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'Two-wheeler sales likely to fall 1-4% in FY22'
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SME Times News Bureau | 22 Nov, 2021
India's two-wheeler sales are expected to contract by 1-4 per cent
year-on-year (YoY) in FY22 due to weak festive season performance, ICRA
said on Monday.
Accordingly, the rating agency cited that the
relentless increase in prices of two-wheelers coupled with record-high
petrol rates kept consumers away from dealerships. "The entry-segment
(75-110cc), which dominates 2W (two-wheeler) sales in India, has
remained subdued this year, reflecting extensive (and extended) impact
of the second wave of the pandemic. The lacklustre festive season
performance also highlighted continued wariness among the low-income
population regarding big-ticket purchases," said Rohan Kanwar Gupta,
Vice President and Sector Head, Corporate Ratings, ICRA.
"On the
financial front, given the high operating leverage of the industry,
subdued demand and elevated raw material costs are expected to keep the
operating margins constrained for the two-wheeler OEMs (original
equipment manufacturers) in the current fiscal," Gupta said. Besides,
the agency said rural offtake has lagged urban, possibly due to
moderated agri-sentiments caused by uneven monsoons and delayed
harvesting across regions.
Furthermore, for the urban markets,
the agency's report said that the delay in reopening of schools and
colleges, weak income sentiments due to job losses or salary cuts and
extended work-from-home policies by corporates, have impacted its sales.
Additionally, it claimed that finance companies have remained cautious
because of an increase in delinquency levels. India's domestic
two-wheeler sales for the first seven months of FY22 were flattish at
8.05 million on a YoY basis, despite a "severely contracted base", it
added.
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