Cars have posted a powerful post-pandemic rebound. However one section continues to wrestle: two wheeler gross sales are nonetheless 25% under the pre pandemic peak. Automotive sellers are calling for a ten% GST minimize to assist a revival. Will it assist?
What’s taking place with two wheeler gross sales?
After declining closely for 3 fiscals in a row between 2019-20 and 2021-22, two wheeler gross sales grew 17.8% in 2022-23, the very best in a 12 months in over a decade. However this was on a really low base and the
5-year CAGR for the sector remains to be a unfavorable 3.8% whereas the 10-year CAGR is a measly 2%. In absolute phrases, gross sales are nonetheless under 2014-15 ranges and a few quarter lower than the pre-pandemic peak of 2018-19. The worst performers are the
100-125cc commuter bikes, which nonetheless account for half of total two wheeler trade volumes. This section has shrunk under ranges from a decade in the past in 2012-13.
What are the explanations for the poor present?
Plenty of elements together with excessive inflation, stagnant wages and rising unemployment. Hovering petrol worth have been a serious pace breaker. Lastly, a raft of regulatory modifications starting with BS IV to BS VI emission norms in 2020 and extra stringent security requirements have come into pressure. This has impacted each sub section. The value of India’s largest promoting scooter Honda Activa has gone up from ₹52,000 in 2016 to ₹88,000 in 2023. The Bajaj Pulsar has seen its worth go up from ₹72,000 in 2016 to ₹150,000 in 2023 whereas the value of Hero Splendor jumped from 46,000 to ₹74,801.
Have scooters performed higher than bikes?
Scooter gross sales final 12 months had been up 30% to over 5 million models. During the last 15 years, scooters have gained floor, growing their share from below 20% in 2011-12 to almost 33% final 12 months. However its final 5-year CAGR is marginally worse than bikes at -3.6% to bikes’ -3.4%. The slowdown in two wheelers cuts throughout city and rural India.
Will a GST minimize actually assist?
Two-wheelers appeal to the very best charge of GST at 28%. The demand for it to be put within the 18% slab has been round for a while and in 2020, finance minister Nirmala Sitharaman agreed that two wheelers deserve a GST discount. A ten% minimize would make two-wheelers cheaper, offsetting among the worth hikes of the previous. It may probably carry new customers. The general restoration would nevertheless rely upon how the financial system does normally, particularly on the backside to center of the pyramid.
Have EVs begun to play spoilsport?
Helped by beneficiant subsidies, electrical two wheelers are booming. In 2022-23, the section grew 60% however was nonetheless below 1 million models, in contrast with the standard trade’s 15.8 mn models. In Delhi, Bengaluru, Pune and Hyderabad there appears to be an affect. However patrons have begun to place off purchases hoping for extra electrical choices. A current govt determination to scale back subsidies will make electrical two-wheelers costly. However the reprieve for petrol two-wheelers, even with a GST minimize, could possibly be quick lived.
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Up to date: 25 Might 2023, 11:41 PM IST
Supply: Live Mint