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File photo used for representational purpose. (AP)
File photo used for representational purpose. (AP)

What festive cheer? Why prospects for two-wheelers may be dimmer than for cars

  • It is estimated that two-wheeler segment will see a single-digit decline in October despite the promise that the festive period usually brings with it.

The festive period in India starting around October usually brings about reasons to cheer for the country's automotive sector regardless of how the preceding months may have been. In the face of challenges galore in 2019, the industry saw an uptick during late September and October of the year which acted as a balm of sorts over sales wounds. 2020 has been significantly more challenging and, therefore, may be significantly more different from 2019 and the previous years gone by. The threat of Covid-19 remains omnipresent and the promise of a V-shaped turnaround for the economy is expected, if at all, some time in 2021. In such times, the outlook for two-wheelers in the country remains in more of a gloom than for passenger vehicles with several OEMs predicting little to cheer about this festive period.

The Federation of Automobile Dealers Association (FADA) had already predicted that two-wheeler sales in the month of October will see a decline. "We see a single-digit decline as compared to last year. The reason is more to do with rural than urban," Vinkesh Gulati, President, FADA, told ET NOW in an interview.

The hit may be coming the most from the decline in sales in the entry-level 100 cc segment. "The mass consumer is not coming back in a hurry as this end of the market is under a lot of pressure," Ravi Bajaj, MD at Bajaj Auto, told CNBC TV18.

In contrast though, reports suggest that car makers - both in the mass-market field and a few in the luxury segment - are making the most of the festive period. Mercedes, for instance, reported it had sold 550 units during the Navratri-Dussehra period. (Full report here)

One of the clear reasons why there is this contrast is because two-wheelers are mostly bought by middle and lower-middle income families who may be far more cautious of big-ticket expenditures in current situation than before. The prevalence of a 'Work-from-Home' culture may be adding to lowering the demand for two-wheelers among the majority of working-class personnel. Job losses could be another factor at play while the rise in demand for second-hand vehicles in order to maintain social distancing while commuting could have also hurt sales of two-wheelers.

As such, assessing the sales data from the month of October as well as November would be crucial to precisely establish the sales trend in the two-wheeler segment vis-a-vis passenger vehicles' segment. The writing, however, may be on the wall already.

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