Demand for two-wheelers remained subdued for the fifth consecutive month in March with Hero MotoCorp and Honda Motorcycle reporting the highest decline in monthly sales in FY19. The weak volumes dragged down the growth in 2018-19 to just under 7% from a robust 15% in 2017-18. Analysts said record high inventories with dealers had led to weakness in wholesale volumes. \u201cHigh dealer inventory build-up is likely to have dragged down sales, in addition to demand issues,\u201d analysts at Jefferies noted. Yadvinder Singh Guleria, senior VP \u2013 sales & marketing at Honda Motorcycle & Scooter India (HMSI), said the challenging and disruptive second half of 2018-19 had wiped out growth seen in the first half. \u201cHigher insurance premiums dampened the festival sentiment and pre-festival stock buildup was converted into high inventories for the two-wheeler industry,\u201d Guleria said. The worst hit was HMSI, which saw a sharp 47% year-on-year (y-o-y) dip in March, followed by Hero MotoCorp with over a 20% y-o-y decline. Dealers of both the companies are holding inventories of up to 80 days in several parts of the country, piled up from the festive months when demand was much lower than expected. For 2018-19, HMSI posted a 4.4% fall in volumes while Hero recorded a mere 3% increase. While Royal Enfield reported a 21% y-o-y decline in March volumes, TVS Motor's sales fell 1.54% y-o-y. Bajaj Auto bucked the trend reporting a smart 20% y-o-y growth as the company had started slowing despatches to dealers during the December 2018 quarter. Industry volumes in March fell by around 15% in March primarily due to the nearly three-fold rise in insurance premiums; sales had slipped to single digit growth after the Supreme Court ordered compulsory five year third-party insurance from September, 2018 driving up the premiums. Before that, sales had been rising at a brisk 20%. Earlier this year, Pawan Munjal, MD, Hero MotoCorp, had observed that the liquidity crunch coupled with third-party insurance costs had impacted Diwali sales and there were no signs of pick up in Q4FY19. Analyst at Nomura said the price hikes due to new safety norms from April 1 will weaken demand in the near-term. \u201cWe expect the industry to remain weak in the near-term on high inventory which have increased further and rising cost pressure by 11-15% price hike on ABS\/BS6 norms,\u201d they said. Most manufacturers have, in March, increased prices in the range of `500-7,000, depending on the engine capacity, as they start rolling out products with combined braking system (CBS) and anti-lock braking system (ABS) feature, which is mandatory for vehicles sold from April 1 this year. This appears to have further impacted demand. According to the Federation of Automobile Dealers Association (FADA), retail sales or registrations of two-wheelers have been trending down since November, 2018 and fell 8% y-o-y in February, one of the slowest month during FY19. Analyst at Kotak Institutional Equities said that industry volumes will likely be subdued over the next two years due to increase in prices and weaker consumer sentiment.