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Report on Indian Two wheeler Industry

Press Release   •   Oct 22, 2012 14:12 IST

Report on Two wheeler Industry

The Indian two-wheeler industry has come long way since its humble beginning in 1948 when Bajaj Auto started importing and selling Vespa Scooters in India. Since then, the customer preferences have changed in favour of motorcycles and gearless scooterettes that score higher on technology, fuel economy and aesthetic appeal, at the expense of metal-bodied geared scooters and mopeds. These changes in customer preferences have had an impact on fortunes of the players. The erstwhile leaders have either perished or have significantly lost market share, whereas new leaders have emerged. http://www.bharatbook.com/market-research-reports/automobiles-market-research-report/report-on-indian-two-wheeler-industry.html

Rising income levels, reducing excise duties, higher loan tenure and loan-to-value offered by the financing companies have all fuelled the growth of two-wheeler demand. Besides, mounting traffic chaos and limited parking space has also increased the demand for two-wheelers from households that can afford or actually do own a car. Furthermore, with increasing women working population, changing social philosophy and broad-mindedness, the penetration of two-wheelers in target population has increased significantly during last one decade especially in urban areas. However rural areas and smaller towns still remains considerably underpenetrated market. CARE Research foresees rising income levels combined with increase in finance penetration in rural areas and smaller towns, the demand for two-wheelers will grow swiftly in short to medium term period. Sighting this huge growth opportunity two-wheeler manufacturers have started launching models catering to the needs of rural demand. Two Wheeler Industry

CARE Research has developed a statistical model that attempts to forecast the domestic two wheeler sales on the basis of ownership cost and the target population that includes young populace that can afford but do not own a two wheeler. Other qualitative factors like macro-economic outlook, consumer confidence, willingness of vehicle financers to finance TWs, etc. have also been quantitatively built in demand forecasting model.

After registering strong growth in FY10 and FY11, TW industry continues to witness high growth in H1FY12. CARE Research expects the momentum to continue in the future, however, marginal impact of economic slowdown will be felt in the short term period. Nonetheless the industry would register a healthy growth during FY11-FY16 period. According to CARE Research, lower dependence on finance and considerably lesser TW penetration in rural markets coupled with rising export demand will drive the industry growth.

In FY11, almost all the manufacturers reported healthy rise in their top-line, driven by growth in both volumes and realisation. However, operating margins of the industry remained under pressure to some extent on account of sharp rise in prices of key inputs. CARE Research foresees that industry will continue to face margin pressure on the back of firm key input prices combined with increase in selling and distribution expenses.

EXECUTIVE SUMMARY
Two-wheeler (TW) industry the lone performer as slowdown hit auto sector
Domestic demand to grow at a CAGR of around 11 per cent till FY16
Gearless scoters to lead the way for two wheeler industry
Exports to continue in the fast lane
Margins expected to drop despite of volume growth

SECTION I: OUTLOOK OF THE INDUSTRY
OUTLOOK ON DOMESTIC MARKET
Two-wheeler (TW) sales to accelerate at a CAGR of around 12 per cent till FY16
Domestic TW sales to grow at a CAGR of 10-11 per cent till FY16
Revival in economic buoyancy to push TW demand
Low rural penetration would continue to drive growth in the TW domestic demand
Replacement demand increasing at a higher pace
Motorcycle is expected to grow at a CAGR of 10-11 per cent in next five years
Scooter to outpace industry growth
Mopeds would continue to remain niche segment
Investments of around Rs 20-25 billion expected by the end of FY13
Exports to grow by around 20 per cent till FY16
OUTLOOK ON PROFITABILITY
Top-line to remain healthy
EBITDA margins to remain under pressure on the back of escalating input cost
Pressure on growth would push selling and distribution cost for key manufacturers
Debt-equity is expected to improve by FY13

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