Saturday, May 18, 2024

Decline in Two-Wheeler Inventory Levels in 2024: A New Trend Shaping the Auto Industry


Two-wheeler Inventory Levels See Notable Drop in CY24

The landscape of the two-wheeler market has undergone a significant shift as inventory levels have witnessed a considerable decrease in the calendar year 2024 (CY24), facilitated by an acceleration in sales, the festive allure of the wedding season, and a resurgence in the entry-level segment’s popularity.

As reported by the Federation of Automobile Dealers Associations (FADA), the initial months of CY24 have presented a promising outlook for two-wheeler dealers. Specifically, inventory durations in January and February narrowed down to a span of 10 to 15 days, marking a stark contrast to previous months. This reduction in inventory levels highlights an enriched sales momentum within the sector.

The inventory accumulation previously peaked alarmingly with a duration of 40 to 45 days in October, indicating a pressing surplus. However, the scenario has since shifted positively.

“Post-Covid, the two-wheeler industry faced daunting challenges, leading to a significant downturn. Remarkably, there has been a consistent rise in demand commencing from September 2023, propelling sales upward across the nation, including rural expanses. Anticipating the continued demand surge, there’s an expected increase in production measures,” explained Manish Raj Singhania, President of FADA.

The optimistic trend isn’t limited to economic recovery signs; it extends to anticipation of growth. March is expected to maintain inventory levels within the rejuvenating 10 to 15-day range. Interestingly, this contrasts with the passenger vehicle segment, where inventory levels soared to between 50 and 55 days in February.

Looking ahead, forecasts by the credit rating agency ICRA project an 8-11% growth in the two-wheeler segment volumes for FY2024, with a subsequent 7-10% growth in FY2025. This prediction draws upon factors such as increasing per capita income, urbanization trends, and a more accessible financing environment.

“Our analysis, incorporating dealer insights, indicates that demand has showcased remarkable stability post the festive season, as mirrored by the consistent two-wheeler dealership inventory levels,” the ICRA report elucidated.

Entry-Level Two-Wheelers Gaining Momentum

Dealers have noted a heightened interest in entry-level two-wheelers, buoyed by a fruitful crop season towards the previous year’s end and an uplift in the Minimum Support Price (MSP) for crops. This positive feedback from dealers signals a lucrative phase for the entry-level segment in the two-wheeler industry.

“The entry-level segment’s resurgence is palpable. With favorable agricultural outcomes and an enhanced MSP, feedback from dealers across the board has been overwhelmingly positive. This period may well mark a turning point for the profitability of entry-level two-wheelers,” Singhania further added.

The trajectory of two-wheeler inventory levels and sales in CY24 showcases a resilient and adaptable industry. With strategic adjustments and insights from dealers and associations like FADA, the two-wheeler market is navigating its post-pandemic recovery with promising prospects for growth and stability.

Jordan Clark
Jordan Clark
Jordan Clark brings a dynamic and investigative approach to business reporting. Holding a degree in Business Administration and a certification in Data Analysis, Jordan has an eye for detail and a knack for uncovering the stories behind the numbers. His career began in the bustling world of Silicon Valley startups, giving him firsthand experience in tech entrepreneurship and venture capital. Jordan's reports often focus on technology's impact on business, startup culture, and emerging

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