MayDay For Two-wheeler Segment As Virus Rides Into Rural India

Deepanshu Taumar

Deepanshu Taumar

2 Jun 2021
04:29 PM
2 Min Read

As per data released by five major two-wheeler OEMs, the domestic volumes were around 65% lower vis-a-vis April 2021. Among the top five two-wheeler manufacturers, Hero MotoCorp could only make up to one lakh mark of wholesale dispatches falling by 51% to 183,044 units.


Infographics

There is no respite for Indian two-wheeler manufacturers as the already bleeding segment will have to bear the pain for a few months until the festive period kicks in. The COVID-19, which already claimed the lives of lakh of Indian citizens, has now reached Tier-2, Tier-3 cities and rural India, making it challenging for the manufacturers to sail through these uncertain times. 

Industry experts cite that along with income loss in the middle-class families, this time, there is a personal loss for many. Also, increased expenditure on medicare and fighting the diseases has further aggravated the pain of the customers. 

According to the Centre for Monitoring Indian Economy (CMIE), about 10 million people lost their jobs because of the second wave of Coronavirus. Moreover, 97% of households' incomes have declined since the beginning of the pandemic last year.

As per data released by five major two-wheeler OEMs, the domestic volumes were around 65% lower vis-a-vis April 2021. Among the top five two-wheeler manufacturers, Hero MotoCorp could only make up to one lakh mark of wholesale dispatches falling by 51% to 183,044 units.

It is to note that the wholesale numbers of May 2021 are compared to April 2021 as the numbers are not comparable with May 2020, when the country was under national lockdown. 

The company said sales in the month of May 21 were adversely impacted due to the closure of plant operations because of the escalation in the spread of the Coronavirus in the country.

Performance Of Top 5 Two-Wheeler Manufacturers In May 2021

OEMsMay 2021April 2021%Change
Hero MotoCorp183044372285-50.83
Honda 2 Wheelers58,168283045-79.45
TVS Motors52084131386-60.36
Bajaj Auto60,830126570-51.94
Royal Enfield20,07348789-58.86

Honda Motorcycles and Scooters India fell drastically to 58,168 units recording a steep decline of 79.45%. 

Yadvinder Singh Guleria, Director – Sales & Marketing, Honda Motorcycle & Scooter India, said, 'May '21 witnessed a further slowdown in sales momentum with close to 80% of the network being non-operational due to local lockdowns. The situation on the ground is very dynamic, with weekly announcements of lockdown extensions.'

Many two-wheeler manufacturers went under annual production maintenance seeing the rising number of cases in the second wave, due to which there is an overall impact on wholesale dispatches. 

Rohan Kanwar Gupta, Vice President & Sector Head - Corporate Ratings, ICRA said, 'In line with expectations, May 2021 was a near washout month for the domestic 2W industry, with most of the OEMs remaining closed to prevent the spread of the second wave of COVID-19 infections. The localised lockdowns imposed by various state governments kept the dealerships shuttered.'

Among the other three top two-wheeler manufacturers, Bajaj Auto, TVS Motor and Royal Enfield saw a steep decline of more than 50%. 

Many two-wheelers dealers are under distress as they are already carrying a higher inventory as sizeable stocks were accumulated in April on account of festive and rural demand. But due to rising cases across the country, 80% of the market went under lockdown. 

Outlook 

While June 2021 is likely to witness a gradual reopening of operations, the domestic wholesale volumes may remain subdued, given the high inventory with the dealers. Moreover, given the extensive impact in rural and semi-urban markets, any support from pent-up demand seems unlikely. Moreover, the second quarter of the fiscal year remains lull due to multiple reasons such as the shradh period and no other demand trigger. 

The expectation of a normal monsoon and healthy farm cash-flows are likely to support recovery in rural sentiments and demand for two-wheelers. However, pick up in the pace of the vaccination programme continues to remain critical for continued recovery in urban sentiments and economic activity, said Rohan. 

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