Two-wheeler sales skid 25% in February amid poor demand, chip shortage

Likely spike in fuel costs following soaring crude prices could delay recovery in the world's largest market for scooters and motorcycles, said analysts

Two-wheeler sales remained under pressure in February, showing no signs of recovery. Cumulative sales of top five manufacturers dropped by a fourth during the month over the year ago period as companies curtailed dispatches to dealers amid a poor demand.

An impending hike in the petrol prices following the soaring crude prices could delay the recovery in the world’s largest market for scooters and motorcycles, said analysts.

Sales of some of the premium models also suffered due to the ongoing semiconductor shortage. The shortage in supply of semiconductors has impacted the production and sales of premium two-wheelers, TVS said in a statement.
 

Among all the manufacturers, Bajaj Auto was hit the most with the volumes plunging by a third year-on-year to 96,523 units, the lowest in many months.

Market leader, Hero MotoCorp remains optimistic of the road ahead. With a sharp decline in the number of Covid-19 cases and the economy gradually opening up with several other positive indicators, such as easing of the lockdown restrictions, as well as the measures announced in the FY’23 Union Budget, a swift revival in sales is expected in the coming months, it said in a statement on Tuesday.

But analysts are cautious. The ongoing geopolitical tension which has jacked up the global crude prices could delay the recovery, rating agency Icra said on Wednesday.

“While reopening of corporates and education institutes, and spillover impact from positive announcements on infrastructure spends and agri-initiatives in the budget remain positive factors, a volatile geopolitical environment leading to higher fuel and commodity prices remain a key risk to recovery prospects in early FY2023.