Monday, June 17, 2019

Vehicles in Pakistan: Over Half of All Households Own Motorcycles in 2019

Private vehicle ownership in Pakistan has risen sharply over the last 4 years. More than 9% of households now own cars, up from 6% in 2015. Motorcycle ownership has jumped from 41% of households in 2015 to 53% now, according to data released by Federal Bureau of Statistics (FBS) recently. There are 32.2 million households in Pakistan, according to 2017 Census.

Vehicle Ownership in Pakistan. Source: PBS

Total number of vehicles registered in Pakistan increased 9.6% to 23,588,268 in 2018, up from 21,506,641 vehicles in 2017. Of all the vehicle categories, motorcycles saw the biggest increase of 11.5% reaching 17,465,880. Cars, jeeps and station wagons rose 5.3% reaching 3,043,593. Trucks surged to 277,416 and buses to 236,461, according to Pakistan Today.

Pakistan is now the 5th largest motorcycle market in the world after China, India, Indonesia and Vietnam. With 7,500 new motorcycles being sold everyday, Pakistan is also the among the world's fastest growing two-wheeler markets. Passenger car and motorcycle sales in Pakistan have both been soaring at rates of over 20% a year until recently.

Motorcycle ownership data is yet another confirmation of the fact that the majority of the households in Pakistan now belong to the middle class, a first in Pakistan's history. This was first reported in 2015 research done by Dr. Jawaid Abdul Ghani of Karachi School of Business and Leadership (KSBL).

It's an important tipping point that puts Pakistan among the top 5 countries with fastest growing middle class population in Asia-Pacific region, according to an Asian Development Bank report titled Asia's Emerging Middle Class: Past, Present, And Future. The ADB report put Pakistan's middle class growth from 1990 to 2008 at 36.5%, much faster than India's 12.5% growth in the same period.

Related Links:

Haq's Musings

South Asia Investor Review

The State of Pakistan's Social Sector

Credit Suisse Wealth Report 2016

Pakistan's Trillion Dollar Economy Among World's Fastest Growing

Pakistan: A Majority Middle Class Country

Karachi School of Business and Leadership

State Bank: Pakistan's Actual GDP Higher Than Officially Reported

College Enrollment in Pakistan

Musharraf Accelerated Development of Pakistan's Human and Financial Capital


Khurram Dastagir said...

نواز شریف اور مسلم لیگ ن کا فیض الحمدللّٰہ آج بھی جاری ہے

Faseeh M. said...

Good indicator to keep an eye out to see what happens this year

nayyer ali said...

Pakistani consumers continued to spend in the last two years and consumption levels have trended up. The devaluation of the rupee will finally allow Pakistani exports to be competitive and bring the current account deficit down. Hopefully, the SBP is now in charge of the currency, and its new head will let it stay fairly valued and not repeat the mistake of an overvalued rupee. The exchange rate needs to constantly to higher Pakistani inflation. I hope that this next 12 months of pain yields to an export led growth path that can be sustained and that Pakistan can reach 6-7% growth on a consistent basis for the next 20 years. The government needs to end its subsidies and get rid of state owned firms. It should instead concentrate on human development, raising enrollment and completion rates for primary and tertiary schooling, and improving health and cutting infant mortality in half at least. These are all attainable goals with political will.
Another item which was supposed to have been completed last year was rebasing the GDP. It is likely undercounted by 20%, and with a correct GDP number, Pakistani per capita income (in PPP terms) is actually fairly close to India. Given the much lower income inequality in Pakistan there is much less extreme poverty in Pakistan. The fall in the exchange rate effects the market rate GDP but not the purchasing power parity number.

Riaz Haq said...

#Pakistan’s #economic #crises over: Central Bank Chief Reza Baqir "Uncertainty and instability was a serious challenge to the country, which is now over as the economic team tackled the situation very effectively. Pakistan's future is bright." #SBP #IMF

KARACHI: Governor, State Bank of Pakistan (SBP), Dr. Reza Baqir on Monday assured that the country has come out of the economic crises as it has achieved economic stability including financial one, which has created investors' confidence that is very positive signal.

