Factors favoring growth of two wheeler industries:
Government policy impact on petrol prices: Petrol prices determine the running cost of two/three wheelers expressed in Rupees per kilometer. Petrol prices are the highest in India as GOI subsidizes only kerosene and diesel. But with the recent change in GOI policy to reduce the subsidy, the prices of petrol will remain constant at the current prices.
This will have a positive effect on purchases on two/three wheelers.
Improvement in disposable income: With the increase in salary levels, due to entry of multinationals following liberalization process and fifth pay commission, the disposable income has improved exponentially over the years.
This will have multiplier effect on demand for consumer durables including two-wheelers. This is already witnessed in improved demand for 2-wheelers in FY99 compared to a meager growth in FY98.
Changes in prices of second hand cars: The second hand car prices of small cars have come down sharply in the recent past. This will shift the demand from higher end two-wheelers to cars and affect the demand for two-wheelers negatively. A further drop in second hand car prices will lead to pressure on the two-wheeler majors who plan to release higher end scooters and motorcycles.
Implementation of mass transport system: Many states have planned to implement mass transport systems in state capitals in the future. This will have negative impact on demand for two-wheelers in the long run. But taking into account the delays involved in implementation of such large infrastructure projects, we expect the demand to be affected only five to seven years down the line.
Availability of credit for vehicle purchase: The availability and cost of finance affects the demand for two and three-wheelers as the trend for increased credit purchases for consumer durables has increased over the years. Therefore any change with respect to any of these two parameters as a result of change in RBI policy has to be closely watched to assess the demand for two and three wheelers.
Motorcycles gaining popularity:
The motorcycles are gaining ever-increasing preference in two wheeler segment and the reason being that it is being increasingly used by youngsters/bachelors in urban areas and by rural folk as a sturdy means of personal transportation. Bigger wheels, better road grip, higher ground clearance, power, fuel efficiency, low maintenance cost are the major attraction of this segment.
The motorcycle segment, too, can be further classified into the Japanese and the Indian motorcycle segments. The former consist of models manufactured out of Japanese technology while the latter category consist of the high-powered bikes of the 'Rajdoot' and 'Bullet' range and also the step-thru's which fall somewhere between a scooter and a motorcycle.
The sales of motorcycle have increased from 0.1mn in FY80 to 0.38mn in FY93 at a CAGR of 11.6%. The segment picked up momentum in the 90's to grow at a CAGR of 15.7% to 1.796mn vehicles in FY2000. Motorcycle sales achieved a major milestone of crossing the scooter sales in the month of November 1998. This trend has further continued for the next couple of years causing a jump in
sales of 28.7%yoy to 1,796,734 units in FY2000.
Government policy impact on petrol prices: Petrol prices determine the running cost of two/three wheelers expressed in Rupees per kilometer. Petrol prices are the highest in India as GOI subsidizes only kerosene and diesel. But with the recent change in GOI policy to reduce the subsidy, the prices of petrol will remain constant at the current prices.
This will have a positive effect on purchases on two/three wheelers.
Improvement in disposable income: With the increase in salary levels, due to entry of multinationals following liberalization process and fifth pay commission, the disposable income has improved exponentially over the years.
This will have multiplier effect on demand for consumer durables including two-wheelers. This is already witnessed in improved demand for 2-wheelers in FY99 compared to a meager growth in FY98.
Changes in prices of second hand cars: The second hand car prices of small cars have come down sharply in the recent past. This will shift the demand from higher end two-wheelers to cars and affect the demand for two-wheelers negatively. A further drop in second hand car prices will lead to pressure on the two-wheeler majors who plan to release higher end scooters and motorcycles.
Implementation of mass transport system: Many states have planned to implement mass transport systems in state capitals in the future. This will have negative impact on demand for two-wheelers in the long run. But taking into account the delays involved in implementation of such large infrastructure projects, we expect the demand to be affected only five to seven years down the line.
Availability of credit for vehicle purchase: The availability and cost of finance affects the demand for two and three-wheelers as the trend for increased credit purchases for consumer durables has increased over the years. Therefore any change with respect to any of these two parameters as a result of change in RBI policy has to be closely watched to assess the demand for two and three wheelers.
Motorcycles gaining popularity:
The motorcycles are gaining ever-increasing preference in two wheeler segment and the reason being that it is being increasingly used by youngsters/bachelors in urban areas and by rural folk as a sturdy means of personal transportation. Bigger wheels, better road grip, higher ground clearance, power, fuel efficiency, low maintenance cost are the major attraction of this segment.
The motorcycle segment, too, can be further classified into the Japanese and the Indian motorcycle segments. The former consist of models manufactured out of Japanese technology while the latter category consist of the high-powered bikes of the 'Rajdoot' and 'Bullet' range and also the step-thru's which fall somewhere between a scooter and a motorcycle.
The sales of motorcycle have increased from 0.1mn in FY80 to 0.38mn in FY93 at a CAGR of 11.6%. The segment picked up momentum in the 90's to grow at a CAGR of 15.7% to 1.796mn vehicles in FY2000. Motorcycle sales achieved a major milestone of crossing the scooter sales in the month of November 1998. This trend has further continued for the next couple of years causing a jump in
sales of 28.7%yoy to 1,796,734 units in FY2000.