Two-wheeler makers go premium
In the last 2-3 years, two-wheeler prices have risen sharply, delaying the recovery of small engine-powered bikes. premium segment has not been impacted much by price rises, or slowdowns.
NEW DELHI: Gone are the days when affordability used to be the major factor for two-wheeler manufacturers to grab a bigger pie in the Indian market.
In the past few years, manufacturers have scaled their offerings, and in more recent times, they have flooded the market with ‘premium products’ as this segment continues to outpace the overall growth of the two-wheeler market.
The premium segment, which comprises bikes above 150cc, grew in strong double-digits in FY23 and accounted for 18% of the total two-wheelers sold in the country, as per the Siam data. This is a big jump given premium bikes accounted for about 14% of total sales in FY18. The share of entry-level bikes (76-100cc) and commuter bikes (110-150cc) has seen a noticeable fall in the past five years. This change in market dynamic comes even as the overall two-wheeler market fell to a decadal low in FY22 and could only witness a minor recovery in FY23. Following the uneven monsoon this season and continued distress in the agrarian economy, recovery of smaller-engine two-wheelers remains uncertain. The premium category, however, appears to be bucking the slowdown trend.
As per industry experts, there are many factors behind premiumisation — from growing aspiration of young riders to the rising disposable income of target consumers. Easy finance availability, ever-increasing options and bigger operating margins for original equipment manufacturers (OEMs) are other enablers.
Rohan Kanwar Gupta, vice president & sector head, of corporate ratings at ICRA, says as opposed to the price-sensitive entry segment, the premium segment demand has remained relatively healthy (YoY volume growth of 32% in >150 cc motorcycle segment in FY2023 vis-a-vis 14% for the entire motorcycle segment), buoyed over the years by increasing per capita income, growing motorcycling culture, rising popularity of superbike clubs along with the availability of a wide range from several global brands.
“The up-trading (from lower to higher engine power) is expected to continue over the medium term and support volumes in this segment. OEMs have been looking at enhancing their presence in this segment to benefit from the relatively healthy demand,” said Gupta. This week alone, two bikes were launched in the premium segment — Hero MotoCorp’s Karizma XMR and Royal Enfield’s Bullet 350.
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