Retail sales of two-wheelers witnessed a decline of 7% in April 2023 as compared to the same period last year, according to the Federation of Automobile Dealers’ Association (Fada). The association has attributed this fall to a shift towards on-board diagnostics 2A, untimely rains, and pre-buying in March. Weak rural sentiments have also contributed to the depressed demand in the motorcycle segment.
Despite the economy bouncing back to a certain extent after the pandemic, two-wheeler sales have still failed to reach pre-Covid levels. In fact, the sales in April 2023 were still down by 19% as compared to April 2019 sales. In contrast, car sales have surpassed the pre-Covid levels. The disparity between two-wheeler and car sales is a matter of concern as the two-wheeler segment constitutes 75% of the total auto sales volume.
In light of the situation, Fada has urged the GST Council to consider reducing the GST on two-wheelers from 28% to 18%. This step could help revive the two-wheeler segment, which is critical to the overall health of the automobile industry. Manish Raj Singhania, the president of Fada, has stated that the month of April 2023 witnessed a 4% year-on-year overall decline. The two-wheeler and passenger vehicle categories witnessed year-on-year degrowth of 7% and 1%, respectively.
Singhania has expressed hope that the upcoming marriage season in May could drive a resurgence in two-wheeler sales as customer inquiries increase. However, the increasing consideration of customers to transition from internal combustion engines (ICE) to electric vehicles may temporarily delay purchasing decisions.
On a positive note, the high demand for e-rickshaws has fueled the growth of three-wheelers, which have surpassed pre-Covid levels. This growth trend in the three-wheeler segment could help offset the losses incurred in the two-wheeler segment.
In conclusion, the decline in retail sales of two-wheelers is a cause for concern. However, the upcoming marriage season and a possible reduction in GST could drive sales growth in this segment. Additionally, the growth in the three-wheeler segment could help balance the losses incurred by the two-wheeler segment.