Two-wheeler demand undergoes major slump due to depressed household income

Auto dealers expect this slump in demand to continue into January and well into the fourth quarter as well. Walk-ins to showrooms have already dropped significantly in metro cities. Salary cuts, anxieties about future affect two-wheeler customers more, says Rajiv Bajaj

After months of a lockdown in the wake of COVID-19, it was demand from the rural and the semi-urban regions of the country which propped up sales for the auto sector. Now, as the year ends, this demand is on the wane, and no fresh triggers for demand seem to be in sight.

While sales for passenger vehicles has seen sustained momentum into December, usually a month where deal-seekers lead to good demand, two-wheeler demand has seen a major slump. The reasons can largely be attributed to depressed household incomes which are impacting sales in the commuter segment. The result could be a double-digit decline in retail sales of two-wheelers for the December quarter, sources said. The motorcycle segment could see a decline of 3-4 percent for the same quarter.

Auto dealers expect this slump in demand to continue into January and well into the fourth quarter as well.

For the month of December, sales of two-wheelers in tier-2 and tier-3 towns and cities and rural areas will see a double-digit decline, while sales in the urban markets will likely see a flattish trend. This decline compounds the nearly 17 percent drop in two-wheeler registrations in December 2019.

However, festive season bookings/deliveries spilling into December will also reflect in registrations for the month, but future triggers, including imminent price hikes from January 2021, are not enough to create fresh demand in the market.