Two-quarters of no disruptions will help revive entry-level bike and cars segments: FADA chief  

A clear six months or two quarters of no disruption (from Covid variables and associated issues) could help revive demand for entry-level cars and the two-wheeler segments, says Vinkesh Gulati, president of the Federation of Automobile Dealers Associations (FADA).

While demand in the automotive sector is much better during the first four months of this fiscal year than in the past two years affected by Covid, it will take some time to reach pre-Covid level volumes. “Overall, the industry is still not able to escape from the impact of Covid,” he said.

The shift in the rules

India has always been known for cheaper cars and motorcycles as the industry used to sell bikes in the range of INR 40,000-50,000 and scooters around INR 30,000. So, our volumes were among the highest in the world. But, everything changed with the shift from BS IV to BS VI. The shift to new standards and the pandemic have had a huge impact on entry-level cars and bikes. There are still people who buy, Gulati said, but they all lean toward premium products.

The continued slow phase in the entry-level segment is mainly due to weak sentiment among potential buyers in this category, particularly those in rural areas.

Amid waves of covid, the monsoons of the last three years have been good. MSP prices are the best ever and crop production is getting better every year. There are a lot of positive things on the rural front. This means that farmers are better off and have more money. They have purchasing power. But they don’t buy. He said because feelings are not suitable for them to buy.

Since people have been hit hard by the second wave, they want to make sure that there are no such problems in the near term. In pre-pandemic, people bought two wheels with an initial payment of Rs 5,000 only. Because the feelings and earning prospects were bright at that time. So if sentiment improves, the recovery in the entry-level segment will pick up pace, he said.

“We need at least 6 months of no pandemic or wall monkey related disruptions to the market. This will see the beginning of recovery in rural markets and in subsequent months volumes will start to move north. However, it is likely that it will take at least two years for the two-wheeler industry to reach pre-Covid levels.”

A suitable ecosystem for electric vehicles

Discussing electrification in the two-wheeled segment, he said that everyone sees electric cars as the future. But there was a lot of hype and hype. Instead of making a big noise and hitting the ICE sector, the electric vehicle industry should focus on creating a favorable ecosystem and offering high-quality products.

The impression created is that if you don’t buy an EV, you’re a criminal. In fact, most of the pollution is from older vehicles – BS1, BS2 and BS3, not the current range of ICE vehicles. The electric car industry spends more time criticizing the electric motor sector than making its products worth buying.”

Gulati said many auto dealers have plunged into the electric vehicle business on a trial basis. If all goes well for the electric vehicle business, people will go ahead and expand.”

He also said that a lot of people without any sales experience were often dealing with electric two-wheeler dealerships as “dealers”. “A car is not sold as an item. Buyers are offered an experience along with the product. Car dealers explain features and measures for maintenance of parts, fuel etc. But in the case of electric vehicles, it is gathered that buyers have not been properly educated about the products.”