Two-Wheeler Industry To Grow 8-10 Per Cent This Year

The two-wheeler industry in India is on the road to recovery after five months of rough ride due to demonetisation and ban of BS-III models. According to ratings agency ICRA, the two-wheelers segment is expected to grow by 8-10 per cent in FY 18. In the five-month period between November 2016 and March 2017, the two-wheeler industry had witnessed a decline of 6.5 per cent. As the demonetisation impact wanes off and overall demand recovers, domestic two-wheeler sales volumes are expected to grow by 8 to 10 per cent. Already, the new fiscal has started off with a growth of 7.3 per cent in April 2017, ICRA noted.

"Among the various two-wheeler product segments, both scooters and motorcycles were significantly impacted by the demonetisation exercise, while mopeds continued to report growth on their low base," said Subrata Ray, ICRA Senior Vice President and Group Head- Corporate sector ratings.

According to ICRA, pent up demand consequent to the deferment of purchases during the third and fourth quarter of FY17, augur well for demand revival on the rural front. Urban sentiments are expected to draw support from staggered pay revision for state government employees and pensioners as well as muted CPI inflation, it said. Expected improved demand from rural segment is on the basis of improved farm sentiments following two seasons of good crop, forecasts of normal monsoons and benefits from rural employment guarantee schemes trickling in, ICRA added.

"The industry witnessed de-growth in both the key product segments -- motorcycles and scooters during the last five months (Nov-Mar 2017) of the (last) fiscal," it said. "On an annual basis, this has led to the slowing down of growth in the domestic two-wheeler industry to a relatively modest 6.9 per cent during FY17."

In contrast, ICRA said the industry had posted a strong double-digit growth across all the product segments between April-October 2016.