Indian two-wheeler industry

Topics: Motorcycle, TVS Motors, Marketing Pages: 75 (8860 words) Published: November 2, 2013
INDIAN TWO-WHEELER INDUSTRY
Industry volume growth expected to gear down to 8-9% in 2012-13 ICRA RATING FEATURE
MAY 2012

Overview
The Indian two-wheeler (2W) industry recorded sales volumes of 13.4 million units in 2011-121, a growth of 14.0% over the previous year. In a year wherein growth in other automobile segments particularly, passenger vehicle (PV) and medium & heavy commercial vehicle (M&HCV), slowed down to single digits - marred by demand slowdown due to northward movement of inflation, fuel prices and interest rates - the 14% growth recorded by the 2W industry remained steady. However, the momentum in the 2W industry’s volume growth too has been losing steam lately as evident from the relatively lower volume growth of 11.0% recorded in H2, 2011-12 (YoY) against a growth of 17.1% recorded in H1, 2011-12 (YoY). The deceleration in growth is largely attributable to the motorcycles segment which grew at a much lower rate of 7.8% (YoY) in H2, 2011-12 vis-à-vis 16.4% in H1, 2011-12; even as the scooters segment continued to post 20%+ (YoY) expansion during both halves of the last fiscal. With this, the share of the scooters segment in the domestic 2W industry volumes increased to 19.1% in 2011-12 from 17.6% in 2010-11. Overall, ICRA expects the domestic 2W industry to report a volume growth of 8-9% in 2012-13 as base effect catches up with the industry that has demonstrated a strong volume expansion over the last three years at cumulative annual growth rate (CAGR) of 21.8%. Over the medium term, the 2W industry is expected to report a volume CAGR of 9-11% to reach a size of 24-26 million units (domestic + exports) by 2016-17, as we believe the various structural positives associated with the domestic 2W industry including favourable demographic profile, moderate 2W penetration levels (in relation to several other emerging markets), under developed public transport system, growing urbanization, strong replacement demand and moderate share of financed purchases remain intact.

Table 1: Trend in Sales Volumes of the Indian 2W Industry
Volumes (Units, Nos.)
Domestic

Motorcycles
Scooters
Mopeds
Total Domestic

2010-11

9,019,090
2,073,797
697,418
11,790,305

Exports

2010-11

Motorcycles
Scooters
Mopeds
Total Exports
Source: SIAM

Q1
2011-12

2,464,143
532,867
190,672
3,187,682
Q1
2011-12

1,480,983
52,312
6,295
1,539,590

1

Refers to domestic sales volumes

ICRA LIMITED

482,566
20,949
1,461
504,976

YoY Growth (%)

Q2
2011-12

Q3
2011-12

Q4
2011-12

2,558,515
650,155
192,859
3,401,529

2,556,782
659,643
186,472
3,402,897

2,514,699
720,176
206,863
3,441,738

Q2
2011-12

Q3
2011-12

Q4
2011-12

492,408
24,696
3,478
520,582

448,090
23,950
2,796
474,836

434,521
21,010
1,341
446,872

2010-11

22.9%
41.8%
23.5%
25.8%
2010-11

34.3%
73.6%
-8.8%
35.0%

Q1
2011-12

17.5%
13.3%
21.0%
17.0%
Q1
2011-12

27.1%
100.4%
-44.0%
28.6%

Q2
2011-12

15.4%
29.0%
7.0%
17.3%
Q2
2011-12

31.7%
88.5%
159.2%
34.0%

Q3
2011-12

9.2%
21.6%
2.6%
11.0%
Q3
2011-12

21.8%
92.0%
188.0%
24.5%

Q4
2011-12

6.3%
29.4%
16.4%
11.1%
Q4
2011-12

18.1%
29.0%
-2.3%
18.5%

Corporate Ratings
Anjan Deb Ghosh
+91 22 3047 0006
anjan@icraindia.com
Analyst Contacts:
Subrata Ray
+91 22 3047 0027
subrata@icraindia.com
Jitin Makkar
+91 124 4545 368
jitinm@icraindia.com

MEDIUM TERM DEMAND DRIVERS STAY PUT
An analysis of the mix of Indian populace and the structure of the Indian 2W industry brings to the fore several key attributes namely, India’s demographic advantage, moderate 2W penetration levels and shrinking of replacement cycle; factors that have combined to propel the industry’s volumes over the last 10 years from 4 million units in 2001 to 13 million units in 2011. In ICRA’s view, these growth drivers are likely to remain relevant over the medium term and continue to...
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