2-wheeler sales expected to dip by 8-10% this fiscal year - Check factors

Two-wheeler sales volume is expected to dip by 8-10 per cent this fiscal year due to factors like sluggish rural demand, low festive-season sales, higher prices, and deferred purchases as consumers eye electric vehicles, Crisil Ratings said on Thursday.

The decline in sales volume in the current financial year is expected on an already-low base after two consecutive years of decline -- at 13 percent in fiscal 2021 and 18 percent in fiscal 2020, the domestic ratings agency said in a statement.

This is the first time in over a decade, when two-wheeler sales are declining for three successive fiscal years, it added. Segment-wise, motorcycle volume, which accounts for two-thirds of the overall two-wheeler volumes, will see a drop of about 8-9 per cent this fiscal year, it said.

"The second, third covid waves and delayed harvest impacted rural demand for two-wheelers this fiscal. Besides, higher vehicle and fuel prices also affected rural demand this fiscal, unlike last fiscal, when rural India was less impacted by the first covid wave," Crisil Ratings Senior Director Anuj Sethi stated.

Three consecutive years of decline will take two-wheeler sale volumes back to the fiscal 2014 level and it may take 3-4 years to reclaim the peak sales volume of 2.11 crore seen in 2019, another company executive said.

"That said, volume growth is expected to be better at 6-8 per cent next fiscal, on a low base, due to moderate recovery in rural incomes, new product launches, normalisation of chip availability, and sharper focus of manufacturers on premiumisation," he added.