CHENNAI: Two-wheeler sales have hit skid row and the real culprit is the multiple price hikes that are pinching the mass-volume entry-level segment. Auto industry sources say that between April-December, prices of two-wheelers on an average have gone up by Rs 5,000-8,500, impacting the entry-level where affordability is key.
“While the semiconductor chip shortage has hit production and sales of cars, in two-wheelers it is a problem of demand. The multiple price increases on account of raw material costs have hit entry-level two-wheeler sales,” said Automotive Component Manufacturers Association (ACMA) president Sunjay Kapur. Steel prices have gone up by 60% in a year whereas copper, aluminium and rubber prices have shot up too, he added.
Auto consultants say that the entry-level segment has actually not shrunk the most, but its volume hit is highest because of the sheer numbers. Two-wheelers are the most impacted automotive segment as affordability and demand sentiments of target clientele have been hit by the second wave. The reduced discretionary income due to job losses, salary cuts and Covid-induced medical expenses coupled with relentless increase in two-wheeler prices, record high petrol rates, uneven monsoons and delayed harvest and moderation in financing availability have significantly impacted the industry’s prospects particularly in the entry level segment. In April-November, the 75-110cc segment was down 1.5%, while the 110-125cc segment was down nearly 8%. The pricier 125 cc-150 cc segment however was down 36%,” said Rohan Kanwar Gupta, VP and sector head, ICRA.
“But the 75 cc-110 cc segment is around 57% of the overall volumes so if that segment does not grow, it is difficult for entire industry to grow,” he added. The sub-125 cc segment is 75% of the two wheeler market.
According to the data released by the Society of Indian Automobile Manufacturers (SIAM), the auto industry apex body, total two wheeler domestic sales in November came down more than 37% from 16 lakh units in 2020 to 10.5 lakh units this November. “Since March 2019 to now, two wheeler prices have gone up by 28%-35% including BS6, safety norms and now raw material hikes. Also petrol prices have gone up by 30% in the last 6 months. It has hit the sub-125 cc segment really hard,” said Hero Motocorp dealer Nikunj Sanghi, MD, JS4Wheel Motor.
What is also eating into entry level sales is the new interest in sub-45 km range electric two wheelers which do not even need registration and so don’t show up on official data. “It takes a mere 10% of an ICE showroom cost to set up an EV showroom and there are Ev outlets coming up all over rural India,” said Sanghi. “That’s affecting entry level sales too,” he added.
“While the semiconductor chip shortage has hit production and sales of cars, in two-wheelers it is a problem of demand. The multiple price increases on account of raw material costs have hit entry-level two-wheeler sales,” said Automotive Component Manufacturers Association (ACMA) president Sunjay Kapur. Steel prices have gone up by 60% in a year whereas copper, aluminium and rubber prices have shot up too, he added.
Auto consultants say that the entry-level segment has actually not shrunk the most, but its volume hit is highest because of the sheer numbers. Two-wheelers are the most impacted automotive segment as affordability and demand sentiments of target clientele have been hit by the second wave. The reduced discretionary income due to job losses, salary cuts and Covid-induced medical expenses coupled with relentless increase in two-wheeler prices, record high petrol rates, uneven monsoons and delayed harvest and moderation in financing availability have significantly impacted the industry’s prospects particularly in the entry level segment. In April-November, the 75-110cc segment was down 1.5%, while the 110-125cc segment was down nearly 8%. The pricier 125 cc-150 cc segment however was down 36%,” said Rohan Kanwar Gupta, VP and sector head, ICRA.
“But the 75 cc-110 cc segment is around 57% of the overall volumes so if that segment does not grow, it is difficult for entire industry to grow,” he added. The sub-125 cc segment is 75% of the two wheeler market.
According to the data released by the Society of Indian Automobile Manufacturers (SIAM), the auto industry apex body, total two wheeler domestic sales in November came down more than 37% from 16 lakh units in 2020 to 10.5 lakh units this November. “Since March 2019 to now, two wheeler prices have gone up by 28%-35% including BS6, safety norms and now raw material hikes. Also petrol prices have gone up by 30% in the last 6 months. It has hit the sub-125 cc segment really hard,” said Hero Motocorp dealer Nikunj Sanghi, MD, JS4Wheel Motor.
What is also eating into entry level sales is the new interest in sub-45 km range electric two wheelers which do not even need registration and so don’t show up on official data. “It takes a mere 10% of an ICE showroom cost to set up an EV showroom and there are Ev outlets coming up all over rural India,” said Sanghi. “That’s affecting entry level sales too,” he added.
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