India’s Two Wheelers (2Ws) exports to witness sustained growth in the remaining months of the current financial year and in the next financial year, predicted credit rating firm India Ratings and Research (Ind-Ra).
“India’s two wheelers (2Ws) exports volumes will see sustained growth in 2HFY21-FY22. The industry faced temporary hiccups in 1QFY21 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. Since then India’s 2W exports have moved in line with growth in domestic markets, with September and October 2020 recording the highest monthly sales in FY20-October FY21” said Ind Ra.
Ind-Ra expects the exports momentum 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 in the midst of COVID-19. Moreover, with their strong market position and robust distribution network, Indian original equipment manufacturers (OEMs) will continue to gain traction for their key offerings. Ind-Ra expects the 2W exports decline for FY21 to be in line with that for the domestic industry, at 18%-21%. Since 2W exports only account for 16%-18% 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. 2W exports volumes are likely to increase by mid-teens in FY22.
While India’s 2W export sales volumes declined by 29% yoy during April-October 2020, the monthly sales volume recorded during September-October 2020 was the highest amongst the past two fiscals. This is primarily backed by a gradual recovery seen in key markets, and stable crude oil and forex prices. Most of the key exporting markets in Latin America, Africa and Asia have recovered to 80%-90% of pre-COVID export levels.