New Delhi: Domestic two-wheeler revenue surged in the to start with quarter of 2021-22 when compared to the prior year’s very similar quarter. Nonetheless, CRISIL Scores has trimmed its advancement estimate for two-wheelers this fiscal to ten{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}-12{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} towards an earlier estimate of 18{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}-20{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}, owing to further and wider penetration of the second wave of the Covid-19 pandemic into the hinterland, non permanent closures of dealerships and higher channel inventory.
Gautam Shahi, director, CRISIL Scores, explained, “Though forecasts of normal monsoons in the impending season bode well for the rural segment, higher level of Covid-19 infections in rural locations will affect profits degrees and constrain offtake for most of the to start with 50 percent of fiscal 2022. Additionally, as opposed to for the duration of the to start with Covid wave, channel inventory for the industry was higher at forty-45 times in April 2021 when compared to 20-25 times in April 2020 owing to BS-VI transition. Hence, the benefit of channel filling will not be offered this fiscal, as the affect of the Covid wave abates from Q2 of the current fiscal, resulting in lessen advancement.”
The benefit of channel filling will not be offered this fiscal, as the affect of the Covid wave abates from Q2 of the current fiscal, resulting in lessen advancementGautam Shahi, director, CRISIL Scores
According to the Society of Indian Vehicle Companies (SIAM), the domestic two-wheeler wholesales in to start with quarter of 2021-22 witnessed a double digit advancement of 85{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} at two,403,591 units as towards one,294,509 units in the Q1 of fiscal 2020-21.Nonetheless, the revenue figures are significantly lessen than the pre-Covid volumes of Q1 2019-20 at 5,013,067 units. Rajesh Menon, director standard, SIAM explained, “Sales of 24.04 lakh units for the two-wheeler segment, ended up most affordable in the earlier 12 yrs, but for Q1 of FY21.”
Right after the zero revenue of April 2020 with the nationwide lockdown owing to the Covid to start with wave, April and May well 2021 revenue also ended up marred by the second wave because of the lockdown in quite a few states. This affected manufacturing schedules and dealership functions.
What built the second wave extra devastating than the to start with one was its common affect on the rural financial state and industry. Analysts forecast that the huge credit card debt and very low profits in the countryside will hold back economic restoration and dent private personal savings and investments for lengthier than predicted.
In the to start with quarter of the current yr, SIAM documented one,740,198 bike revenue and 592,445 scooter revenue in the domestic industry as towards April-June 2020 when revenue nosedived to 901,743 units of motorcycles and 339,008 units of scooters. In April-June 2019, the industry recorded 3,330,868 motorcycles and one,514,202 scooter revenue.
Profits of 24.04 lakh units for the two-wheeler segment, ended up most affordable in the earlier 12 yrs, but for Q1 of FY21Rajesh Menon, director standard, SIAM
Rohan Kanwar Gupta, vice president and sector head, corporate rankings, ICRA, explained, “The comprehensive localised lockdown steps, carried out owing to the second wave involving April and June 2021, ended up nearly akin to the nationwide lockdown final yr. Several two- wheeler OEMs innovative their shutdown servicing schedules for the duration of these months, which hit wholesale volumes drastically in April and May well 2021.”“This mirrored in a sharp sequential slide in two wheeler retail revenue in the mini festive and marriage ceremony season in April-May well 2021. The inventory at dealerships, at thirty times+ at May well-conclude, was also reasonably large, which could necessarily mean only a gradual restoration in wholesale volumes, till the stocking commences for the forthcoming festive season,” Gupta added.
Q1 FY22 industry share
For the duration of the to start with quarter of FY21 (April-June 2020), the country’s major two-wheeler maker Hero MotoCorp gained a industry share of about 5{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} to cross the forty{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} mark for the to start with time in nearly 5 yrs (earlier 19 quarters). Nonetheless, the automaker ended the to start with quarter of the current economic yr (April-June 2021) just underneath the mark at 39.two{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}.
The Pawan Munjal-led enterprise bought eight,79,144 motorcycles and sixty one,453 scooters in the domestic industry in Q1 FY22 as when compared to 5,00,605 motorcycles and 39,132 scooters in Q1 FY21.
Honda Bike and Scooter India (HMSI) gained marginally to file 20.5{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} industry share in Q1 FY22 from 19.eight{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} in Q1 FY21. Earlier, the enterprise had clocked 27{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} share in Q1 FY20.
The country’s major scooter maker saw a advancement of 57{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} in its domestic scooter revenue at two,sixty seven,479 units for the duration of the to start with quarter of this fiscal yr as towards one,sixty nine,995 units in the corresponding quarter prior yr.
For the final economic yr, the enterprise recorded 25.fifty eight{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} industry share, which is a sharp reduction from a peak of nearly 29{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} in FY18 and 27{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} in FY20.
