Thursday, 11 Sep, 2025
By: Sutanu Guru
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Domestic sales of two wheelers are growing, but definitely not booming the way passenger car sales have been for more than a year. In August, domestic sales clocked 1.56 million units, 16.7% higher than August 2021.
Domestic sales of two wheelers are growing, but definitely not booming the way passenger car sales have been for more than a year. In August, domestic sales clocked 1.56 million units, 16.7% higher than August 2021. It is also much higher than 1.38 million units clocked in July, 2022. But these numbers conceal more than they reveal. That is because 2021-22 was a brutal year for the two wheeler industry. Sales actually declined 11% to 13.46 million units, the lowest sales since 2011-12. In the same period, passenger car sales improved 13% to cross 3 million units. Passenger car sales have actually been booming since July 2021 and the boom continues even in the current financial year. Not so with two wheelers. Here are the month wise numbers released by the Society of Indian Automobile Manufacturers: 1.15 million in April, 1.26 in May, 1.3 in June, 1.38 in July and 1.56 million in August 2022. No doubt, there is a steady improvement. But it would be instructive to remember that this growth merely marks a recovery towards old level of sales. In contrast, virtually all automobile industry analysts reckon that passenger car sales will see record sales in the current year.
Source: Society of Indian Automobile Manufacturers
The reason is very simple: two wheelers are purchased by aspirational Indians whose families have climbed out of poverty and are struggling to enter the middle class. Unlike upper middle class Indians who buy cars, aspirational Indians are clearly not feeling confident enough about their income prospects to invest what is a large sum for them in a two wheeler. Besides, the exceedingly high costs of petrol has also dissuaded aspirational Indians as they can’t afford the fuel costs. As the accompanying chart shows, two wheeler sales have been declining and stagnating for quite a while. From a record high of 21.17 million units in 2018-19, two wheeler sales have been steadily falling and crashed to 13.46 million units in 2021-22. The most optimistic estimates project sales in 2022-23 at about 18 million units; much lower than the peak achieved in 2018-19. This is despite a GDP growth rate of 8.7% in 2021-22 and 13.5% in the first quarter of 2022-23. The sobering realty is: even the optimistic estimate of 18 million units in 2022-23 is possible only if there is a massive growth in demand and sales in the up coming festival season.
Basic economics tells us that purchases o goods and services depend both on current income levels as well as consumer sentiments. This is particularly true of “discretionary” or “non-essential” expenditure. For the aspirational consumer in India, two wheelers come under the discretionary category. This consumer sentiments for this large segment of the population remains very weak. The day after the first quarter GDP figures were released on August, the newspaper Mint featured an analysis of consumer sentiments based on a nationwide survey conducted by C Voter. The survey revealed that 51% of the respondents (in late August 2022) stated that their disposable incomes had decreased. And three in four said they were finding it difficult to manage household expenses. Close to 90% said they may not indulge in discretionary spending in the festive season. In such a scenario, it wOuld be naïve to expect two wheeler sales to go back to their peaks. It is also the biggest challenge confronting finance minister Nirmala Sitharaman: how to revive sentiments of aspirational consumers.
