India`s 2-wheeler market set to hit new peak next year with 8-10 pc growth
Following an estimated 12-14 per cent surge this fiscal, the India’s two-wheeler industry is set to grow by another 8-10 per cent in the upcoming year, a report said on Friday.
The Crisil Ratings report added that it will surpass the previous record of over 24 million units seen in 2019 as the sales volume is expected to reach a new peak.
This growth is driven mainly by four key factors -- strong rural demand, rising urban interest in premium motorcycles, better export opportunities, and a diverse range of models, including electric two-wheelers (e2Ws), according to the report.
The revenue of two-wheeler manufacturers is expected to increase by 10-12 per cent next fiscal, compared to around 16 per cent this year, the report added.
This growth will be fuelled by higher sales volumes and a shift towards premium models, which generate better profit margins.
Moreover, the operating margin of original equipment manufacturers (OEMs) is projected to reach a decade-high level of around 15 per cent this fiscal and remain steady next year.
This is an improvement from the average of 14 per cent in the past three years. Higher exports and the premiumisation trend will further boost profitability.
Domestic sales make up nearly 85 per cent of the two-wheeler market, while exports account for the rest.
"Higher rural incomes and increasing interest in premium internal combustion engine (ICE) vehicles and electric two-wheelers will drive this growth," said Anuj Sethi, Senior Director at Crisil Ratings.
The expert expects that the domestic demand is set to rise by 7-8 per cent next fiscal.
Meanwhile, exports are expected to grow at a faster pace of 11-12 per cent that may be supported by strong demand from Africa, Latin America, and other emerging markets.
Motorcycles continue to dominate the Indian two-wheeler market, accounting for nearly two-thirds of ICE vehicle sales.
With a growing preference for high-performance vehicles, premium and executive motorcycles (above 110cc) now hold more than 50 per cent of the market.
Consumers are also showing greater interest in larger-engine scooters for a more powerful and comfortable riding experience, the report said.
This fiscal year alone, the segment is expected to grow by about 27 per cent. A similar double-digit growth is anticipated next year as well.
