Demand for two-wheelers to grow 4-6% in 2016-17: ICRA

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The demand for two-wheelers is expected to grow at a pace of four to six per cent during 2016-17, ratings agency ICRA said in a study on the Indian two-wheeler industry.

"The industry has been off to a strong start in 2106-17 with volumes during the first two months having grown by 15.3 per cent on the back of festive and wedding season demand," the study said.

"The growth during 2016-17 has been broad based with scooters leading the pack at 30.3 per cent year-on-year growth while motorcycles and mopeds reported year-on-year growth of 9.5 per cent and 14.8 per cent respectively."

The study pointed out that the domestic two-wheeler industry had expanded by a modest three percent to touch 16.5 million units hurt by sluggish demand across segments during 2015-16. While motorcycles and moped volumes shrank by 0.2 per cent and 3.3 per cent respectively, scooters segment held the fort - albeit posting a relatively lower growth of 11.8 per cent as against past five fiscals.

According to another study by the ratings agency, the cost structures for manufacturers would be impacted by the migration to BS (Bharat Stage) VI emission norms -- which would mandate the use of electronic fuel injection (EFI) systems in two-wheelers to replace carburettors.

"The cost impact of EFI systems on two-wheelers with existing levels of localisation is expected to be significant, in the region of 10 per cent to 20 per cent, for now. The costs however, are expected to come down subsequently as parts in the EFI system get localized," said Subrata Ray, Senior Group Vice President, ICRA.

The report stated that all automobiles including two wheelers would need to migrate to BS VI emissions norms in 2020, bypassing BS V norms, as per the notification from the Ministry of Road Transport and Highways (MoRTH).

"Currently, India follows BS III emission norms for two-wheelers. From April 2016, all new two-wheeler models have started complying with BS IV emission norms, and the existing models would comply with BS IV emission norms from April 2017, on a pan-India basis," the report said.

Ray further said the major change in a two-wheeler on migration to BS IV norms would be the inclusion of carbon canisters to control evaporative emissions, adding: "Other changes, like tightening on limits of different pollutants, would be met through optimization of the combustion process and increasing the volume and surface area of catalyst used in the catalytic convertor."

"The cost impact is not expected to be significant, in the range of 2-3 per cent of the price of the vehicle," he said.

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