The Hindu : Andhra Pradesh / Hyderabad News : Bike sales hit by the global meltdown Recession Effect

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Friday, Dec 05, 2008
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Andhra Pradesh

Andhra Pradesh - Hyderabad

Bike sales hit by the global meltdown Recession Effect

Abhijit Dev Kumar

Rising interest rates, banks’ reluctance to lend for two-wheelers cited as factors

Earlier, one could pay 5 to 10 per cent of the bike’s price towards down payment
Now one has to cough up anywhere between 30 and 40 per cent initially

HYDERABAD: The global meltdown impacted the sale of motorbikes and it is felt even in the city. Coupled with high interest rates and reluctance of banks to offer two-wheeler loans, the larger-than-usual sum of down payment has wreaked havoc in the two-wheeler market.

Down payment

Quantum of down payment percentages has shot up exponentially, destabilising the market. “Earlier, one had to pay between five to 10 per cent of the total price of the bike towards down payment. But today, those investing in a two-wheeler have no choice but to cough up anywhere between 30 and 40 per cent initially,” says Roy Kurian, Business Head (South), Yamaha Motor India Sales Pvt. Ltd.

Dealers say that rising interest rates have impacted the drop in sales to quite an extent in the last few months. “The interest rates still rule high in spite of the Reserve Bank of India (RBI) easing the situation.

Also, most financiers have opted out of offering two-wheeler loans, while some are selectively giving,” according to an official of a Bajaj auto outlet.

Even though advertisements of fast and stylish bikes are being incessantly aired/published in the media, the ‘wait-and-watch’ attitude of buyers has worsened the scenario. “I don’t want to invest in a two-wheeler right now, because the prices of other commodities too have also risen severely. I think it is worth waiting for some more time. None of my friends are planning to buy bikes at present,” says Aakash Roy, an engineering student from JNTU.

Confirming this adverse market situation, Mr. Kurian says, “No one is ready to invest now and people are holding their money back. Another reason fuelling the situation is, fancy two-wheelers are bought by the IT and real estate players who are now bearing the brunt of the economic impact.” He also doesn’t foresee the market to rebound immediately.

But, high-end bikes (above 150 cc) such as Yamaha’s R15 and FZ-16, Royal Enfield’s Bullet, Hero Honda’s Karizma and Unicorn from the stables of Honda are still being sold in decent numbers. Officials from Honda Motorcycles and Scooter India Pvt. Ltd disclosed that the sales have been stable in the last few months.

The overall sale figures of the company were clocked at 94,222 units, from which 4,200 units were sold in Hyderabad alone.

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