Two-wheeler industry to grow at 23-m units by 2016: ICRA

The two-wheeler industry is likely to grow at a CAGR of 12% at 21-23-million units over the next five years on the back of a good demand and steady GDP growth as well sound public transport system in the country, ICRA said in its report.

The two-wheeler industry is expected to grow at a CAGR of 10-12% at 21-23 million units by 2015-16, as against 11.7% at 13-million units in 2006-11, the rating major said.

"We expect the growth will continue as steady GDP growth, moderate two-wheeler penetration level and under-developed public transport system are intact," ICRA Limited''s Senior Group Vice-President and Co-Head-Corporate (Ratings), Subrata Ray, said.

"While the trend in rising commodity prices, hardening interest rates and increasing fuel costs may lead to some moderation in industry growth over the short-term, the growth over the medium-to-long-term is expected to remain in double digits," Ray said.

ICRA believes the landscape of the two-wheeler industry is set to evolve as several new players are keen to enter into the market which would further intensify competition.

Most existing players plan to strengthen their reach into the rural and semi-urban markets to harness incremental growth opportunities and manufacturers are showing increased thrust on new product development and repositioning to tap new customer segments, the rating agency said.