Two-Wheeler Sales Growth Slowed In February, Say Analysts
Traffic moves along a highway during morning rush hour in Delhi, India. (Photographer: Kuni Takahashi/Bloomberg)

Two-Wheeler Sales Growth Slowed In February, Say Analysts

Domestic sales of two-wheelers slowed in February as commodity prices surged and pent-up demand waned, according to estimates by four brokerages.

Only Hero MotoCorp Ltd. among the listed automakers tracked by analysts reported a decline in shipments over the year earlier. That compares with a 4-30% year-on-year estimated rise in wholesales for cars to commercial vehicles, data compiled from research reports of Motilal Oswal, Emkay Global, Dolat Capital and Prabhudas Lilladher showed.

Month-on-month, barring Escorts Ltd., Ashok Leyland Ltd. and Hero MotoCorp, all other automakers are estimated to have witnessed a decline in sales.

Inquiries for two-wheelers during the month were lower for both urban and rural regions, according to Deep Shah and Amber Shukla, analysts at Prabhudas Lilladher. “Demand for entry-level declined 10-12% year-on-year, while the premium segment (150cc and above) dropped 15-16%,” they said, adding dealers are holding an inventory of 1-1.5 months.

Two-Wheeler Sales Growth Slowed In February, Say Analysts

According to Shah and Shukla, that prompted dealers of two-wheelers to offer discounts in February. “OEMs increased discounts for entry-level models to push sales. Bajaj Auto offered discounts of Rs 2,000-3,000, while for Hero MotoCorp it stood at around Rs 2,000.”

And that’s just a month after automakers, including two-wheelers, hiked prices across models to fight rising input costs.

Demand for passenger vehicles, on the other hand, remained strong even as production suffered because of supply constraints, analysts said. “Wholesales volume for most OEMs such as M&M, Tata Motors and Toyota are affected due to acute shortage of semiconductors,” Dolat Capital said.

The supply chain constraints, according to Prabhudas Lilladher, have impacted overall volumes in passenger vehicles and commercial vehicles by 10-15%.

While the pandemic has fueled demand for personal mobility, automakers, recovering from several quarters of slowing sales, have not been able to keep up with supply. A global shortage of microprocessors—the brains of electronic components used to control everything from anti-lock braking to airflow systems of cars—is making a quick ramp-up difficult after the Covid-19 stalled production.

Also read: Chip Shortage Threatens Indian Automakers’ Nascent Recovery


Brokerages expect passenger vehicle volumes to remain in the positive territory, while for domestic two-wheelers the pain may persist till mid-April.

Emkay Global expects the tractor industry to grow at more than 25%, aided by better retails. “Domestic volumes should grow 28% for M&M Tractors and 27% for Escorts,” Raghunandhan NL, and Mumuksh Mandlesha, analysts at the research firm, said.

Analysts also expect commercial vehicle dispatches to continue to witness gradual recovery on the back of a pick-up in economy activities. But rising diesel prices, lower fleet utilisation, weak financial condition of fleet operators, and subdued freight rates will hurt buyers’ appetite in the near term.

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