"Uncertainty and instability was a serious challenge to the country, which is now over as the economic team tackled the situation very effectively. Pakistan's future is bright," he said while speaking at his first interaction with media here at the SBP Building.

He also answered questions by journalists in Islamabad through a video link.

Dr Reza said the present government had assigned two major tasks to its economic team that is, bringing economic stability and ensuring inclusive economic growth in the country; where there is improvement in the life of the common man.

“The two main reasons for the economic instability were: external deficit and fiscal deficit. Now, these were being addressed effectively and in credible manner.”

The external/trade deficit situation was improving.

He said it was very positive development that the government had pledged not to borrow from State Bank of Pakistan.

Instead, he added, it would borrow from the money market. This would save State Bank of Pakistan from printing new notes which pushed inflation.

About the exchange rate, SBP Governor said a fixed rate or free float currency policy were not in favour of the country.

Rather, SBP had adopted the market-based policy for it.

Regarding the key interest rate, Dr. Reza said SBP's Monetary Policy Committee did take into account the projected inflation before fixing it.

"We shall be fighting inflation to our best," he reassured, adding the interest rate was the best tool to control inflation.

He said the state bank had to work for three objectives including financial stability, maintaining exchange rate and for sustained economic growth.

The SBP Governor defended the agreement being signed with IMF maintaining that it had sent positive signals to the entire world about financial stability in Pakistan that had also built confidence among the local and foreign investors.

After that, Pakistan Stock Exchange also strengthened.

"Going for IMF loan, everything was being done in the interest of the country," he said and that all IMF conditions were dully fulfilled.

He informed the media that on July 3, 2019 IMF Board of Directors' meeting would be held and all details would be dully published which would make the things clear about the deal with the world credit body.

Riaz Haq said...

#Pakistan Home #Appliance Maker Dawlance Manufactures Its 10 Millionth Unit. Company makes #Refrigerators, #Freezers, #AirConditioners, #Microwave Ovens, Built-in #Ovens, #WashingMachines, Water Dispensers, #Dishwashers, and small #kitchen appliances.

The market-leader in Pakistan’s Consumer-Electronics and Home Appliances market – Dawlance has now achieved another huge milestone, by manufacturing its Ten Millionth unit. Completing its 40 years of excellence, this enterprise is a fully owned subsidiary of Arçelik A.S. – The largest Turkish enterprise and the third-largest manufacturer in Europe.

The Chief Executive Officer of Dawlance – Mr. Umar Ahsan Khan stated that: “Dawlance is the biggest Turkish investment in the economy of Pakistan. Producing its 10 millionth Unit is the strongest evidence of the brand’s reliability. It is an unforgettable moment for us as we enter this new era of consumers’ confidence. The company is thankful to its over 4000 employees, our consumers, stakeholders, distributers, and dealers all over Pakistan, along with everyone else who contributed to the success and growth of the company.”

The Head of Production at Dawlance – Mr. Ameen Ahmed expressed his delight and said; ”We have come a long way since the company’s humble beginning, back in 1980, when a small assembly plant was established in Hyderabad. Today, the company has grown tremendously, operating 3 large-scale manufacturing units in Pakistan. The 10 millionth product is a testament to our passion and commitment, to strengthen Pakistan’s industrial-base and economy.”

Through this resourceful collaboration, the most reliable brand has been established, to offer the highest quality electronics and services to Pakistani consumers. Our most innovative technologies also promise the conservation of energy. Being a socially responsible organization, it generously contributes towards credible initiatives for community-development and other healthy socio-cultural activities, to create more economic opportunities and empower its consumers.

