Muted demand owing to high ownership costs left dealer despatches by domestic two-wheeler manufacturers weak in March. Most companies, including Hero MotoCorp, Honda Motorcycle & Scooter India, TVS Motor Company, Royal Enfield and Suzuki Motorcycle India, despatched smaller volumes. Many manufacturers have already hiked the prices of their models once in January and are expected to do so in April as well.
Domestic volumes at Hero MotoCorp fell 23.62% year-on-year, while at Honda Motorcycle & Scooter India they were down 21.64% y-o- y. TVS Motor’s volumes dropped 2.57% y-o-y, while at Royal Enfield they fell 2.82% y-o-y, and at Suzuki Motorcycle India by 15.75%.The entry-level category, which accounts for almost 75% of the two-wheeler market, has been the worst affected.
“If the agricultural output, rural economy and labour-intensive sectors show improvement, then the category may see a growth of about 9-10% in FY23,” Suraj Ghosh, director, S&P Global, told FE.
While ownership costs have gone up following price hikes by manufacturers to offset increasing input costs, rising fuel prices have driven up running costs. Prices of aluminium, steel, rubber and palladium have gone up by anywhere between 15% and 50%, over their average prices in the second half of 2021, further pushing the input costs.
However, sector experts believe that with offices and educational institutions re-opening and the wedding season coming up, there could be a pick up in demand.
According to Rajat Mahajan, partner, Deloitte India, the electric two-wheeler space is expected to be very busy in FY23.”However, that will not be enough and the two-wheeler sector’s growth may restricted to a mid-single-digit growth over the current low base,” Mahajan said.