FADA estimates two-wheeler sales in October 2020 will see double-digit decline

Rough estimates drawn up by the Federation of Auto Dealers Association (FADA) see sales of two-wheelers recording a double–digit decline in the current month, on a y-o-y basis, as Navaratri sales were tepid.

By:October 27, 2020 10:30 AM
Citing a pick-up in sales of some auto segments like passenger vehicles and two-wheelers in August, he said the sector was already on a revival path.

 

While passenger vehicle (PV) manufacturers seem to have done good business during the Navaratri festival and are looking forward to even better sales during Diwali, business has been dull for two-wheeler players. Rajiv Bajaj, MD, Bajaj Auto, on Monday said in an interview with CNBCTV18 sales had been disappointing during the Navaratri festival, especially in the entry-level 100 cc segment. “The mass consumer is not coming back in a hurry as this end of the market is under a lot of pressure,” Bajaj said. While domestic motorcycle sales were down 3% year-on-year, the 100 cc portfolio of CT100 and Platina motorcycle sales declined by 30% y-o-y, Bajaj indicated. The company has seen a spurt in demand in the premium segment with Pulsar sales going up 28% y-o-y and the KTM and Husqvarna sales going up 25%.

Rough estimates drawn up by the Federation of Auto Dealers Association (FADA) see sales of two-wheelers recording a double–digit decline in the current month, on a y-o-y basis, as Navaratri sales were tepid. Typically, there has not been such a divergence between sales of PVs and two-wheelers and, therefore, analysts are still hoping that two-wheeler sales will pick up during Diwali. Retail sales of PVs grew by about 10% y-o-y in September while those of two-wheelers had witnessed a decline of 13%. Data from SIAM on October 16 showed PV sales grew 17.02% y-o-y in the September quarter while sales of two-wheelers remained almost flat at 0.17%.

Analysts attributed several reasons for poor two-wheeler sales even during the festival season. For one, there have been very few new launches in this segment compared to PVs. Second, institutional buying – by food delivery companies like Zomato and Swiggy – is yet to pick up as they are still recovering after the lockdown. Third, buyers who generally buy entry-level two-wheelers like 100 cc motorcycles have been more hit in terms of loss of jobs or income due to the pandemic; and lastly, a section of two-wheeler buyers may have graduated to smaller cars like the Alto or even second hand PVs.

Deepak Jasani, head of retail research, HDFC Securities, said, “The high-value purchases continue to grow and the two-wheeler purchases may be seeing some issue according to FADA’s estimates. There are two reasons for this, the reduced availability of credit because the financing companies have become cautious and want to avoid rising NPAs and the borrowers have less earnings visibility in the beginning of the festive season. Both the factors could improve once the lockdown is completely lifted and we can see an uptick in the two-wheeler sales. Such a dichotomy in two-wheeler and high-value purchases has taken place earlier whenever the GDP growth of the country was sluggish.”

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