Two-Wheeler Sales Below Pre-Covid Levels Leave Room For Growth, Says JPMorgan's Pirani

Two-wheeler sales have been lower compared to the pre-Covid levels and that leaves room for further growth despite high base, says Amyn Pirani, head of automotive research at JPMorgan.

He spoke to NDTV Profit exclusively on the sidelines of the JPMorgan India Investor Summit while also giving deeper understanding of the automotive industry.  

Amyn Pirani mentioned that volumes of passenger cars have been strong for the past two fiscal years and have already exceeded pre-Covid levels by 20%. He is expecting moderate growth in the current year due to a high base effect.

While, there is anticipation of a healthy growth phase in the next two-three years driven by low penetration, rising incomes, and new model launches, including EVs.

While for cars the sales have risen by 20% compared to pre-Covid levels, there is an opposite trend playing out in two wheelers. Sales of two-wheelers are still below pre-Covid levels but recovering steadily. This is partly due to lower recovery post pandemic as the lower end of the economy was deeply affected which has impacted discretionary purchases including for two wheelers.

On EV, current penetration has reached 6-7% of the market with electric scooters particularly performing well, said Pirani.  

But within two-wheelers, there is a lag in the entry-level motorcycles and that is partly due to the rising popularity of the 125cc segment. The 125cc motorcycle segment is emerging as a new sweet spot.

The industry experienced a 7-8% decline last year. While it’s a five-six player market, there are 2 major listed players namely Escorts and M&M.

Companies are projecting a 5% growth this year, driven by a favourable monsoon season. While the western part of the country has done well, this has done well for players like M&M. But Pirani’s view has been that data over the last 10-15 years suggests market share changes are primarily influenced by regional performance rather than structural shifts.

The truck segment is expected to see growth, potentially exceeding the previous peak, says Pirani. His view has been that rising prices due to emission norms are driving smaller operators towards the used truck market.

Another key trend electrification is gaining traction in buses and LCVs, supported by government schemes and a focus on cleaner fuels.

The Indian automotive market is witnessing a shift towards cleaner fuel options, with EVs playing an increasingly prominent role, particularly in the two-wheeler and bus segments, says Pirani.

He also mentioned consumer preferences are evolving, with a growing preference for scooters and SUVs over entry-level motorcycles and sedans. Affordability remains a key factor influencing purchasing decisions, with many consumers opting for used vehicles or delaying purchases due to rising prices.

Government policies, such as emission norms and EV incentives, are significantly impacting the industry's trajectory. Regional disparities in economic conditions and infrastructure development are influencing market dynamics and company performance.