Two-wheeler sales likely to witness marginal growth in next 6 months
The Financial Express : May 28,2008
New Delhi, May 27 Despite a healthy 9% growth of two-wheelers in April, manufacturers and analysts feel that the industry would remain flat or witness marginal growth over the next six months as against a negative growth over the whole of last year, thanks to the persistent liquidity crunch and no sight of cooling of interest rates.
“Inflation has been rising for quite some time now. This will squeeze the disposable income of individuals when it comes to buying not so essential commodities like two-wheelers. Moreover, with no easing of interest rates in sight, the first six months of the current fiscal is expected to see flat growth,” says R Chandramouli, vice president, TVS Motor Company.
According to Chandramouli, the two-wheeler industry works in a cyclical manner with 18 months of growth followed by 18 months of de-growth and since the decline in sales have been there for more than a year, it would be another six months before the industry sees a reverse in trend that will be sustainable for a longer period. “If all remains favourable and the Economy continues to grow, six months down the line the industry is expected to grow by 3 to 4%,” he says.
Persistent high interest rates and unavailability of finance across several pockets had pulled down the overall sales of two-wheelers in the country by 7.92% at 72,48,600 units in 2007-08 as compared to 78,72,334 units in 2006-07. However, there was a reverse in trend in April with the motorcycle industry witnessing a growth of 8.3% at 5,01,592 units vis-à-vis 4,63,091 units in the corresponding period last year after major players actually dumped their stocks at dealers end.
“The sudden spurt in sales is not sustainable unless there is some respite from macroeconomic factors like high interest rate and unavailability of finance. The industry is expected to maintain status quo or grow marginally by single digit if finance, continues to be a problem,” says Anil Dua, vice president, Hero Honda Motors Ltd.
“Fundamental pullback of finance will continue to result in a flat market and I do not see any revival in sales this fiscal,” Rajiv Bajaj, MD of Bajaj Auto had said last week.
