Two-wheeler exports to see stable growth in latter half of next fiscal
India’s two-wheeler exports will see sustained growth in the second half of next fiscal after witnessing temporary hurdles in the first half this year due to COVID-19 and weakened crude oil prices, hurting the economies of key exporting destinations, according to ratings agency Ind-Ra.
Exports momentum is expected to continue in the remaining part of FY21 and FY22, primarily driven by the exporting countries’ lower penetration level, demand for usage as commercial fleet, stability in crude prices, lack of public infrastructure and aversion to public transport amid COVID-19, India Ratings and Research said in a statement.
India exports two-wheelers mainly to African, Asian and Latin American countries, constituting 37.5 per cent, 22.9 per cent and 21.4 per cent, respectively, during the first half of FY21, it added.
“Within this, Nigeria, Colombia, Nepal, Bangladesh and Philippines together accounted for around 50 per cent of the total exports in FY20 (in terms of value),” the rating agency said.
Indian original equipment manufacturers (OEMs) will continue to gain traction for their key offering on the back of their strong market position and robust distribution network, it added.
Indian two-wheeler manufacturers such as Bajaj Auto and TVS Motor Co will benefit from their exports-focused business model, with almost 49 per cent and 26 per cent, respectively, of their total sales volume in the first half of FY21 coming from exports, it said.
However, Indian OEMs face tough competition, particularly from Japanese OEMs that have a strong market share globally. Though Chinese OEMs have a higher market share than Indian OEMs in the global markets, the competition is fragmented and Indian OEMs have superior quality, the agency noted.
Ind-Ra said it expects the two-wheeler (2W) exports decline for FY21 to be in line with that of the domestic industry at 18-21 per cent.
“Since 2W exports only account for 16-18 per cent of the total 2W sales for Indian OEMs, this is not likely to be substantial enough to compensate for the domestic volumes during the same period,” it added.
2W export volumes are likely to increase by mid-teens in FY22, the ratings agency said.
The industry faced temporary hiccups in the first quarter of FY21 due to the COVID-19 spread as well as weakened crude oil prices, hurting the economies of key exporting destinations for India.
“This coupled with the nationwide lockdown, supply-chain and logistics disruptions impacted export sales significantly,” Ind-Ra said.
Since then India’s 2W exports have moved in line with growth in domestic markets, it added.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