It caters to consumers’ 3 different functions; Food Care, Fabric Care and Home Care with a wide range of appliances including; Refrigerators, Freezers, Air-Conditioners, Microwave Ovens, Built-in Ovens, Hoods and Hobs, Washing Machines, Water Dispensers, Dishwashers, and small kitchen appliances. Consumers can enjoy the ‘Grand Warranty’ on all Dawlance products sold all over Pakistan, without paying additional costs or any registration process.

All Dawlance Refrigerators and Freezers come with a 12 Years Compressor Warranty (including Inverter and non-inverter technology). All its new models of Washing Machines are covered by a 10 Years Motor Warranty.

With the continued focus on customer care and after-sales service, it always exceeds the customers’ expectations. With creating newer technologies, every employee is inspired to ensure compliance with global standards and best-practices at every level.

A nation-wide ‘After Sales network’ provides 24/7 Customer-Care, while Technical-Collaborations with Arçelik’s global plants in Turkey, Russia, Romania, Thailand, and South Africa are also nurturing expertise at Dawlance.

Riaz Haq said...

#Pakistan's #Atlas Group and DID Group #Japan sign Joint Venture (JV) for #motorcycle chain production in Pakistan

A joint-venture company in Pakistan for the integrated-production of motorcycle chains is now on the cards as two of Japan’s acclaimed corporations Atlas Group and DID Group Japan have now been amalgamated as one.

The association between the two groups has now strengthened through the joint-venture which aims to provide consistent quality, cost and delivery services to motorcycle manufactures and the after-market suppliers in Pakistan by starting an integrated production of motorcycle chains in Pakistan.

The two had earlier in November of 2017 initiated the assembling of motorcycle chains in Pakistan through a technical collaboration.

Both Atlas Group and DID are renowned names in the manufacturing and marketing of auto products. Atlas Group is best known for manufacturing and marketing of motorcycles and cars in collaboration with Honda Motor Company, Japan. It also manufactures various hi-tech components in-house in technical collaboration with leading Japanese components manufacturers including DID.

DID is a leading supplier of advanced automotive technology, systems and components for the world’s major auto-manufacturers and has operations in numerous countries around the world.

The venture marks a significant milestone in the collaboration between two Companies as it strengthens an already excellent co-operation between the two partners.

Riaz Haq said...

#Car dealerships in #Delhi look deserted #India’s #automobile sector is witnessing its worst-ever slowdown. In May 2019, passenger #vehicle sales in the country fell 20.55% year-on-year. #economy #Modi #Manufacturing via @qzindia

Nitin Kumar, a young automobile salesman in South Delhi’s Lajpat Nagar, isn’t having the best of days at work.

Customer footfall at his showroom, which sells Indian carmaker Mahindra & Mahindra’s (M&M) vehicles, has fallen in the recent times.

“The situation has worsened in the past six months,” Kumar said. “Earlier, 60-70% of customers who made enquiries through phone calls and other channels, used to visit the showroom. This has now gone down to 10-20%.”

Falling footfalls and poor sales at Kumar’s showroom is not a one-off instance.

India’s automobile sector is witnessing its worst-ever slowdown. In May, passenger vehicle sales in the country fell 20.55% year-on-year to 239,347 units. It was the steepest drop in nearly 18 years, according to data released by industry body Society of Indian Automobile Manufacturers (SIAM).

Several major automakers are being forced to cut production as inventory piles up.

Mahindra Vehicle Manufacturers, an arm of M&M, informed the stock exchanges (pdf) on June 8 that it would be observing “no production days ranging between 5–13 days” in the April-June quarter as part of “aligning its production with sales requirements.”

Market leader Maruti Suzuki will also shut its plants between June 23 and June 30 to curb the rise in unsold vehicles.

What caused the downturn?
A host of factors has brought India’s automobile industry, the world’s fourth largest by sales, to this sorry state.

First, the Indian economy is going through a slump. The country’s gross domestic product (GDP) (growth) fell from 7.2% in financial year 2018 to 6.8% in financial year 2019, data from Central Statistics Office showed. This has resulted in cautious consumer spending.

