Two-wheelers witnessing revival in urban demand

By: |
March 12, 2021 8:09 AM

State-wise two-wheeler (2W) registrations show that the urban-centric states have started to witness relatively better demand trends than the rural-centric ones.

two wheelerSegmental wholesale break-up also suggests a pick in urban demand

State-wise two-wheeler (2W) registrations show that the urban-centric states have started to witness relatively better demand trends than the rural-centric ones. Scooter wholesale volume growth is picking up while premium motorcycles have performed better than entry-level bikes in recent months, both suggest a revival in urban demand.

We maintain our preference for urban exposure in 2Ws with preference for TVSL and EIM. 2W registration trends better in urban than rural states. The 2W segment of the Indian auto industry is lagging in the post-Covid recovery with registrations in tracked stated still down ~14% YoY over October-February. Moreover, state-wise registrations show a divergence in growth rates with urban-centric states starting to perform relatively better than rural-centric states in recent months. 2W registrations in rural states grew 4-9% YoY in FY19-20, outperforming urban states by 6-11ppt. However, the YoY trends seem to be changing now as urban states have witnessed just 8% YoY decline in Jan-Feb vs 18% YoY fall for rural states.

Segmental wholesale break-up also suggests a pick in urban demand. Scooter wholesale volume growth is picking up while premium motorcycles have performed better than entry-level bikes in recent months, both suggest a revival in urban demand. Scooters grew faster than motorcycles for 11 years in a row over FY08-18, but then entered a weak patch underperforming the latter in FY19 and 9MFY21. The trend appears to be changing again as scooter wholesales grew 4ppt higher than motorcycles in January, and we estimate 5-6ppt spread in February as well. Within bikes, October-January wholesale volumes grew 2% YoY for 75-110cc bikes versus 38% and 25% growth for 110-125cc and 125cc+ bikes, respectively.

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