overall higher cost of ownership of two-wheelers, brought about by an increase in the prices, as well as fuel costs and insurance expenses. Mainstay models, particularly in motorcycles, typically cater to the price-sensitive market segment, with higher sales in rural areas,” the CareEdge report stated.

“The impact of El Nino on the rural economy in FY24 remains uncertain, affecting the prospects of two-wheeler sales rebound during the year,” the report stated.

CareEdge said in its report that lack of public transport and affordability for four-wheelers are the two main factors driving sales of two-wheelers in rural areas. “Considering that rural consumers are generally more price sensitive than urban; the main-stay models are naturally bought more by rural consumers,” it said. 

The report stated that increase in prices of two-wheelers witnessed in the past four years has led to a weakening in rural demand and deferment of buying decisions, adding that any disruption to agricultural output in FY24 due to the El Nino impact, which reduces the disposable income of the rural populace can further subdue two-wheeler sales in the current year.

The report also stated that export volumes of two-wheelers declined by 31% year-on-year during the last April-June quarter (Q1FY24), due to weakening economic conditions in key markets in Africa and Latin America, which are currently facing challenges on account of high inflation, reduced buying power and inadequate foreign exchange reserves.

Additionally, sales of electric two-wheelers also significantly declined in Q1FY24 due to the government withholding FAME subsidies for certain original equipment manufacturers (OEMs), CareEdge said.

“Owing to the aforementioned factors, the medium-term sales trajectory for two-wheelers is anticipated to be modest, characterised by uncertainties. The absence of definitive growth drivers and an already substantial sales volume base will constrain high growth rates in the medium term,” it said.