Mumbai, The two-wheeler industry is expected to maintain steady volume growth in this fiscal year driven by improving domestic sales and good traction in motorcycles in the executive and premium segments, according to a report released on Monday.
According to CareEdge Ratings, post-Covid, two-wheeler sales volume declined steadily during FY20, FY21 and FY22 before starting to recover from FY23, with sales momentum continuing in the year fiscal 24 too.
"CareEdge Ratings anticipates two-wheeler sales volume growth to continue in FY25 and would be further driven by improved domestic sales, higher electric vehicle sales, launch of CNG-powered two-wheelers and good traction in executive and premium segment motorcycles," said Hardik Shah, Director, CareEdge Ratings.
Growth in the two-wheeler segment in FY25 is also expected to be helped by likely interest rate cuts in the second half of FY25, strong demand for new model launches along with Recovery of exports from their low base and a favorable monsoon are likely to improve rural consumer confidence and income levels, said Arti Roy, associate director at CareEdge Ratings.
In FY23, the Indian two-wheeler industry recorded sales of 19.51 million units, a growth of 8 per cent compared to 18.01 million units in the previous fiscal year.
In FY24, the industry continued its upward trajectory, achieving 9.8 percent growth with a total sales volume of 21.43 million units. However, this was still below the peak sales volume recorded in fiscal 2019, when the annual sales volume reached 24.46 million units, he said.
During FY24, the domestic two-wheeler industry recorded a total sales volume of 17.97 million units, reflecting a growth rate of 13 percent, while the export volume witnessed a decline of 5 percent.
There are signs of revival as in each of the last five months (January to May 2024) two-wheeler exports recorded solid double-digit volume growth, and in February two-wheeler exports reached a high of 19 months with 0.33 million units. said CareEdge.
Furthermore, the recent improvement in export volumes is due to marginal recovery and stabilization in some key export markets after they were affected by inflation, high interest rates and currency problems in some of these markets, the rating agency said, adding this positive trajectory in exports is likely to continue for the rest of FY25.
In FY24, growth was driven by combined factors such as traction in EV volumes, wider model range and new launches, but was constrained due to subdued demand in the first half of FY24. due to the increase in vehicle prices after the implementation of the phase. II of BS-VI emission norms, higher interest rates and stress on rural incomes, CareEdge said in its report.
Demand for electric vehicles is driven by a shift in consumer preferences toward options that offer lower fuel costs, lower maintenance and lower service requirements compared to internal combustion engine (ICE) models, he said, emphasizing that The government's FAME II program through FY24 has made EV ownership more affordable, contributing to this volume growth.
The Indian government's recently introduced Electric Mobility Promotion Plan 2024 (EMPS 2024) has continued to boost sales of electric two-wheelers in fiscal year 2024-25 until July 2024, she said.
While motorcycles remain popular due to their high fuel efficiency, cost-effectiveness, and versatility, scooters have also gained traction, especially among urban commuters. Additionally, the growing appeal of electric two-wheelers (E2W) is contributing to the overall growth which is expected to continue, CareEdge Ratings stated.
According to CareEdge Ratings, post-Covid, two-wheeler sales volume declined steadily during FY20, FY21 and FY22 before starting to recover from FY23, with sales momentum continuing in the year fiscal 24 too.
"CareEdge Ratings anticipates two-wheeler sales volume growth to continue in FY25 and would be further driven by improved domestic sales, higher electric vehicle sales, launch of CNG-powered two-wheelers and good traction in executive and premium segment motorcycles," said Hardik Shah, Director, CareEdge Ratings.
Growth in the two-wheeler segment in FY25 is also expected to be helped by likely interest rate cuts in the second half of FY25, strong demand for new model launches along with Recovery of exports from their low base and a favorable monsoon are likely to improve rural consumer confidence and income levels, said Arti Roy, associate director at CareEdge Ratings.
In FY23, the Indian two-wheeler industry recorded sales of 19.51 million units, a growth of 8 per cent compared to 18.01 million units in the previous fiscal year.
In FY24, the industry continued its upward trajectory, achieving 9.8 percent growth with a total sales volume of 21.43 million units. However, this was still below the peak sales volume recorded in fiscal 2019, when the annual sales volume reached 24.46 million units, he said.
During FY24, the domestic two-wheeler industry recorded a total sales volume of 17.97 million units, reflecting a growth rate of 13 percent, while the export volume witnessed a decline of 5 percent.
There are signs of revival as in each of the last five months (January to May 2024) two-wheeler exports recorded solid double-digit volume growth, and in February two-wheeler exports reached a high of 19 months with 0.33 million units. said CareEdge.
Furthermore, the recent improvement in export volumes is due to marginal recovery and stabilization in some key export markets after they were affected by inflation, high interest rates and currency problems in some of these markets, the rating agency said, adding this positive trajectory in exports is likely to continue for the rest of FY25.
In FY24, growth was driven by combined factors such as traction in EV volumes, wider model range and new launches, but was constrained due to subdued demand in the first half of FY24. due to the increase in vehicle prices after the implementation of the phase. II of BS-VI emission norms, higher interest rates and stress on rural incomes, CareEdge said in its report.
Demand for electric vehicles is driven by a shift in consumer preferences toward options that offer lower fuel costs, lower maintenance and lower service requirements compared to internal combustion engine (ICE) models, he said, emphasizing that The government's FAME II program through FY24 has made EV ownership more affordable, contributing to this volume growth.
The Indian government's recently introduced Electric Mobility Promotion Plan 2024 (EMPS 2024) has continued to boost sales of electric two-wheelers in fiscal year 2024-25 until July 2024, she said.
While motorcycles remain popular due to their high fuel efficiency, cost-effectiveness, and versatility, scooters have also gained traction, especially among urban commuters. Additionally, the growing appeal of electric two-wheelers (E2W) is contributing to the overall growth which is expected to continue, CareEdge Ratings stated.
