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Ind-Ra expects India's two-wheeler exports to see sustained growth in H2FY22
Nov-25-2020

The ratings agency -- India Ratings and Research (Ind-Ra) in its latest report has stated that India's two-wheeler exports will see sustained growth in the second half of next fiscal (H2FY22) 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. It added that 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.

As per the report, 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. 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). 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. 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.

However, the agency noted that 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. 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. It added ‘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’. 2W export volumes are likely to increase by mid-teens in FY22. 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.

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