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Fall in motorcycle sales drag overall two-wheeler volumes

As motorcycle and moped sales declined during the first eleven months of FY16, it dragged down the overall growth of the Indian two-wheeler industry, which grew a modest 2.2% year-on-year (yoy) for the 11-months FY16.

The motorcycle and moped segments reported 1.2% and 5% decline in growth respectively, during the 11-month FY16 period over the corresponding period last year, as the volumes by both these segments are primarily driven by rural demand.

As per a latest analysis by ICRA, the income growth in the rural sector has been weak over the last two fiscals with two consecutive drought years impacting kharif production while the rabi crop was affected by unseasonal rains.

“However, the scooter segment posted a yoy growth of 11.5% for 11M FY2016, which was mainly driven by urban demand and new launches. The motorcycle and scooter segments posted yoy growth rates of 0.9% and 14.2% respectively, mainly on account of the festive season falling in Q3 FY2016 and not being split between Q2 and Q3 as had happened during FY2015," ICRA said in its report titled Indian Two-wheeler Industry.

As per the credit rating agency's analysis, the urban demand has fared well for the scooter industry, which continued to post healthy growth numbers for Q3 FY2016 and 11M FY2016 at 14.2% yoy and 11% yoy, respectively. The average monthly sales for Q3 FY2016 stood at 435,806 units as compared with 381,530 units for Q3 FY2015.

During 11M FY2016, the average monthly sales of scooter stood at 416,513 units (up from 373,536 units for the same period the previous year), data from ICRA showed. The 90-125cc segment, accounting for around 98% of the scooter volumes, continued to grow by 13.1% yoy during 11M, FY2016 with consumer preferences shifting to higher engine capacity and high powered scooters.

The report further added, "Honda Activa remains the highest selling scooter in the country with monthly average sales of around 200,000 units during 11M FY2016."

On the other hand, on account of weak rural sentiment, the domestic motorcycle industry continued to decline in FY2016. While the executive segment (125 cc) showed some signs of improvement which led to the domestic motorcycle industry reporting a meagre 0.6% yoy growth in volumes, the 150cc segment reported a steep decline yoy on account of discontinuation of CB Unicorn 150 and CB Trigger by Honda. ICRA further highlighted, “The over 250cc category continues to report healthy growth numbers on back of the success of Royal Enfield, which is perceived as a lifestyle brand.”