The Indian two wheeler industry is current bright spot in the automobile industry. After worst recession in calendar year 2008, the two-wheeler industry bounced back quickly, consistently recording y-o-y growth from February 2009 onwards.
The two-wheeler industry has consistently improved on sequential basis as well as y-o-y basis after falling down to levels of 5,52,058 two wheelers sold in December 2008 to 808075 two wheelers in May 2009.
In FY09, the total 2-wheeler sales grew by 5 per cent from 8068991 vehicles in FY08 to 8,44,1844 vehicles in FY09.
The growth in two wheelers were triggered by couple of factors such as 4 per cent excise duty cut announced in stimulus package in December 2008, fuel price reduction of Rs 5 per litre in petrol and Rs 2 per litre in diesel as well as the unaffected and untapped demand from the rural market.
In case of 3 wheeler industry, the domestic sales have perked up from low of 19048 vehicles in Dec 2008 to 30036 vehicles in May 2009 post excise duty cut of 4%. However, 3-wheeler industry continues to struggle with lack of credit as well as Light commercial vehicles eating into its marketshare especially in goods carrier segment. Nevertheless, Bajaj Auto is launching 2 three wheelers in FY10 one in goods carrier and other in passenger carrier.
Two wheelers: Sales at a glance
|
Details |
Apr 2009 - May 2010 |
Apr 2008 - May 2009 |
Var % |
|
Scooter/Scooterettee |
209031 |
182293 |
14.67 |
|
Motor Cycles/Steps -Through |
1282316 |
1172775 |
9.34 |
|
Mopeds |
83658 |
69570 |
20.25 |
|
Electric Two Wheelers |
1332 |
2390 |
-44.27 |
|
Grand Total |
1576337 |
1427028 |
10.46 |
Source: SIAM
Three wheelers: Sales at a glance
|
Details |
Apr 2009 - May 2010 |
Apr 2008 - May 2009 |
Var % |
|
Passenger Carriers |
61892 |
59495 |
4.03 |
|
Goods Carriers |
12339 |
15815 |
-21.98 |
|
Grand Total |
74231 |
75310 |
-1.43 |
Source: SIAM
Industry expectations
- Retain the existing excise duty on 2 & 3 wheeler at 8%.
- Release a measure to boost retail lending in big way in PSU banks
- Abolish fringe benefit tax.
- Analysts/market expectations
- Reduce interest rates on auto loans and credit availability on 2 wheeler and 3 wheeler loans. The lack of finance and high interest rates limits the growth in both the 2 wheeler and 3 wheeler industry.
- Retain the existing excise duty on 2 & 3 wheeler at 8%. The reduction in the excise duty to 8% enabled the revival of the 2 & 3 wheeler sales. Thus retention of the same will provide support for 2 & 3 wheeler industry to continue to grow.
Companies to watch
Bajaj Auto, Hero Honda, TVS, Mahindra & Mahindra
Outlook
Currently, the 2 wheeler industry is thriving thanks to excise duty cut and conscious effort of players to focus on the untapped unaffected rural demand and premium bike segment. In contrast, 3 wheeler industry's growth is still muted despite revival from the downtrend.
A focus on credit availability to 2 & 3 wheeler loans and lowering of interest rates could boost their sales especially the 3 wheeler industry's. If the customs duty on steel, aluminium etc is raised, then it will be negative for the auto industry in general and 2 & 3 wheelers in particular.