Second, automakers are struggling to comply with the government’s new policies, including a total ban on polluting petrol and diesel vehicles, forcing them to discontinue some old models. The government think tank Niti Aayog has recommended that only electric vehicles be sold in the country after 2030.

Besides, the Bharat VI emission standards are set to kick in from April 2020, forcing brands like Maruti Suzuki to remove diesel cars from their portfolio from next year.

“Customers know buying diesel cars will no longer be fruitful, and we cannot convince them otherwise. Petrol variants can still find buyers, but diesel ones continue to wait,” said a Maruti salesperson from East Delhi’s Preet Vihar showroom, who did not wish to be named.

Riaz Haq said...

#Remittances to #Pakistan up 8.45% to $17.875 billon in first 10 months. #SaudiArabia ($4.175 billion), #UAE ($3.787 billion), #USA ($2.786 billion), #UK ($2.756 billion), other #GCC ($1.718 billion), Malaysia ($1.263 billion ), #EU ($485.89 million)

The Economic Survey 2018-19 presented here on Monday by Adviser to PM on Finance, Revenue and Economic Affairs Dr Hafeez Shaikh unfolds that the remittances have increased by 8.45 percent in first 10 months of the ongoing fiscal to $17.875 billion against $16.482 billion during the same period last year.

It further reveals that the major share of remittances are from Saudi Arabia which is 23.36 percent ($4.175 billion), UAE 21.19 percent ($3.787 billion), USA 15.6 percent ($2.786 billion), UK 15.41 ($2.756 billion), other GCC countries 9.61 percent ($1.718 billion), Malaysia 7.06 percent ($1.263 billion ), EU 2.72 percent ($485.89 million) and other countries 5.07 percent.

The remittances during July-April financial year 2019 have declined by 9.28 percent from EU countries, 5.40 percent from other GCC countries. However, a marginal increase in remittances has been observed from Saudi Arabia, 2.08 percent as compared to 9.5 percent decline in the same periods last year. However, visa fee reduction from the Kingdom is likely to boost up the inflows in coming years. A strong increase from USA and UK provided a major push to inflows.

Remittances increased by 21.82 percent form USA and 16.59 percent from UK. Economic turnaround, declining unemployment and rising wages in the US and the UK in the recent past have supported inflows from these countries. Besides the US and the UK, inflows from Malaysia also supported overall remittances, with inflows amounting to $1.262 billion in July-April FY2019.

Over the last couple of years, Malaysia has been facing workforce shortage in labour-intensive sectors, such as manufacturing, construction and agriculture. To address the problem, Malaysia raised the wages for both local and foreign workers in its minimum wage policy of 2013. Following this, the number of Pakistanis going to Malaysia for work has been rising since 2014-15, leading to increase in remittances from the country.

Riaz Haq said...

Number of dentists in Pakistan is growing at a rate of 2000 per year.

There are now 22,595, according to Pakistan Medical Dental Council (PMDC), 100% growth in 10 years.

Rapid growth in dentists is an indication of Pakistan's growing middle class.

American health journalist Mary Otto links access to dentists with class divide sand affordability.

"The Class Politics of Teeth. Inequalities in oral health and dental access reflect our deepest social and economic divides".

Riaz Haq said...

Number of dentists in Pakistan is growing at a rate of 2000 per year.

It's grown from 797 new entrants in 2008 to 2132 new entrants in 2018.

2012 1043

2014 1389

2016 1681

2018 2132

There are now 22,595, according to Pakistan Medical Dental Council (PMDC), 100% growth in 10 years.

Rapid growth in dentists is an indication of Pakistan's growing middle class.

American health journalist Mary Otto links access to dentists with class divide sand affordability.

"The Class Politics of Teeth. Inequalities in oral health and dental access reflect our deepest social and economic divides".

Riaz Haq said...

Based on the numbers provided by the now defunct Pakistan Medical and Dental Council (PMDC), as of 2018, Pakistan had about 190,000 non-specialist doctors and another 46,000 specialists. However, there was no breakdown into different specialties.

