Finance Blog

Check out the impact of Covid-19 on two-wheeler industry

The COVID-19 pandemic has taken a toll on the entire economy, and every industry is directly or indirectly affected by it. However, the Indian auto industry was witnessing a slowdown even in the pre-pandemic days. The stagnation in the industry has been palpable for around two years now. The domestic two-wheeler sales in 2019-20 stood at 1.74 crore units across categories, down from 2.12 crore the year before. However, two-wheeler exports from India have been on the rise, posting sale of 35.2 lakh units in 2019-20, an annual rise of 2.4 lakh.

The lockdown effect

The Society of Indian Automobile Manufacturers (SIAM) has reported, understandably, low figures for the period between April and June 2020. This was the period when almost the entire country was under lockdown. The production of automobiles fell by nearly 80%, compared to the same period in 2019. Domestic sales of passenger vehicles fell by 78%, commercial vehicles dipped by 85% and three-wheeler vehicles by 91%, in a quarter-to-quarter comparison. The two-wheeler segment posted a sale of nearly 13 lakh units. In quarter 1 of 2019, this figure was 50 lakh. Although the least hit in the auto segment, two-wheeler vehicles nevertheless saw a significant fall of 74% in sales. RBI tried to boost demand by lowering the interest rate, including two wheeler loan interest rate. This has made the auto loan more affordable.

The circumstances surrounding the pandemic

During the lockdown, most scooter and motorcycle manufacturers faced disruption in the production process due to non-availability of spare parts. Auto-ancillary companies provide these parts and components to the manufacturers but in turn, rely heavily on the labor force. With the workforce either stuck at home or returning to their native places, the production was disrupted. On the other hand, the liquidity crunch in the market lowered sales as well.

Some noteworthy developments emanating out of the COVID-19 scenario that can affect the two-wheeler segment are:

  • The shock arising due to the Chinese supply dependency and the Indo-China border escalation has led to a renewed impetus on “Make in India”.
  • The introduction of BS-VI norms may lead to bigger discounts to dealers and customers. Lower purchase cost would, of course, mean lower two wheeler loan eligibility requirement.
  • Industry experts are expecting that the pandemic could be a Black Swan event for the electric vehicle segment. An electric bike loan is easily available even now, and it is an eco-friendly option for riders.

Retail sales have recovered after the easing of the national lockdown. Two-wheeler sales in June 2020 saw a 38% decline from June 2019, a much healthier figure than the aforementioned 74% quarterly decline. The good summer harvest and a preference for personal transport should be able to improve the two-wheeler sales again.

Tata Capital’s two wheeler loan is designed to meet such a rise in loan requirements, be it for an entry-level or a high-end two-wheeler. With quick and simple loan processing, buying a two-wheeler with Tata Capital’s financing assistance is a smooth experience indeed.

Comments are closed.