Curiously, Suzuki Bike India jumped up to the fifth place in the major 5 two wheeler makers listing this quarter from the position of variety 7 in the to start with quarter of final fiscal yr. The enterprise acquired 4.eight{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} industry share in Q1 FY22 as towards one.9{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} in the corresponding quarter final yr. For the duration of the April-June 2021 quarter, Suzuki bought one,13,224 scooters and 3,642 motorcycles in the domestic industry.
Bajaj Car and premium bicycle maker Royal Enfield maintained their positions at fourteen{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} and 4{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} respectively, with no substantial alter in their industry share. While the Chennai-based mostly TVS Motor missing nearly one{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} industry share as when compared to Q1 FY21.
India Yamaha Motors industry share dropped from 3.two{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} in April-June 2020 to two.9{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} in the similar period of time this yr.
Top quality motorcycles, just after the earlier three fiscals of quantity decline, are anticipated to expand at 12{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}-15{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}, specified the higher variety of new launches and enhanced focus of two-wheeler makers on ‘premiumisation’CRISIL
In the 110cc-125cc bike segment, HMSI (CB Shine) took a lead with one,sixty five,951 unit revenue for the duration of the April-June 2021 quarter as towards the maximum of Hero MotoCorp (Glamour, Splendor) that clocked one,29,530 revenue in April-June 2020 quarter.
The demand from customers for 150cc-200cc premium commuter motorcycles witnessed a sharp improve of 189{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} with domestic wholesales in this class clocking one,sixty nine,947 units in Q1 FY22 as when compared to fifty eight,686 units in Q1 FY21. While HMSI sells Hornet models in the product segment, TVS sells Apache brand, and Bajaj offers Avenger, Husqvarna, KTM, Pulsar bikes. Hero MotoCorp’s Xpluse two hundred and Xtreme in this class garnered eight,455 units in this quarter towards one,066 units in the corresponding quarter prior yr.
Outlook for FY22
According to CRISIL, bike volumes will see higher moderation as 70-seventy five{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} of these are bought in rural locations, when compared to scooters’ which is predominantly an urban product. Amid the domestic two wheeler segments, advancement of rural-concentrated government and financial state motorcycles will remain constrained at 9{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}-11{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} this fiscal.
And the premium motorcycles, just after the earlier three fiscals of quantity decline, are anticipated to expand at 12{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}-15{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}, specified the higher variety of new launches and enhanced focus of two-wheeler makers on ‘premiumisation’.
“The scooters segment is anticipated to stage a good restoration this fiscal, registering quantity advancement of 15{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}-17{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}, albeit on a reasonably very low base, supported by speedier restoration in urban incomes, continuing desire for own mobility, and the graded opening up of workplaces and instructional institutes, as vaccination generate gathers pace. This advancement, although, is on the back of three consecutive yrs of quantity decline.” CRISIL explained.
Sushant Sarode, affiliate director, CRISIL Scores, explained, “Credit top quality of two-wheeler producers will remain resilient thinking about powerful harmony sheets, constrained credit card debt, efficient operating cash administration, strong liquidity (in excess of INR forty,000 crores), and constrained want to include extra ability, specified very low ability utilisation in excess of earlier two fiscals.
Scores company ICRA expects a 12{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}-fourteen{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} YoY advancement in two-wheeler volumes in FY22, amid an evolving Covid-19 scenario. While the general intake and investment decision demand from customers may possibly get some time to get better just after the devastating second wave, India’s rural financial state is anticipated to deliver some guidance. Anticipations of a healthful rabi manufacturing, timely arrival of the monsoons, a hike in least guidance charges for kharif crops and other profits guidance schemes by the Government are possible to assistance revive rural demand from customers sentiments and guidance the two-wheeler offtake in the festive season.
According to ICRA, specified the large running leverage of the industry, subdued demand from customers and ongoing hardening in raw-material fees are anticipated to retain the running margins constrained for the two wheeler OEMs in the current fiscal. Nonetheless, these will possible be near-about the FY2021 degrees (13.5{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}-fourteen{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}), supported by selling price escalations, a depreciating rupee and continuing expense rationalisation initiatives. The RoCE of two-wheeler OEMs would also proceed to remain at healthful degrees, ranging involving 22{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}-24{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}.
Rohan Gupta of ICRA explained, “In line with ICRA’s Secure outlook on the industry, the credit score profile of two wheelers OEMs is anticipated to remain healthful, supported by powerful harmony sheets, constrained credit card debt and healthful dollars and liquid investments. While the capex would possible be higher than the FY2021 degrees, important enlargement plans are anticipated to be deferred till a significant demand from customers restoration. Even so, the OEMs will proceed to commit in new product advancement and network enlargement in both domestic and abroad arenas.”
The analysts see decline in revenues up to 20{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}, even though slump in revenue could be as significantly as thirty{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade}-35{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} sequentially on account of lockdowns and offer-chain constraints.
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