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Two-wheelers: Buoyancy continues - Views on News from Equitymaster
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  • Sep 18, 2001

    Two-wheelers: Buoyancy continues

    While most of the major sectors are reeling under pressure due to a slow down in the economy, the two-wheeler segment has has shown some resilience over the past two years. We look at the performance of this segment in the first four months of the current year.

    Overall volumes of two-wheelers (comprising scooters, motorcycles and mopeds) has increased by 4.6% YoY to 1.3 m units for the period ended April-July 2001. This was primarily led by a robust motorcycle segment that has registered 24.4% growth in sales. One of the key reasons for this buoyancy is the slew of new introductions in the market. Almost all the two-wheeler manufacturers, on an average, have introduced two new models in the 100 cc segment in an attempt to capture market share from Hero Honda. Hero Honda has twice the market share in the motorcycles segment as compared to its nearest competitor, Bajaj Auto. Volumes in the upper end of the segment i.e. Hero Honda's CBZ and Suzuki's Fiero are also on the rise and is expected to remain robust in coming months also.

    Two-wheelers: April-July 2001-02
    (% change) Production Sales
    Scooters -6.8% -5.2%
    Motorcycles 20.1% 24.4%
    Mopeds -40.3% -36.5%
    Two-wheelers 1.5% 4.6%

    Though scooter sales have fallen by 5.2% for the first four months of the current financial year, Bajaj Auto and TVS-Suzuki have registered a 6.1% and 10.7% growth in sales for the same period. Honda, which has recently forayed into the scooter segment with the launch of 'Activa', has managed to corner 1.7% market share. But this segment seems to be on a decline with motorcycles being increasingly preferred by consumers.

    Production during April-July 2001 has increased marginally by 1.5% as manufacturers seem to have cut back production in light of the subdued demand scenario. It also looks like producers are de-stocking inventory. If one were to look at the production trend over the last one year, 4QFY01 witnessed negative growth, both in terms of production and sales, which could be due to the earthquake in Gujarat. Otherwise they have been in the positive territory.

    The slow down in the global economy seems to have affected exports of two-wheelers also. Compared to a growth in volumes of 107.1% in July 2000 exports have fallen by a sharp 30.1% in July 2001 (the sharpest fall in the last one year). Given the current international unrest following the terrorists attacks on the US, exports might further slow down in coming months.



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