India's two-wheelers to see sustained export growth in H2 FY22: Ind-Ra

As per Ind-Ra, original equipment manufacturers from India will enjoy growing demand thanks to a robust distribution network and strong market position.
By : PTI
| Updated on: 24 Nov 2020, 16:11 PM
File photo of Royal Enfield 500cc Bullet used for representational purpose
File photo of Royal Enfield 500cc Bullet used for representational purpose
File photo of Royal Enfield 500cc Bullet used for representational purpose
File photo of Royal Enfield 500cc Bullet used for representational purpose

India's two-wheeler exports will see sustained growth in the second half of next fiscal after witnessing temporary hurdles in the first half this year due to Covid-19 and weakened crude oil prices, hurting the economies of key exporting destinations, according to ratings agency Ind-Ra.

Exports momentum is expected to continue in the remaining part of FY21 and FY22, primarily driven by the exporting countries' lower penetration level, demand for usage as commercial fleet, stability in crude prices, lack of public infrastructure and aversion to public transport amid Covid-19, India Ratings and Research said in a statement.

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India exports two-wheelers mainly to African, Asian and Latin American countries, constituting 37.5%, 22.9% and 21.4%, respectively, during the first half of FY21, it added.

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"Within this, Nigeria, Colombia, Nepal, Bangladesh and Philippines together accounted for around 50% of the total exports in FY20 (in terms of value)," the rating agency said.

Indian original equipment manufacturers (OEMs) will continue to gain traction for their key offering on the back of their strong market position and robust distribution network, it added.

Bajaj Pulsar 220F BS 6. Image Courtesy: Bajaj Auto
Bajaj Pulsar 220F BS 6. Image Courtesy: Bajaj Auto
Bajaj Pulsar 220F BS 6. Image Courtesy: Bajaj Auto
Bajaj Pulsar 220F BS 6. Image Courtesy: Bajaj Auto

Indian two-wheeler manufacturers such as Bajaj Auto and TVS Motor Co will benefit from their exports-focused business model, with almost 49% and 26%, respectively, of their total sales volume in the first half of FY21 coming from exports, it said.

However, Indian OEMs face tough competition, particularly from Japanese OEMs that have a strong market share globally. Though Chinese OEMs have a higher market share than Indian OEMs in the global markets, the competition is fragmented and Indian OEMs have superior quality, the agency noted.

Ind-Ra said it expects the two-wheeler (2W) exports decline for FY21 to be in line with that of the domestic industry at 18-21%.

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"Since 2W exports only account for 16-18% of the total 2W sales for Indian OEMs, this is not likely to be substantial enough to compensate for the domestic volumes during the same period," it added.

2W export volumes are likely to increase by mid-teens in FY22, the ratings agency said.

The industry faced temporary hiccups in the first quarter of FY21 due to the Covid-19 spread as well as weakened crude oil prices, hurting the economies of key exporting destinations for India.

"This coupled with the nationwide lockdown, supply-chain and logistics disruptions impacted export sales significantly," Ind-Ra said.

Since then India's 2W exports have moved in line with growth in domestic markets, it added.

First Published Date: 24 Nov 2020, 16:11 PM IST
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