Why the Indian two-wheeler industry is worried?

Why the Indian two-wheeler industry is worried?

The Indian two-wheeler industry has been hammered due to the Covid crisis and now is worried due to the farmers’ agitation and Union Budget 2021.

The Indian two-wheeler industry is hopeful of growth in the fourth quarter of the ongoing financial year, but at the same time, it is wary of some major issues like farmers’ protest, upcoming union budget, etc.

Rural India contributes substantially to the two-wheeler industry’s sales, but the ongoing farmer’s protest against the new farm bill is expected to impact the sales adversely. Also, the industry is wary of what the budget will bring for it in February 2021.

According to Yadvinder Singh Guleria, Director, Sales and Marketing, Honda Motorcycle and Scooter India (HMSI), the ongoing farmers’ agitation and the upcoming union budget are like dark clouds that require to be closely watched. At the same time, the Indian two-wheeler industry is hoping for a low single-digit sales growth in the Q4 of FY2021, on the back of the low base of previous fiscal, revealed the key official from the second largest two-wheeler manufacturer of the country.

PIC

However, with the gradual resumption of economic activities and reopening of colleges and universities expected from 2021, the two-wheeler industry is banking on students to increase sales momentum, as the young buyers contribute significantly to the two-wheeler manufacturers’ balance sheets. In 2020, so far, two-wheeler buying from students has been almost negligible. As colleges and universities remained closed due to the pandemic, young people, especially those turning 18, refrained from buying two-wheelers.

Like the rest of the automobile industry, the two-wheeler industry too has faced massive disruption in the last two years, due to factors like economic crisis, the transition to BS-VI emission norms, and lately the lockdown and Coronavirus pandemic as well. In a bid to meet the new BS-VI emission norms from April 2020, the automobile companies including two-wheeler manufacturers had reduced their production volume to avoid stocking BS-IV models.

According to Guleria, the Indian government is feeling the pressure of tax collections, which has been reduced drastically during the Covid-19 lockdown, as the majority of the economic activities were stopped during that time. Despite a slow resumption of economic activities and slight revival during the festive season, the setback received by the Indian economy is massive. It is not known what the government will do to recover that using its union budget in 2021.

Two-wheeler industry

Between April-November 2020, the two-wheeler industry has witnessed around a 25% decline in sales, and the momentum is expected to continue in December as well.

The Indian two-wheeler industry registered 13.4% YoY growth in November 2020, with 16,00,379 units sold last month, as compared to 14,10,939 units recorded in the same month a year ago.

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