Crisil Sees More Two-Wheeler Launches

The Credit Rating Information Services of India Ltd (Crisil) foresees a number of new product launches by major two-wheeler players with an increasingly active involvement of foreign collaborators in the near term.

In its Outlook on the two-wheeler industry, the rating agency has said the industry was poised to change from a commodity industry, driven by distribution strengths and pricing, to a brand and feature-driven one.

This structural transformation, coupled with an intensification of competition, was likely to throw up a number of new challenges for the major industry players. Expansion of existing capacities was expected to increase working capital requirements and squeeze profit margins.

 

The industry was also likely to see a substantial deployment of resources in product upgradation, brand building and feature incorporation in the future, the report added.

The two-wheeler industry had bucked the recessionary trend in the auto sector in general, showing healthy growth rates during 1997-98. This has contributed to a more stable business and better financial risk profile of the players in the industry.

Within the two-wheeler segment, there had been an increased proportion in the contribution of motorcycles to growth as compared to scooters and mopeds. Higher motorcycle sales had been on account of demand from the semi-urban and rural markets.

Crisil has predicted that the industry would continue to grow albeit at a lower rate.

However, the fundamentals of two-wheeler industry was expected to remain fairly strong, and the risk profile of major manufacturers, stable, the report said.