INDIAN AUTOMOBILE INDUSTRY Two Wheelers

Healthy growth reported in March 2016

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Domestic Volume Growth Trends in March 2016

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Two-Wheeler volumes increased by 10.9% YoY in March 2016

Scooter volumes grew by 13.7% YoY in March 2016
Motorcycle volumes grew by 10.1% YoY in March 2016
Moped volumes increased by 4.7% YoY in March 2016

April 13, 2016

ICRA Research Services

Summary
Industry Sales Trends March 2016
Two Wheelers: Last month witnessed favourable YoY growth in an otherwise weak FY2016
The Indian two wheeler industry posted a healthy 10.9% YoY growth in March 2016 on back of new launches from OEMs and higher dispatches to dealers along with low interest cost
and fuel prices. However, the full year FY2016 posted a meager growth of 3.0% YoY growth in line with ICRA estimates due to weakness in rural incomes. For the month of March 2016,
premium segment continued to post healthy YoY growth rates of 51.4% on back of the continued demand for Royal Enfield motorcycles and new launches from Bajaj. The 150cc
premium commuter and 125cc executive commuter segments posted 31.0% and 13.4% YoY growth respectively during March 2016 on back of new launches from TVS and Bajaj. The
entry level commuter segment continued to face the pressure of rural slowdown and lack of new products and reported a 2.3% YoY growth during the last month of the fiscal. The
scooter segment continued to post healthy 13.7% YoY growth during March 2016 in line with its performance throughout the year.
In March, Hero MotoCorp Limited crossed the 600,000 unit sales (domestic+exports) for the third month in the year. The company reported a 12.1% YoY growth for the month which
led to an exit market share of 39.7%. For FY2016, the company reported a 0.2% de-growth and a market share of 39.0%. Honda continued to remain the second largest two wheeler
manufacturer in the country; the company posted a 0.7% growth in the two wheeler industry and maintained its market share at 26.0% for FY2016. For the month of March, the
company reported a YoY 4.9% de-growth mainly on account of stiff competition in the motorcycle segment. Bajaj Auto continued to ride high on the success of the recent new
launches and reported a 31.3% YoY growth in March 2016. For FY2016, the company posted 7.2% YoY growth in two wheeler volumes after three consecutive years of de-growth and
thus arrested the slide in market share at 11.5% for FY2016.
Exhibit: Trend in Domestic Two Wheeler Sales
Industry Volumes
FY 2013
Motorcycles
10,085,000
Scooters
2,923,424
Moped
788,761
Total
13,797,185
Growth (%) YoY
Motorcycles
Scooters
Moped
Total
Source: SIAM Data, ICRA research

0.1%
14.2%
1.5%
2.9%

FY 2014
10,479,850
3,602,743
722,920
14,805,513

FY 2015
10,726,013
4,500,920
748,628
15,975,561

Mar-15
859,521
395,901
67,762
1,323,184

Mar-16
946,758
450,038
70,918
1,467,714

FY 2015
10,726,013
4,500,920
748,628
15,975,561

FY 2016
10,700,466
5,031,678
723,767
16,455,911

3.9%
23.2%
-8.3%
7.3%

2.3%
24.9%
3.6%
7.9%

-5.2%
11.1%
-5.0%
-0.8%

10.1%
13.7%
4.7%
10.9%

2.3%
24.9%
3.6%
7.9%

-0.2%
11.8%
-3.3%
3.0%

Outlook
Two-Wheelers: Medium term outlook remains positive on back of structural positives
ICRA expects demand for two-wheelers to grow at a muted pace of 4-6% during FY2017 after a modest 3% growth in domestic volumes during FY2016. Although increased allocations
towards rural development and welfare schemes in the Union Budget for 2016-17 and growth in National Rural Employment Guarantee Act (NREGA) expenditure, besides the
governments focus on improving irrigation infrastructure, augur well for the farm sector, demand recovery from rural households is expected to be gradual and in turn linked to the
volume and dispersion of monsoon rainfall. Additionally, the implementation of the recommendations of the Seventh Pay Commission in phases and expectations of softer interest
rates would support demand (which remains healthy) for two-wheelers from urban households.
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