Even though covid-19 has not officially bid its farewell to the country—evidenced by fresh cases standing at a 7-day average of 650—life has more or less gone back to normal. There is a renewed appetite amongst people to head out to markets. This is demonstrating in sales numbers of other consumption goods (LSM shows marked improvement) but it is already visible in motorcycle volumes. In Jul-20, sales are up 29 percent from the corresponding month last year—now at par with Jul-17 and Jul-18 volumetric sales.
Last year, the economy was in slowdown that had started to chip away at demand. In the first half, there was a marked slowdown while in the second half of the year, covid-19 and subsequent lockdowns made sure any major recovery would not be possible. Sales during the year declined by 22 percent year on year and the coming year will be working from a much lower base.
The July increase (the numbers here are reported by PAMA which does not cover several other non-Japanese motorcycle companies currently in operation in the country) is a beginning to a strong recovery and a number of factors will work towards bolstering the sector. To start with, business and economics will resume. Construction across the country has already been revived, factories have reopened and people are going back to work. The demand from rural areas was not as impacted due to covid as the disease and its spread remained in the urban peripheries. Two-wheelers will remain a popular mode of transportation for rural males who are in transit for work and as the crop harvesting period begins.
More youth jobs will also create new motorcycle demand. The PM’s Kamyab Jawab Program is disbursing loans of Rs5 billion to youth which is expected to create 50,000 more jobs (since the loans will go to 10,000 or so registered SMEs). Even if a fraction of these jobs materializes, it would spur demand for affordable motorcycles.
Though motorcycle prices have been raised by major players from July 1st, car prices have been raised much higher. It will be that much harder for traditional motorcycle users to shift to lower engine cars as income grow and they may be opt to upgrade their bikes instead. Lastly, the government’s move to introduce an electric vehicle policy for two and three-wheelers is another move toward the segment expanding. The policy will initially bring imported electric vehicles into the market and eventually over the next five years result into new EV ventures for motorcycles and rickshaws.