Two-wheeler volumes likely to contract by 11-13% in FY21: Icra

Ratings agency Icra on Monday said two-wheeler volumes are expected to contract by 11-13 per cent in FY2021 due to the coronavirus pandemic.

The challenges are likely to get aggravated as consumer spending will be severely impacted by the outbreak resulting in lower spending power both in urban and rural markets, Icra said in a statement.

The extent of slowdown remains contingent on the severity of the coronavirus outbreak and thus continuation of lockdowns. Even prior to the disease outbreak, the demand for two-wheelers was expected to be flat in India amid sharp rise in vehicle prices following the transition to BS-VI emission norms (resulting in 10-12 per cent inflation) and subdued macro-economic scenario, it said.

Giving an estimate, the ratings agency said, "The two-wheeler industry is likely to witness another year of demand contraction with unit sales likely to decline between 11-13 per cent to around 18 million units in FY2021 following the adverse impact of the Covid-19 outbreak on economic growth and discretionary spending."