According to industry body SIAM (Society of Indian Automobile Manufacturers), the Indian two-wheeler segment declined by 17.76% in FY20 over FY19, with sales of 1,74,17,616 units in FY20 compared to 2,11,79,847 units in FY19. Analysts say the demand was under pressure due to high ownership costs (high insurance, increased fuel costs, new safety norms and transition to BS6) amidst overall weak economy. According to CARE Ratings, a credit rating agency, the last such double-digit decline was seen three decades ago, in FY92.
And then the Covid-19 lockdown happened. In a post-lockdown world, some analysts argue that with people refraining from using public transport, a tendency towards personal mobility, especially two-wheelers and small passenger cars, could offer hope. “Two-wheelers appear to fit very well in the current scheme of things, as the need for commuting will gradually rise and public transport might take some time to fully open up. Even when it opens, social distancing norms will ensure few people will take it,” says Gaurav Vangaal, associate director, IHS Markit. “A section of people who use public transport might shift to two-wheelers.”
Also, some prospective car buyers, Vangaal argues, may consider premium two-wheelers. “Two-wheelers make more sense because there is congestion in our cities and parking issues with cars,” he adds. However, Yadvinder Singh Guleria, director, Sales & Marketing, Honda Motorcycle and Scooter India, says we are reading too much into it. “If you analyse the buyer profile, the needs and requirements are different (of two- and four-wheeler buyers). Usually, there isn’t a direct competition between these two,” he says.
Guleria does argue that a section of users of public transport may shift to commuter motorcycles. “This shift may happen. But will the size of the market increase just because of that, it is too early to say. We don’t even know how trends such as work-from-home and social distancing will play out,” he adds.
A recent CARE Ratings report ‘Will personal mobility take the two-wheelers on a long ride?’ notes that the demand for big-ticket items such as automobiles is expected to remain muted at least during H1-FY21. “Besides, nearly 50% of two-wheelers are financed, with NBFCs having a predominant share … the general health of NBFCs is still not at ease,” the report says. Yamaha India, which is a major player in the premium two-wheeler space (150cc-plus motorcycles and 125cc scooters), expects there may be some car buyers shifting to premium bikes. Ravinder Singh, senior vice-president, Yamaha Motor India Sales, says that while car buyers have a set aspiration and value they look for in a car, in current times there may be some who opt for premium two-wheelers. “We cannot predict how much the buying patterns will change, but it’s a good opportunity for two-wheeler players to look into,” he says.
Singh adds that someone who wants to buy a second car in family could, instead, consider premium motorcycles. Of late, a lot of carmakers have started entirely online car sales, but such a shift could be tough in the two-wheeler space. “At the end of the day, a customer has to visit a dealership to take delivery, and then go for registration. But we can reduce a lot of physical touchpoints,” Singh says. Guleria adds that certain RTOs require physical presence of the customer, and at some places the vehicle also needs to be present. “Unless those rules get changed, it is difficult to convert each and every step of a two-wheeler buying process online,” he says, adding that the same holds true for two-wheeler financing. “In terms of disbursal of loans, while some banks have turned the process entirely online, in the case of NBFCs not everything is currently processed online.”
As the lockdown gets lifted, gradually, the June-August period will lay the groundwork for the festive season and next year.
