Indian two-wheeler majors target new global markets as exports to Africa slide

• India’s 2-wheeler exports continue to struggle as demand from its largest market – Africa – continues to slow down.
• Two-wheeler makers are seeing a sharp rise in demand from new geographies like Brazil, Mexico, Philippines and Turkey.
• While weak demand from Africa will impact volumes of Bajaj Auto and TVS, demand from other geographies hold promise.
  

Export of two-wheelers, which were booming till a few years ago, have now hit the slow lane. In FY23, export of motorcycles declined by nearly 20% to 3.65 million units, while scooters clocked a rise. Africa was a very large market for India’s two-wheeler exports but that market has been slowing down in recent years. In FY20, Nigeria accounted for 25% of India’s overall two-wheeler exports, but in FY23 Nigeria’s share is down to 12%, shows industry data.

The bad news is that all other African markets in the first quarter of the current fiscal year are also looking weak. As demand from African markets are expected to remain weak in FY24, it could impact volumes of Bajaj Auto and TVS.

Now for the good news, there is demand for motorcycles and scooters made in India across new geographies like Mexico, Philippines, LatAm and Turkey. Going by the run rate of monthly volumes, the share of Philippines in India’s two-wheeler export market could rise to 8% in FY24 from 4% in FY22. African markets are expected to struggle as those economies continue to battle economic and political turmoil.

Analysis done by Antique shows the change in India’s top exports markets for two-wheelers and why FY24 could see a turnaround. According to Antique, “In the first 3 months of FY24 the two-wheeler exports continued to remain weak with the overall decline of 31%.

However, there are some green-shoots in terms of recovery in the exports of scooters with 40% growth. We however, see the exports recovering in the second half with the African markets recovering from the slowdown and expansion of Indian OEMs in the new geographies.”

Auto analysts believe that with new export markets emerging, India’s flagging two-wheeler sales may get a boost. New demand for both scooters and motorcycles is likely to come from countries such as Brazil, Colombia, Mexico, Asia and LATAM demand for personal demand for personal mobility is visible. According to analysts, these geographies are different from African markets in terms of vehicle usage. While African countries use two-wheelers for commercial reasons, buyers in LATAM, Brazil and Philippines use two-wheelers for personal mobility. The demand for scooters and premium two-wheelers is therefore on the rise in these countries.

Top OEMs And Why They Dominate

Bajaj Auto: The top four export markets are Nigeria, Philippines, Colombia & Uganda. These countries account for 53% of Bajaj Auto’s total export volumes from India. More than half these volumes are from the 100cc models. But to capitalise on rising demand in Brazil, Bajaj Auto is setting up an assembling plant in Brazil to capture the LATAM market and improve product mix.

TVS Motors: For this two-wheeler, the largest export market in FY23 was Guinea. TVS exports have grown at a compounded annual growth rate of 11% between FY20–23 as demand from African markets grew. More than 60% of the exports of TVS came via Africa last financial year. Like Bajaj Auto, the company is looking to expand its footprint in LATAM and West Asia.

Honda Motorcycle and Scooter India: For this Japanese two-wheeler maker, Colombia is the largest market where it has gained share from Bajaj Auto, says Antique Stock Broking. LATAM again is a key focus market, even though it has a plant in nearby Bangladesh.

Royal Enfield: The four top export markets for this leisure bike maker include: Brazil, US, Italy & UK. These countries account for 51% of its export volumes. Brazil’s volumes grew 80% YoY in FY23, while Italy and US volumes grew 107% & 30% year-on-year. It has 7% market share in the United States in the mid weight category and 9% in the Asia-Pacific, Europe and Middle-East.