TVS Motor sees rural markets driving revival in upcoming quarters

The firm sees an opportunity with consumers preferring personal transport to public following the Covid-19 outbreak

TVS Motor has said the sharp drop in two-wheeler sales may partially alleviate in the following quarters. One of the key reasons for that would be the growth in the rural market.

Economic activity and lifestyle spending will rebound, factoring in co-existence with Covid-19. Social distancing (SD) and work-from-home (WFH) practices will see greater prevalence.

"These new long-term practices of social distancing could see consumer preferences change towards personal mobility, which could prove to provide some opportunity, especially to the two-wheeler industry," according to the company's annual report.

The Company is cognizant of this opportunity, and well poised to leverage it with its superior BS-VI offerings across the widest range of personal mobility needs. Curbs on public mobility and the impact on many sectors of the economy will affect GDP, disposable incomes, consumer sentiment and the auto industry as well, the company said.

Consequently, a sharp decline in the first quarter of 2020-21 is likely, which may partially ease in the following quarter, with any upside possibilities only playing out in the later part of the year. BS-VI two-wheelers offer consumers affordable, safe and eco-friendly personal transport and may see less impact due to the need for such solutions.

The Covid-19 pandemic is causing paradigm shifts in consumer behaviour affecting many industries, including automobiles. Social distancing norms followed across the globe due to Covid-19 could become the new normal.

People may move away from use of shared/public transport solutions. This changed preference would lead to an enhanced need for personal mobility solutions and could emerge as an opportunity for two-wheelers, the firm said. 

Favourable reservoir levels, good rabi output and possibility of normal monsoon may support agricultural growth. This spells good news for two-wheeler sales as it is the semi-urban and rural markets that dominate this space.

In 2019-20, TVS sold 2.41 million two-wheelers in the domestic market compared 3.14 million units in 2018-19.

The firm's domestic volumes declined in 2019-20 mainly due to falling consumer sentiment and rapid increase in the cost of ownership on account of higher mandatory insurance costs and enhanced safety norms. Towards the end of the year, the planned transition from BS-IV to BS-VI stock was affected throughout the auto sector, the company said.