Looking at the numbers for Pakistan a bit more closely, the Punjab has 83,000 doctors while Sindh has 66,000 doctors. Sindh has less than half the population of the Punjab and almost three fourths the number of doctors as in the Punjab, but nobody I know will insist that medical care in Sindh is better than that in the Punjab because it has more doctors per thousand people.

Coming to the Punjab, reports suggest that there are as many as 40,000 non-formal medical practitioners (quacks) and a lot more practising alternative medicine like homeopathy, traditional Greek medicine (hakeems) and others such. The reason why these non-formal medical providers exist is simply because regular physicians are either not available or are too expensive for the poorest segments of society.

Riaz Haq said...

Three models of #Chinese automaker Changan's Alsvin subcompact launched as #Pakistan's cheapest sedan : 1.3L Manual Comfort for Rs 2,199,999
1.5L DCT Comfort for Rs 2,399,000
1.5L DCT Lumiere for Rs 2,549,000. #automobile #China

The car comes with two engines, a 1.37l VVT engine with 95hp and 135nm torque and a 1.5l engine producing 105 hp and 145nm torque. The 1.3l is only offered with manual transmission while 1.5l will come with a 5-Speed Dual Clutch Transmission.

The features of the car include Sunroof, Cruise Control, Start-Stop Technology (SST) and Tire Pressure Monitoring System (TPMS). It also has 7-inch infotainment screen that allows the user to reconfigure multiple functions such as air conditioning, lighting, and locks. A reverse camera and parking sensors are also included.

The car has adjustable projector headlamps and heated side view mirrors which can help during rain and foggy weather. Alsvin also comes with 2 airbags as standard.

Riaz Haq said...

The registered vehicles in the country increased by 9.6 per cent in 2018 as the number of vehicles have reached 23,588,268 in the last year compared to 21,506,641 vehicles in 2017, according to the data of Pakistan Bureau of Statistics (PBS).

The data revealed that two-wheel registered motor bikes witnessed highest increase during the said period showing a surge in their registration of 11.5 percent. Their number has jumped to 17,465,880 from 15,664,098 in the previous year.

Similarly, motor cars, jeeps and station wagons have grown by 5.3 percent reaching to 3,043,593 from 2,889,500 during the period of one year. However, the growth in the registration of three-wheel motor cycles, trucks, buses, taxis and others vehicles showed normal increase.

The number of trucks has surged to 277,416 from 272,934 in one year time period. The number of buses has also risen to 236,461 from 233,884, the data showed.

Riaz Haq said...

Pakistan becomes the fourth largest bike manufacturer country in the world

Prime Minister Imran Khan met yesterday with prominent industrialists and businessmen in Islamabad. During the meeting, the Prime Minister Imran Khan stated that Pakistan has become the fourth largest producer of bike in the world. Discussing the automotive sector, Imran Khan said tractor exports increased by 10% while the country produced 90% of its parts.

This is not the first time the Prime Minister has cited the bike industry and its apparent success. Last year, the Prime Minister stated that in the fiscal year 2020-2021, Pakistan recorded the largest number of motorcycle sales in the history of the country. He said record motorcycle sales show that the country’s low-income class is making progress. Given that motorcycles are known as the journey of an ordinary person, “aam admi ki sawari”, the Prime Minister Imran Khan says that the increase in motorcycle sales means the strengthening of “aam admi”.

Meanwhile, prices as well as bikes sales speak differently. During 2021, motorcycle companies gradually increased prices. According to our research, Honda has increased the rates by 7 times, Yamaha 5 times, while Suzuki has revised its rates 4 times.

The figures show that the price of the most famous Honda CD70 has risen by Rs. 14,800 last year, while the Honda CG 125 saw a total increase of Rs. 21 000. Meanwhile, Yamaha’s well-known YBR bikes have noticed a price increase of Rs. 30,500 during 2021.

