EBM News
EBM News

Indian Two-Wheeler Sales Will Decline Drastically Due To The COVID-19 Pandemic

Due to the COVID-19 pandemic, businesses across the world have been affected badly. India is currently facing a 21-day lockdown and due to that, the automobile industry is also going through a daily loss of around a thousand crores. Also, there have been reports that several dealerships are on the verge of shutting down completely but the parent OEMs are preventing such a scenario.

According to The Economic Times, a recent study states that the two-wheeler sales in India might decline drastically in FY 2021. To be precise, there will be an estimated decline of 11-13% over FY20, according to the ICRA. Well, if you put that in numbers, the loss is estimated to be close to Rs 20 to 21 lakh this fiscal year, to about 1.8 crore units.

Seeing the current situation, Shamsher Dewan, vice president, ICRA said, “We expect two-wheeler OEMs to brace for another year of lower earnings and decline in operating margins. Besides lower sales, pressure on earnings will also arise due to costs involved in re-calling BS-IV inventory from dealers which is likely to remain unsold due to shutdowns.”

The Indian two-wheeler sales for FY20 was not good either, the industry saw a fall of about 16 percent and because of the current COVID-19 situation everything has been put to a halt.

Dewan also stated, “While recovery remains elusive in the near-term, over the medium term, ICRA continues to maintain a volume CAGR estimate of 6-8% for the two-wheeler segment, backed by positive structural factors like favourable demographic profile, growing middle class, low two-wheeler penetration, improving financing availability, participation of women in workforce and rapid urbanization.”