Rural market key for two-wheel industry: report

With two-wheelers contributing a major share to the expected sequential growth in the automotive sector in the first quarter, the time is ripe for further penetration into the rural market, according to CARE Research.

Society of Indian Automobile Manufacturers figures show motorcycles grew by 16.23 per cent in June, and the trend is expected to continue. The sector is likely to post an 8-10 per cent rise in year-on-year net sales, driven by Hero Honda with a sales growth of 66 per cent.

According to the CARE Research report on the 'Indian two wheeler Industry', the industry finds itself amongst the list of casualties of the global financial disaster. Job-losses, pay-cuts, low consumer confidence and cautious stance of vehicle financers have had an adverse impact on the domestic two-wheeler sales that registered a modest 2.6 per cent growth in financial year 2008-09 over FY-08.

CARE Research identifies Rural India to be the growth driver for the two-wheeler industry. The report says, ''We observe that the urban market for two-wheelers is largely penetrated, with nearly three-fourths of the target population owning a two-wheeler in some big cities.

However, in case of rural areas, merely 15 per cent of the target population owns a two-wheeler and thus the opportunity is humungous.''

CARE Research has developed a robust model for predicting the demand for the two-wheelers in the next five years. The report also provides analysis of past data pertaining to the industry and a write-up on top industry players.