2W industry to grow by 8-9pc in 2014-15: ICRA

Leading credit rating agency ICRA expects the domestic 2 wheeler industry volumes to grow by around 8-9pc in 2014-15 as 2W volumes in the short term are expected to continue to draw support from replacement demand. Over the medium term, the 2W industry is expected to report a volume CAGR of 8-9pc to reach a size of 22-23 million units (domestic +exports) by 2016-17.

In the 5 months of 2014-15, the 2W industry has recorded a strong growth with sales volumes expanding by a 14.8pc YoY, the fastest pace of growth since 2010-11. While strong demand for scooters (contributed 27pc to domestic 2W industry sales volumes in 5 months 2014-15) has been the primary driving force behind overall 2W industry expansion in the last three years, the motorcycle segment’s contribution to 2W industry growth too gained force in 5 months 2014-15 by virtue of greater replacement demand and new model launches by various Original Equipment Manufacturers (OEMs).  

 According to Subrata Ray, Sr Group Vice President, ICRA Limited, “The fast expansion of the scooter segment’s pie has encouraged most OEMs to launch new models to capitalise on the growing opportunity offered by this segment. In 2012-13, three new scooter brands were launched in India, but the count of new brands introduced increased to six in 2013-14; and in 5 months of 2014-15, already four new models have been launched by various OEMs with more being in the pipeline”.

 Compared to motorcycles (targeted at males), the penetration of scooters (targeted at both males and females) remains lower by a factor of 3-4 times which has been one of the primary drivers of demand for scooters as positioning of this product segment has become sharper. The increased supply push in the form of new scooter launches should only add to the growth momentum”.

 ICRA believe the various structural positives associated with the domestic 2W industry including favourable demographic profile, moderate 2W penetration levels (in relation to several other emerging markets), under developed public transport system, growing urbanization, strong replacement demand and moderate share of financed purchases remain intact; as also the large opportunity available to grow presence in overseas markets, mainly Africa and Latin America.