Two-Wheelers Companies Ride high on Fuel Price Hike

The runaway petrol price, which has singed many, has found an unexpected beneficiary in the Indian auto market: motorcycles and scooters. With customers looking for cheaper mobility options over pricier cars, after the steepestever jump in fuel prices, the demand for the more affordable motorcycles and scooters is likely to go up in the coming months. Traditionally, the demand for two-wheelers has been stable in the Indian market, but a spike in fuel prices or interest rates, always bring them into play, in a much bigger way. “With each jump in fuel price, the cost of running a car goes up tremendously. Based on the changing economic scenario, where inflation is already forcing people to curtail spending, customers look for cheaper transport options to manage their budgets,” said a senior executive of Hero MotoCorp, India’s largest two-wheeler company. Petrol now costs a record Rs 73.18 a-litre in New Delhi and Rs 78.57 a-litre in Mumbai after Thursday’s 11% hike of Rs 7.50 by the government. “Demand for motorcycles for personal transportation has been strong in India. But in a grim economic scenario, where both vehicle and fuel prices are shooting up, customers fall back on cheaper mobility options, such as bikes and scooters. As the economy expands, everybody needs mobility and since they can’t afford expensive transport, they stick to affordable options,” said Sageraj Bariya, managing partner of Equitorials, an independent research firm. India’s top-selling bike, the 100-cc Hero Splendor, starts at an exshowroom price of Rs 42,950 in New Delhi, while the cheapest car in the country, Tata’s Nano, is priced at Rs 1,43,284, according to the companies’ websites. Hero Pleasure scooter sells for Rs 41,700 in Delhi and Maruti Suzuki’s lowest-priced car, the M800, sells for about Rs 2,04, 902, as per ex-showroom prices in Delhi. What’s clear is that the difference in basic prices and the total cost of operating them is influencing demand patterns in the Indian market. Motorcycle manufacturers are gaining at the expense of car companies, such as Volkswagen, General Motors, Honda Siel, Tata Motors and Ford Motors, who have posted lower sales in the recent past, as consumers are putting off their plans of buying new cars. The dwindling demand for cars is already forcing carmakers and its apex body, Society of Indian Automobile Manufacturers, to cut its full-year growth forecast of 10-12% for this fiscal. The high interest rates, coupled with rising fuel prices and a jump in car prices, have knocked down car sales to decade’s lowest of 3.4% in April, while the twowheeler segment grew at a fairly healthy pace of 11%, in the same month. “The impact becomes clear as demand for scooters has been consistent and strongest across all segments of passenger vehicles with a visible strong shift in urban centres. While customers were battling high interest rates in times of double-digit inflation, the steepest-ever increase in fuel price should spur demand for fuel-efficient scooters and bikes,” says Atul Gupta, vice-president of Suzuki Motorcycle India.