Honda Activa scooters at the stock yard before delivery to different parts of the country. Photo: AFP/ Sam Panthaky
Honda Activa scooters at the stock yard before delivery to different parts of the country. Photo: AFP/ Sam Panthaky

India’s prolific two-wheeler industry has been one of the many sectors to suffer following the demonetization of high value currency notes in the crackdown on the shadow economy and the subsequent bungling in restoring the country’s money supply.

Because of India’s poor public transport systems, two-wheeler scooters and bikes play an essential part in the daily lives of the middle and lower middle class, as they are lighter on the pocket and easy to maintain, compared to cars.

Most two-wheeler brands cost between the 50,000 rupees and 100,000 rupees (US$738-US$1,476) and cash plays a major role in the transactions. According to Credit Suisse, about 40% of purchases of two-wheelers are done in cash.

While the December figures are still to be announced, in November top manufacturers like Hero MotoCorp and Bajaj Auto saw a steep fall in their sales and reported a decreasing footfall at their dealerships across the country.

According to a two-wheeler specialist website Bike Dekho Hero MotoCorp managed to sell 479,856 in November this year, compared with 550,731 units in November 2015 — a fall of around 12.9%. In October this year the company sold 663,153 units.

Bajaj Auto also saw a sales drop of around 12% in November this year, shifting 237,757 motorcycles during the month, compared to 270,886 a year earlier.

However, the Indian subsidiaries of Honda and Yamaha have been able to weather the initial effects of demonetization. Honda Motorcycle& Scooter India, the makers of popular Activa brand scooter, managed to hold on with November sales touching 325,448 units, compared with 326,466 units in November, 2015. The company said it witnessed a steep fall in sales in the first week after demonetization, but made a speedy recovery.

Meanwhile, India Yamaha Motor, which has a much smaller share of the market, said it actually registered a growth of 20%, selling 51,106 units this November, as against 42,719 units in the corresponding period last year. The company attributed it to good product line-up along with innovative ongoing customer-centric activities.

The company officials of various two-wheeler units, however, claimed that the worst was behind them and their sales have started looking up again. They hope to be back on track soon.

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