Motorcycle sales may continue to outperform scooters in near term: Report3 min read . Updated: 23 Jul 2020, 12:43 PM IST
- Motorcycle sales volume declined 35 per cent y-o-y as compared with a 47 per cent y-o-y drop in scooter volumes in June.
Motorcycle sales outperformed scooter sales in June due to higher demand from rural markets and tier-II and tier-III cities, and the trend is expected to continue in the near term as around 50 per cent of the motorcycle demand comes from the rural markets, according to a report by India Ratings (Ind-Ra).
Automobile sales volume in June surged a whopping 580 per cent over May led by the pent-up demand and demand for personal mobility to maintain social distancing with the easing of lockdown and public transport only partially open, the rating agency said in the report on Wednesday.
It also expects recovery in demand to take place only by the middle of the next financial year.
Two-wheelers have demonstrated signs of a faster recovery than other industry sub-segments, as forecasted by Ind-Ra, on account of a continuous demand from the rural segment as well as two-wheeler being the most-affordable vehicle, favouring personal mobility, it said.
During the June 2020 quarter, two-wheeler domestic sales declined 74 per cent y-o-y, while passenger vehicle (PV) sales dipped 78 per cent and commercial vehicle (CV) sales fell 85 per cent, it added.
In the two-wheeler segment, motorcycle sales volume declined 35 per cent y-o-y as compared with a 47 per cent y-o-y drop in scooter volumes in June, said the report.
As against this, motorcycle sales volume in the first quarter of 2019-20 were down 73 per cent and scooter sales declined 76 per cent during the period, it said.
Stating that motorcycles accounted for around 69 per cent of the total two-wheeler sales in June as compared with 66 per cent in the year-ago period, Ind-Ra said motorcycles outperformed scooter sales in June due to higher demand from rural markets and tier-II and tier-III cities.
The rating agency expects this trend to continue in the near term, as around 50 per cent of the motorcycle demand comes from the rural markets.
It added that the sales volume of motorcycles up to 125 cc, having a strong presence in rural and semi-urban markets, declined only 28 per cent in June as compared with the 47 per cent y-o-y decline in sales volume of motorcycles above 125 cc.
With a strong rural focus and the portfolio focussed towards motorcycles under 125 cc, Hero MotoCorp Ltd's two-wheeler market share was up at 42 per cent in the June quarter of 2020-21 as against 36 per cent market share a year ago, it said.
A lower channel inventory meant Hero's production level in June was at 64 per cent of June 2019 as compared with 50 per cent for the overall two-wheeler industry, the report stated.
In June, domestic automobile sales volume (excluding commercial vehicles) declined 41 per cent y-o-y, with PV and two-wheeler sales declining 50 per cent and 39 per cent over the year-ago period, respectively, said the report.
It is a sharp improvement from April and May when the total sales volumes had plunged 100 per cent and 85 per cent y-o-y, respectively, amid the coronavirus-induced lockdown, it said adding that Ind-Ra expects improving rural sentiments and continued preference for personal mobility over public transport or shared mobility to remain the key growth drivers in the near term.
In the PV segment, car sales fell 58 per cent y-o-y in June while utility vehicles (UVs) registered only 31 per cent y-o-y decline, according to the report.
Over the past few years, customers have displayed an increasing preference for UVs over cars, as seen through a 0.5 per cent volume increase in UVs in 2019-20 whereas the overall industry fell 18 per cent y-o-y, Ind-Ra said.
This trend continued in June 2020 as well. The new model or variant launches have also been in this sub-segment. In the cars sub-segment as well, the decline in the entry-level 'mini' hatchback sales volume was lower than the overall sub-segment, as consumers continue to look at lower ticket items, the report stated.
According to Ind-Ra, CV sales volume plummeted 85 per cent y-o-y in the first quarter of 2020-21, with a higher decline of 94 per cent in medium and heavy commercial vehicles (MHCVs) against the 80 per cent y-o-y decline in light commercial vehicles (LCVs).
Apart from disruptions due to C-19, MHCV demand continues to be impacted by the ongoing overall slowdown in economic activity coupled with the excess available capacity in the system. LCVs have fared better on increasing demand than MHCVs for last-mile connectivity, it said.
This story has been published from a wire agency feed without modifications to the text.