ICRA says Indian two wheeler industry faces bleak growth

India is the second largest producer of two wheelers in the world and is one area which has till date seen spectacular growth. In fact the Indian two wheeler industry is second only to that of China and Japan where production and sales is concerned. Youngsters and Indian women office goers prefer two wheelers due to the fact that it is an easy means of transportation, is economical, fast, safe and fuel efficient as compared to other means of transport in the country.

However, recent months have not been fruitful for this industry which experienced a fall in sales of two wheelers for the first time in 42 months in August 2012. There were a number of reasons for this and at the top of the list is surging petrol prices coupled with high interest rates which resulted in a number of buyers curtailing purchases. In the hinterlands of India where two wheelers are in great demand, delayed monsoons, rise in cost of inputs and depleting yield of crops lead to reduced sales of two wheelers

Two of India’s major two wheeler companies Hero Moto Corp and Bajaj Auto posted sharp dip in sales while the overall industry declined by 5% for the first time since January 2009. September 2012 saw a decline by 13% and the upcoming festive season too does not hold much promise despite the fact that companies are offering various schemes and discounts to attract customers. Exports too have been on the decline ever since June this year following rise in import duties being levied on the two wheeler industry and all this has impacted growth of the two wheeler industry in the country.