Two wheelers and the Indian lifestyle are associated inherently. They has remained as a intrinsic part of the Indian milieu. By offering mobility at a reasonable cost, the two-wheelers has liberalised the Indian middle class from the monotonous public transport systems. For a majority of them, a scooter or motorcycle is one of the most necessary assets of the life. However, this industry has started showing the signals of a negative growth. Blame the rising inflationary rate or the higher rates on two wheeler loans, the two wheeler market is spearheading towards a down turn.
However, the key question in the market is that whether the downturn is cyclic or permanent. This article will focus on Indian two wheeler market and bike loans in India in detail. If we put the customers of the two wheeler market and two wheeler loans under microscope, we will find that 90% of them belong to the middle class and the lower middle class category. For this segment of customers, aspirations have really outpaced real income growth. This lead to a greater propensity to borrow and spend. With the thundering two digit inflation rate , this segment has found itself over-leveraged. The hardening of interest rates on two wheeler loans at such a juncture leads only to the customer postponing or deferring a new purchase.
From the perspective of the two wheeler loan financiers, servicing this industry and this customer segment is an operationally intensive task. They have to cover locations that fall outside city limits and being dependent on correspondent banking relationships and have to maintain a robust collection infrastructure. In the case of slow down of the economy in general, caution enters the equation as financiers look to keep Non Performing Assets under control. The recent threat to the Indian two wheeler market is the 1 lakh rupee Nano. However when we take the running and maintenance cost of the car with that of a two wheeler, two wheelers are at the top of the ladder.
For the past six months inflation has created a definite decline in the Indian economy and interest rates showing the first signs of increasing. Manufacturers of the Indian two wheeler industry are clueless. However, Brand and line extension in the two wheeler segment has come to a stand still. They have increased segmenting of the two wheeler market by launching products aimed a newer segments like targeting girls and women. Electrically powered motorbikes are also being introduced in the Indian market. The two wheeler market also is seeing a lot of action in the 150cc plus market with new models slated to hit the market in next three months. The cost of brand building and promotional activities have not shown any decline in case of top manufacturers. The next festive season will bring in price-offs and discounts along with other promotional offers that will provide another boost to sales.
It is for the greater interest of the Indian two wheeler market that the manufacturers, dealers and two wheeler loans financiers work together even more closely. The Manufacturers have a strong attachment with their suppliers and dealers but very often view the financiers are treated as an outsider of the supply chain. The financier has to have greater integration in the entire chain, working towards maximising high end customer solutions and services.
All the economic indicators will become positive if there is a good monsoon. The huge demographics of the country remain favourable for the two wheeler industry. and there is a tremendous tailwind in the Indian economy and a spirit of optimism prevailing in the country will definitely turn around in the two-wheeler industry is just around the corner.
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