The global coronavirus pandemic is set to hit economies of several countries hard, and there are already fears of a recession, possibly even worse than the 2008 global economic recession. With restricted movement of populations around the world, as well as complete lockdown in several countries, including India, the manufacturing sector is likely to be affected by the economic fallout from the pandemic, and worse affected will be the auto sector. While health, medical services, basic essentials and employment will be of foremost interest, buying a bike, (or a car), will be quite lower down the priority list at the moment.
Even when the world does emerge out of the coronavirus crisis, consumer sentiment will be low, and from all indications, the global motorcycle and two-wheeler industry will be hit hard. The impact may be different for different markets. Western markets, where motorcycles are used more for leisure than for the daily commute as in emerging markets like India and South East Asia, are likely to feel the pinch even more, when the economic crisis emerges as a result of the pandemic. But even here, in India, as of now there's no clear answer to the scale of the economic effect on the industry.
"Many customers who had made bookings earlier, have now cancelled bookings. Two-wheelers which were already sold, cannot be registered now, due to the coronavirus lockdown. Nobody has an answer to what is going to happen. The scale of the current lockdown is unprecedented," Yadvinder Singh Guleria, Senior Vice President - Sales and Marketing, Honda Motorcycle & Scooter India told carandbike. HMSI is the second largest manufacturer of two-wheelers in India by volume. The sentiment is similar with other mainstream two-wheeler manufacturers in India.
In Europe, mainstream and premium motorcycle brands like Ducati, KTM have already shut production facilities, as have brands like Harley-Davidson and Indian Motorcycle in the US. In India too, manufacturing has been suspended across all two-wheeler brands, and the lockdown will not just affect manufacturers and dealers, but will trickle down the supply chains, including small and large component manufacturers.
Main cycle parts, tyres and electronics are usually not made by the two-wheeler manufacturers themselves, and are sourced from other vendors. For high-end motorcycles, suspension is sourced from brands like Showa, Ohlins, Sachs and Marzocchi, while closer home, commuter and premium commuter motorcycles have suspension sourced from brands like Gabriel and Armstrong. Tyres again are supplied by the likes of Dunlop, Pirelli, Metzeler and Ceat, while brakes and ABS are supplied by brands like Nissin, Brembo, ByBre and Bosch. As shutdowns across the world spread, manufacturing of not just motorcycles, but even components will be hard hit.
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India is the world's leading two-wheeler industry, with the highest number of motorcycles and scooters on the country's roads. While India may not be a leading market for premium brands like Ducati, Triumph, BMW Motorrad and Harley-Davidson, the fact is that observers have been bullish on short-term growth prospects in the premium category in India as well. With cash-flow and liquidity problems, even at the household level, purchasing, for what are essentially seen as leisure products, is likely to be hit.
A prolonged coronavirus crisis will also likely hit more economies around the world, and starve many economies of credit, as well as liquidity. Some markets, where high volumes dictate revenue, lower priced, commuter-oriented products may find it easier to shake off the effects of the economic fall-out, but others, like European and the North American markets, may find it difficult to shake off the bearish sentiment the global economy is likely to be faced with.