By Pritish Raj
The demand for high-end bikes with engine capacity of 500cc-800cc is increasing in the country on the back of higher purchasing power, aspiration for luxury brands and evolving lifestyles. Besides, biking is also emerging as a hobby among millenials, which was not so prominent 10 years ago mainly due to lesser brands available.
As per Society of Indian Automobile Association (SIAM) data, volumes of motorcycles with engine capacity of 500cc-800cc grew 130% to 8,264 units in FY19 against 3,585 units sold in the previous fiscal. The actual number could be even higher as some companies, including Benelli, MV Augusta and UM Motorcycles, are not listed with the auto industry body as of now. Royal Enfield, which lauched two 650cc bikes last year, saw maximum traction with sales at over 5,000 units in FY19. The bikes are priced in the range of Rs 2.5 lakh to Rs 3 lakh.
Pankaj Dubey, MD at Polaris India, which owns the American Cruiser brand Indian Motorcycle, said with the new entrants in the domestic market in the past four-five years, customers are spoilt for choice.
The aspiration level of high bikes is growing and people, especially youngsters, want to have a product like that. Further, with so many riding events happening in the country, the trend of motorcycling is emerging, Dubey told FE.
Observing the demand scenario, companies like Benelli, MV Augusta, Indian Motorcycle, Triumph Motorcycles and UM Motorcycles, have entered India in the last five years with a range of products in the segment. Although bikes over 250cc engine were earlier considered as premium, the motorcycles over 350cc are now considered luxury or premium. Prices of bikes in the 350cc-800cc segment start at around Rs 2 lakh and go up to around Rs 10 lakh, depending upon the engine capacity. While the overall two-wheeler industry has seen its slowest growth in three years at 4.86% in FY19 due to factors such as hike in insurance premium and liquidity crunch, the luxury bike segment grew at a brisk pace.
The main reason could be that customers buying these products remain unaffected with the macro-economic conditions. Someone willing to pay Rs 20 lakh for a premium bike would not care much about price rise of a few thousands due to factors such as insurance premium, an analyst at a foreign brokerage firm said. Another analyst at Edelweiss Securities said demand towards higher engine bikes is increasing given the ongoing premiumisation trend.
Low penetration levels for premium motorcycles and network expansion across tier-I and II cities are likely to sustain the volume momentum, they noted. Even as volumes have been growing consistently, the penetration of premium bikes is way too less, just four in 1,000 persons. Analysts said even if the penetration increases to 10 out of 1,000 persons, that is good enough, given that India is at a nascent stage in the premium biking space and car penetration is also only about 25 out of 1,000 persons.