The two-wheeler industry has witnessed a slump in overall sales in the last five months. Thankfully, ICRA reports that this situation is expected to change in this fiscal year.
The slowing down of growth in the domestic two-wheeler industry was primarily due to post-demonetisation liquidity crisis. Then, the manufacturers had also started undertaking inventory correction measures for the transition from BSIII to BSIV norms. All this impacted the sales of both motorcycles and scooters. The volumes generated by the motorcycle segment took a plunge of 6.5 per cent in the third quarter of 2016 and 4.2 per cent in the fourth quarter. However, it remained flat at the start of 2017. Scooters, on the other hand, maintained their double-digit growth, but slowed down to 11.4 per cent as compared to the 23.7 per cent as reported earlier.
The demonetisation impact has slowly waned off and the overall demand has started to increase again. So ICRA is expecting the domestic two-wheeler sales to increase by 8-10 per cent in the current fiscal. The forecasts of normal south west monsoons should also bring in a good crop, thus improving the financial situation for farmers. In addition to that, the benefits from the rural employment guarantee schemes will also trickle in. So on the rural front, the demand for two-wheelers is expected to revive. Urban sentiments are also expected to be supported by a dismal CPI inflation and a staggered pay revision for state Government employees and pensioners.