Domestic motor-cycle sales bounce back after a two-year lull
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Last Updated: Sunday, October 25, 2009, 09:56
Mumbai: Domestic motor-cycle sales have witnessed a strong bounce-back after two torrid years, a report by a leading credit rating and research agency, said.

Domestic motor-cycles sales registered strong 14.9 percent growth in the first half of this fiscal (H1 FY 10) over the corresponding period in the last fiscal, Credit Analysis & Research Ltd (CARE) said in its report.

Domestic sales during the first-half of this fiscal stood at 35.2 lakh units against 30.6 lakh units in H1 FY 09. Sales had witnessed a sharp drop of 11.9 percent in FY 08 and registered only a modest growth of 1.2 per cent in FY 09.

Motor-cycles with engine capacity from 75 cc to 124 cc, the largest segment accounting for nearly 72.73 percent share, registered a 16 per cent growth in sales while the 125- 249 cc category, accounting for nearly 27 percent of sales, registered a comparatively lower growth rate of 11.8 percent.

Though motor-cycles on and above 250 cc engine capacity witnessed a very high growth rate of 30.5 percent, merely 25,512 motorcycles in this category were sold in H1 FY 10 as compared to 19,548 motorcycles in H1 FY 09, the report said.

According to the report, around 60-65 percent of the total domestic sales in H1 FY 10 came from rural areas.

The cost-conscious rural populace tend to purchase fuel-efficient and lower-priced motor-cycles with engine capacity up to 124 cc.

The last few months saw motor-cycle sales coming primarily from rural areas while urban households were reeling under the pressure of the global financial meltdown.

Thus, the entry level 75 to 124 cc motorcycle segment, typically preferred by rural households, witnessed relatively higher growth than the 125 to 249 cc motorcycles, said Revati Kasture, Head, CARE Research.

Many rural households, which largely remained insulated from the recent financial crisis, took advantage of the reduction in excise duties as well as lower petrol prices and interest costs and bought motor-cycles for themselves, she said.

In rural area, merely 15 percent of the young population, who can afford a two-wheeler, actually owns the vehicle, while 57 percent of the young urban population, who can afford a two-wheeler already owns one. It would provide humungous opportunity for the motor-cycle industry from rural India, the report observed.

With the cost-conscious rural India foreseen as the growth-driver, the entry level segment would continue to remain significant for the industry in the next 45 years, Care Ratings' Managing Director and Chief Executive, D R Dogra, said.

Bureau Report

First Published: Sunday, October 25, 2009, 09:56

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