How COVID-19 Has Impacted The 2-Wheeler Market In India

Anurag Garg Sep 26, 2020

The initial impact of post-COVID-19 pandemic is expected to be affecting the public transportation sector as people are avoiding traveling anywhere due to dreading infection possibilities with an extreme number of cases being hit as of now. Due to this is more likely to select a form of individual mobility with two-wheelers being the most preferred or favored option due to its convenience and pricing point.

A recent survey report has highlighted the fact that Indian Auto Giants are already concentrating on the change to private mobility. This further paint a new picture of some forthcoming trends in transportation in the Indian market on a massive scale.

From the high points of the fiscal year 2016-17, auto exports are up almost 33%. However, domestic sales of automobiles have almost been at the same level as the fiscal year 2016-17. Exports have definitely given a major upliftment to the segment, but it is still not evident how exactly it will shape in a post-pandemic world. COVID-19 has nearly knocked out most of the auto marketplaces around the globe. Here is a sneak peek at domestic sales.

Data Source - SIAM

Two-wheeler exports have continued to persist strong and that is mirrored in the stable progress over the last 3 years at a time when domestic sales have deteriorated. We also have missed a few major windows of festive sales which take place around the harvesting season across India but still, we are looking forward to more opportunities to come from upcoming major festivals.

A scenario like this has already taken place in the past in China, where post the SARS breakout, people started avoiding public transport. Currently, in India, many of the corporates are recommending their employees to not use public transport and some are even providing sanitized private transportation to essential employees who need to travel to their workplaces due to the demand for their roles. Employees are communicated to join offices 1/3rd of the days in a week, that too with options ranging to private or company provided options.

It’s also expected once the job market bounces back and reverse migration starts to various locations, many people will prefer to own private mobility options. This can result not just in demand for new vehicles, but we can also witness major growth in second-hand 2W sales in the cities with lower income distributions. The only evident question is when this surge in demand will finally appear. By August-September or towards the end Q4?

The auto giants in the two-wheeler markets are already hopeful that these users who will reverse migrate will look for options within their ranges and avoid using any public transportation. If industry & financial institutions further reform the regulations related to personal two-wheeler finance and loan options, it will automatically attract more consumers to invest in these options in the longer run.

There are furthermore points to consider

With India’s GDP growth rate for the being downgraded -23,9% the auto sector will take a major hit.
The Unlock window has overlapped with the enactment of the BS-VI norms and many OEMs are offering a great percentage of discounts to dealers and customers. Even as auto corporations are working the prices, the effect of concessions on profitability is going to be sharp.
Another major challenge is associated with the excess of older inventory and deficiency/ cash capital crunch with dealers.
BS-VI price surges are similarly expected to knock down auto demand.

Yet, there are encouraging changes coming from COVID-19. Make in India and AatmaNirbhar movement has further directed the rise of localization and shift to the business model of “for the market, in the market”.

The mounting influence of COVID-19 has made it essential for industries and corporations to modify their plans for the upcoming future. This will further be revised dynamically as per the in developing consumer behaviors. We are optimistic that the two-wheeler sector will play a crucial role in uplifting the auto segment post lockdown and post-pandemic scenarios, given and provided we can further narrow down more affordable private mobility choices. With appropriate finance and loan opportunities at their disposal, the consumers will take an advantage of them and augment their selections.