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Reviving Wheels: Indian Two-Wheeler Industry's Remarkable Recovery and Promising Future

Reviving Wheels: Indian Two-Wheeler Industry's Remarkable Recovery and Promising Future

Photo by Diva Adittiya Putra on Unsplash

The year 2023 has proven to be a year of recovery and growth for the Indian two-wheeler industry. Despite the challenges posed by the pandemic, the industry has demonstrated its resilience and potential for strong growth.

One of the notable highlights of 2023 has been the recovery of the 100-110cc motorcycle segment, particularly in rural areas. The improvement in disposable rural income, infrastructure development, and the rise of e-commerce have contributed to the growth in this segment. Additionally, the festive season enthusiasm has further boosted sales, with the two-wheeler segment outpacing the passenger vehicle segment in terms of growth.

Manufacturers like Hero MotoCorp and TVS Motor have also observed the positive trend in rural growth. Increased income levels, recovery from pandemic worries, infrastructure investment, and retail finance support have all contributed to the improved confidence in rural areas.

Another significant trend in 2023 has been the premiumization of the motorcycle and scooter market. Despite the overall slowdown in demand due to price increases, the premium segment has shown strong resilience. Manufacturers have shifted their focus towards premiumization and have launched new models to cater to this growing market. This has partially offset the impact of weak entry-level segment sales and sluggish export demand.

Electric vehicle (EV) adoption has also witnessed significant growth in 2023, particularly in the two-wheeler segment. Government subsidies and increased recognition of the long-term economic benefits of EVs have contributed to this growth. However, the industry faced a setback when the government reduced subsidies for electric two-wheelers under the second phase of the FAME scheme. This led to a decline in sales and registrations. Despite this, the demand quickly rebounded, driven by the festive season and regained consumer interest. Companies like Hero Electric, Okinawa, Ampere, and Revolt have seen a decline in market share, while players like Ola Electric, TVS, Bajaj Auto, and Ather Energy have captured the market.

The market consolidation in the EV industry was driven by the government's actions against non-compliant OEMs and the introduction of stricter quality standards. Companies that violated sourcing norms and imported components to claim subsidies faced penalties and were ordered to refund the subsidies.

Looking ahead, the future of the Indian two-wheeler industry appears promising. With better distribution of income in rural areas, the entry-level segment is expected to gain momentum. Simultaneously, the growing economy is likely to sustain demand in the premium segment. The industry's resilience, coupled with ongoing innovation and government support, positions the Indian two-wheeler industry for continued growth and success.

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