Two-wheeler volumes to skid 8-10%, demand likely to remain weak: Icra

Demand for two-wheelers in the domestic market is likely to remain weak in the near-term on the back of implementation of BS-VI norms, Investment Information and Credit Rating Agency (ICRA) said on Thursday. The agency expects that the new norms will lead to contraction of volume by 8-10 per cent in FY20. 

However, despite the near-term volatility, Icra maintains a stable outlook for the two-wheeler industry for the coming 12-18 months. The industry, it added, is facing several headwinds that have adversely affected sales, and the transition to new emission norms will further heighten the already subdued outlook. The decline will see some moderation in the second half of the year due to pre-buying before the BS-VI transition in April 2020.

“Over the past couple of months, two-wheeler makers have started introducing BS-VI compliant variants in the market and our analysis of new launches suggests that ex-showroom prices have risen by 10-12 per cent,” said Shamsher Dewan, vice president, ICRA.

Meanwhile, there has been a steady rise in the cost of ownership because of a sharp hike in vehicle insurance and safety regulations, the prices of entry-level motorcycles (75-110cc) have increased by almost Rs 8,500-10,000 (or nearly 15 per cent) over the past 18 months.