And Suzuki motorcycle prices have risen to Rs. 25,000 last year. It shows how much prices have risen. Surprisingly, despite this repeated increase in prices, sales figures in 2021 continued to show upward trajectories, leading the country into a massive motorcycle manufacturer in the world.

According to the data, sales of Honda, Yamaha and Suzuki motorcycles increased in the period July-November 2021, as well as from month to month. The PAMA report showed that Atlas Honda Limited broke its sales record. In November, the company sold its highest number of bikes at 128,503 units, beating its October sales record when 125,031 bikes were sold.

Honda sales, meanwhile, rose to 563,575 units in July-November from 512,010 in the same period last year. Other Japanese motorcycle companies, Suzuki and Yamaha, also recorded high sales during this 5-month period.

The data showed that Suzuki sold 14,915 bikes in those five months compared to 8,719 in the same period last year. This means that its sales increased by 71%. Meanwhile, Yamaha sales rose to 9,962 units from 8,733 last year, a jump of 14%.

Riaz Haq said...

Bilal I Gilani
From just 3 million motorcycles 15 year ago , we now have over 22 million motorcycles

Ppl had disposable income to afford this

Much of these motorcycle are used for rural to urban mobility

Motorcycles r environmentally less harmful than cars ( ideal is public transport)

Riaz Haq said...

Vehicle Sales in Pakistan

In the first eight months of the current financial year (July 2021-February 2022), the automobile industry sold cars at a record pace and car sales went up by a record 57 per cent. According to the data released by the Pakistan Automotive Manufacturers Association, 149,813 vehicles were sold in the first eight months of the current financial year as against 95,139 units in the same period of the previous financial year. The breakup of the sale data tells interesting tales: of the sold vehicles, car sales accounted for 57.5 per cent, truck sales for 82.2 per cent, jeep/pickup sales for 51.5 per cent and farm tractor sales for 6 per cent during the period. However, the sale of motorcycles and rickshaws declined by 3%. Car sales are likely to continue to rise till the end of the current financial year. The increased sale of trucks shows the revival of economic activities across the country. Farm tractors’ sale figures are also encouraging as the agriculture sector has seen an unprecedented boom, thanks to the farmer-friendly policies of the government. The figure strengthens the government’s claims of economic recovery.

This has happened at a time when car prices have increased multiple times, and the opposition has been protesting inflation. The figures of car sales have puzzled many and they may scramble the main reasons for the increase in car sales when people are worried about inflation.

According to experts, the main reason for the vehicle sale is the single-digit rate trade and macro recovery, which played a significant role in increasing auto sales in the first eight months of the current financial year. The increase in the purchase of such necessities of life, which are considered luxuries in Pakistan, is not a sign of the recovery or improvement of the economy, but the recent figures on car sales establish the fact that the purchasing power of a certain class has increased multiple times. The increasing gap between the rich and the poor makes it hard for social scientists to determine the overall rate of poverty.

These figures are, however, welcome for the automobile sector, which went through troubling times in the last three years. Several plants had to close down operations and lay off the staff. However, the life of the common man may remain the same as their purchasing power has shrunk. The government needs to take concrete steps for the welfare of the people.

Riaz Haq said...

Bilal I Gilani
Pakistan produced 2.4 million motorcycles last year

200k in a month 8000 in a day 1000 every hour


Bilal I Gilani
In one decade motorcycle on road increases from 5 million to 25 million !

Riaz Haq said...

PLSM Pakistan 2019-20

Computer 19 7 12
Internet 48 23 33
Mobile 96 91 93
Pakistan 65 25 45
Urban 71 38 55
Rural 61 17 39
Pakistan 24 14 19
Urban 37 24 31
Rural 16 7 12
Copy Move 66 57 63
Copy Paste 54 52 53
Send Mail 51 44 48
Spread Sheet 31 20 27
Finding Downloading Software. 33 32 33
Presentation 25 16 21
Transferring Files 35 33 35
Programming 24 15 20
Social Media 46 41 45
Entertainment 60 58 59
Connecting Installing Devices 26 15 22

Riaz Haq said...

