🙏🙏Two-wheeler sales in 2022, worst in a decade – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/companies/two-wheeler-sales-in-2022-worst-in-a-decade/article66563310.ece

Fewer takers. Increase in ownership cost, Covid-induced financial crunch hit entry-level models

The cost of acquisition has gone up by 50 per cent and two-wheeler dealers are struggling, says FADA president Manish Raj Singhania | Photo Credit: Ruth Dhanaraj

An increase in the cost of acquisition combined with the financial impact due to Covid-19, two-wheeler sales in FY22 was the worst in the past decade.

A 10-year data, sourced by businessline from the Society of Indian Automobile Manufacturers (SIAM), show that two-wheeler sales figures in FY22 stood at 1,34,66,412 units compared with 1,48,06,778 units in FY14. Additionally, the number of vehicles sold between April 2022 and January 2023 was at 1,34,41,873.

In the three-wheeler segment, a total of 2,60,995 units were sold in FY22 compared with 4,80,085 units in 2013-14. However, this has risen to 3,84,026 vehicle units till January this fiscal.

“Despite marginal cyclicality, the industry volumes grew almost threefold between FY09 and FY19 to 21.3 million, at a compound annual growth rate (CAGR) of 11 per cent. However, the cascading impact of regulatory changes (insurance norms), safety standards, emission norms (BS-VI transition) and Covid-19 has led to a contraction in domestic two-wheeler volumes from FY20 to FY22. With sales of 13.4 million units, the industry volumes were almost pushed back by a decade to FY12 levels in the last financial year,” said Rohan Kanwar Gupta, Vice President & Sector Head, Corporate Ratings, ICRA Limited.

Cost of ownership

An increase in the cost of ownership has impacted the two-wheeler segment with entry-level models taking the bigger hit.

“The cost of acquisition has gone up by 50 per cent and two-wheeler dealers are struggling. The entry-level segment is impacted more while the rural demand is still muted and under severe distress. It still has to recover from the pandemic impact. This will take another few years to be back to normal,” said Manish Raj Singhania, President of the Federation of Automobile Dealers Association (FADA).

In India, a majority of the two-wheelers sold — motorcycles and scooters — are low capacity (<125cc engine) and the customers to these mass-market products are extremely price sensitive. A persistent increase in the ownership cost has been the root cause of muted demand for the past three years. ICRA is cautiously optimistic about a gradual demand recovery amid multiple headwinds (elevated ownership cost, persisting inflationary pressures and an increase in financing rates). As erratic monsoons and floods in many regions impacted kharif yields, rural demand may remain dampened; healthy rabi sowing, however, remains positive,” said Gupta.

Positive February

The sales of two-wheelers have picked up in February, however, and dealers are further anticipating an increase in sales.

“With good crops and marriages ahead, February has been a good month in terms of the sales of two-wheelers and demand,” Singhania said.

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