New Delhi: Even though the two-wheeler industry saw improved sentiments during the festive season in 2022, it continues to struggle with industry volumes still below the pre-covid peak levels. The trend is specifically observed for the entry-level, commuter segment two wheelers, implying that the purchasing power of the consumers at the bottom end of the pyramid has been impacted.
“The positive momentum in the industry is expected to continue and the two-wheeler sector is expected to grow over 10% on a year-on-year basis. High fuel prices, vehicle price hikes are some of the headwinds,” Atsushi Ogata, Managing Director, President and CEO, Honda Motorcycle & Scooter India (HMSI), told ETAuto.
The industry recorded domestic sales of 21.17 million units in FY 2018-19, which dropped to 13.46 million units by FY 2021-22.
Although the overall economy is getting back to normal, the rural market is yet to bounce back. We expect positive growth to accelerate in the upcoming financial year FY 2023-24, Ogata said.
“Depending on inflation, GDP and the growth of the EV market, it will take about five more years for the industry to reach peak sales volumes of FY19,” he added.
According to the ratings agency ICRA, the two-wheeler industry is expected to record a 9-12% growth during FY23. It has also given a stable outlook for the sector during FY24 and expects a moderate growth of 6-9% on a truncated base with a recovery to FY19 peak volumes at least 2-3 years away.
As per the government regulations, the company said, it is fully prepared with On-Board Diagnostics (OBD) Phase-II norms to be applicable from April 1, 2023. The average price increase due to these regulations is expected to be around INR 1,170. “We will be able to offer the technology across the model portfolio by June.”
On Monday, HMSI launched its new Activa with Honda-Smart technology. It is also the first OBD-II compliant scooter from the company.
Further, the maker of Activa scooters is working on a project named ‘Futuristic Activa’ and plans to foray into the EV market within FY 2023-24. Its first EV model will be based on an existing platform, replacing the internal combustion engine (ICE) with an electric powertrain. The second model in the electric portfolio will be the ‘Futuristic Activa’ concept based on a completely new platform and design.
“In CY2023, investments are planned towards meeting OBD-II norms, biofuel technology, connectivity in vehicle portfolio and our electrification journey,” Ogata said.
Among the conventional two wheeler players, Hero MotoCorp marked its foray in the electric mobility segment with the launch of Vida V1 in October last year. Bajaj Auto sells Chetak electric scooter and TVS Motor offers the iQube. Other players in the segment include Ola Electric, Ather Energy, Okinawa Autotech, Hero Electric, Ampere Vehicles, among other.
Additionally, to mark its presence in the commuter segment, HMSI will also introduce a new motorcycle in the 110cc entry-level two-wheeler segment by mid-March this year. Currently, rival Hero MotoCorp has a leadership position in commuter bikes, primarily due to its Splendor brand of motorcycles.
For the current financial year, the gap between the domestic sales volumes of top two wheeler makers has reduced. Hero MotoCorp sold 3.92 million units in first nine months of FY23, while HMSI has recorded sales of 3.32 two wheelers during this period.