India will take 40 yrs to draw level with China's car penetration: Bhargava
As a result, the small car market has been shrinking as two-wheeler customers shelve or delay plans to upgrade to a four-wheeled drive

Maruti Suzuki India Chairman R C Bhargava on Monday at a media interaction said that even with the number of cars per 1,000 population projected to grow by three to five per year, India would still take 40 years to draw level with China.

In the past five years, car penetration on average grew by a mere one per 1,000 population, especially with the closure of plants and disruption of sales during the pandemic.

The key drivers for the car industry’s sluggish growth — and consequently penetration — are twofold: high taxation and higher cost of regulatory compliance, especially for small cars.

Bhargava pointed out that currently, the penetration ratio in India is 30 cars per 1,000 population, as opposed to China’s 221 cars per 1,000 population.

“Based on this calculation, we will take around 40 years,” he said.

The message clear: the Indian car market is not growing as fast as it ought to.

He said the low penetration is reflected in a torpid passenger car market.

“In the first decade of this century (2000-2010), the passenger car market grew at around 10-12 per cent per annum. In the next 12 years, the average growth was a mere 3-4 per cent.”

Unlike other developed countries like Germany that build their manufacturing prowess on the strength of their automotive (auto) industry, India, he said, continues to be dismissive of cars as a product of luxury.

“Government policies are such that they treat cars as luxury products that need to be heavily taxed,” he lamented, adding, “Car affordability is not at all related to income.”

“Taxation on cars in Japan is 10 per cent; in Europe, 19 per cent. Apart from the goods and services tax (GST), cess, state taxes, and a one-time road tax, the tax incidence in India is anywhere from 40 per cent to as high as 60 per cent for premium sport utility vehicles. It’s a call the government has to take,” he said.

At present, four-wheelers are taxed at 28 per cent GST, with additional cess ranging between 1 per cent and 22 per cent, depending upon the type of vehicle.

Cars imported as completely-built units attract Customs duty ranging between 60 per cent and 100 per cent, depending upon engine size and cost, insurance and freight value being less or above $40,000.

He said the cost of regulatory compliance (implementing Bharat Stage VI norms, for instance), especially on smaller and cheaper cars, has been going up. While the cost of doing so is similar for both versions, the impact as a percentage of cost is far higher on a smaller car.

As a result, the small car market has been shrinking as two-wheeler customers shelve or delay plans to upgrade to a four-wheeled drive.

For instance, the market share of a Rs 5 lakh and below car has fallen from 25.8 per cent in 2018-19 to a meagre 10.3 per cent in 2021-22. In the same period, the market for cars of Rs 7 lakh and below fell from 60 per cent to 43 per cent.

Bhargava also took a contrarian view on India’s decision to go in for free trade agreements (FTAs) with different countries — a move strongly resisted by many auto companies that feared the absence of tariff barriers opening the floodgates to imported vehicles entering the country.

Riaz Haq said...

Ritesh Kumar Singh
While domestic #demand is hampered by high taxes on both vehicles, fuels, motor insurance and repair and maintenance as well as traffic congestion that jack up the cost of owning #vehicles relatively stronger rupee is hurting #Exports, for instance, of 2W.

Two-wheeler sales stuttering, how long before it gets better?
After signs of recovery, two-wheeler sales slipped in December showing weakness in domestic demand as well as exports. Expectations are that improving rural demand will drive sales, albeit after a couple of quarters

ighlights December saw leading two-wheeler firms report a sales drop both year-on-year and month-on-month Domestic demand is yet to grow beyond 2019 pre-pandemic levels Rural sentiment is turning positive but yet to translate into two-wheeler purchases Exports were hit due to devaluation in currencies of importing markets After a couple months of improvement, a weak December for two-wheeler (2W) sales is a setback for forecasts of recovery in 2023. This auto segment registered a marginal year-on-year (yoy) sales rise, while declining compared to the previous...