The year 2023 witnessed a remarkable recovery in sales, demonstrating the industry's resilience and potential for strong growth, after a challenging few years impacted by the pandemic.
Rural economy recovery
One of the major talking points of 2023 has been the recovery of the 100-110cc motorcycle segment. An improvement in disposable rural income, infrastructure and e-commerce in recent months resulted in some green shoots in the rural areas. Furthermore, festive season enthusiasm helped the two-wheeler segment outpace the passenger vehicle segment in growth to record all-time high sales during the season and in November. ?
The Premium Bike Resurgence
Traditionally dominated by commuter bikes and scooters, the two-wheeler market has seen a resurgence in the demand for premium bikes. In 2023, the premium space saw a slew of new launches with manufacturers shifting their strategy towards premiumisation to capitalise on the trend.
However, the booming sales hit a roadblock in June and the monthly registrations plunged to 46,000 units after the government reduced the subsidy for electric two-wheelers under the second phase of FAME scheme in India. The government slashed the subsidy for electric two-wheelers by around 33 percent to Rs 10,000 per kWh, and reduced the cap on incentives for two-wheelers to 15 percent of the ex-factory price of vehicles from 40 percent. The subsidy is given to electric two-wheeler consumers in the form of an upfront reduced purchase price of vehicles and the government reimburses the manufacturers for the discount. So the OEMs resorted to price hikes soon after the cut in subsidies, which subsequently hit the demand. The decline in incentives also pushed manufacturers for more research and innovation to keep prices lower for higher sales.
- Changing Consumer Aspirations: Today's riders are not just seeking a mode of transportation; they are looking for an experience.
- Rising Disposable Income: Economic factors play a pivotal role in shaping consumer choices. The growing disposable income of the urban middle class has created a segment of consumers willing to invest in higher-end, aspirational bikes.
- Technological Advancements: The integration of cutting-edge technology in premium bikes is a significant draw for consumers.
- Percentage Increase in Premium Bike Sales: A notable aspect of the 2023 sales data is the percentage increase in premium bike sales compared to previous years.
- Market Share Growth for Premium Brands: Premium bike manufacturers, both domestic and international, have seen a growth in their market share.
- Diversification of Premium Bike Offerings: Manufacturers have responded to the rising demand by diversifying their premium bike offerings.
Factors Driving the Premium Bike Trend
While the increase in prices and subsequent slowdown in demand has slowed down overall two-wheeler sales volume over the period, the premium motorcycle and scooter market has shown strong resilience over the period. The electric vehicle revolution has not bypassed the premium bike segment.
- Competition and Innovation: The premium bike segment is becoming increasingly competitive. Manufacturers must continuously innovate to stay ahead of the curve.
- Economic Uncertainties: Economic uncertainties can impact the purchasing power of consumers. Premium bikes, being relatively high-ticket items, may be more susceptible to fluctuations in economic conditions.
The Future of Premium Bikes
As we look ahead, the trajectory of premium bikes in the two-wheeler market appears promising, with several factors influencing their sustained growth.
Rise of Sustainable Mobility
The emphasis on sustainability and eco-friendly transportation is likely to impact premium bike designs. After a long time, all segments of ICE two-wheelers are growing in tandem. Better distribution of income in rural areas will offer heft to the entry segment, whereas a growing economy is likely to sustain demand in the premium segment.