Swaraj Baggonkar Moneycontrol News
Commuter bikes could costs as much as premium bikes after new regulatory and emission norms start getting implemented from next year, a top executive of a motorcycle manufacturer told Moneycontrol.
Onset of the anti-lock braking system (ABS) regulation next year (for all existing 125cc-and-above models), on-board diagnostics (OBD), raw material pricing pressure and Bharat Stage VI implementation in 2020 would push costs of 150-180cc bikes closer that of to 350cc bikes.
"There may be some movement from smaller bikes to bigger bikes because the delta rupee cost (increase) will be the same for everybody by and large, when ABS next year and BS-VI the year after the 150cc bike will cost the same as 350cc," Siddhartha Lal, Managing Director and CEO, Eicher Motors, told Moneycontrol.
Research and rating agency ICRA has predicted a jump of as much as 20 percent in costs of two-wheelers just because of the implementation of BS-VI norms.
To ensure that they are compliant with the norms, two-wheeler makers would need to come up with a completely new layout for fuel injection, air parts, and after treatment of the vehicle. The installation of next-generation OBDs will only add to the rise in prices of two-wheelers.
Honda's recently launched, 163cc, four-stroke bike X-Blade costs Rs 80,000, while the 180cc Pulsar costs Rs 83,500 (ex-showroom, Delhi). A 20 percent hike in the price of the model would put it closer to Rs 1 lakh, which would put it in the same range as the base version of the Royal Enfield Bullet, which costs Rs 1.09 lakh.
Delhi-based Eicher Motors controls Royal Enfield, which is the largest niche bike maker in the country and has models like Classic, Himalayan, Continental GT, Bullet and Thunderbird in its stable. Although Royal Enfield is putting everything behind its expansion plan, which involves the addition of 350,000 units in new capacity next year, it is expecting demand to soften a bit after BS-VI norms come into play in April 2020.
"We are still in market-expansion phase. Sure, the loss of demand will be there, but when we are betting on expanding the market, we will continue to grow. Our distribution has been growing rapidly," Lal said.
According to data shared by the Society of Indian Automobile Manufacturers (SIAM), sales of 150cc-200cc bikes rose 43 percent year on year to 8.45 lakh units. There are more than 20 models in this segment (including their variants) from companies like Bajaj Auto, KTM, TVS Motor Company, Suzuki and Honda.
Other players like Honda Motorcycle and Scooter India (HMSI), the country's second largest two-wheeler manufacturer, is against adding new capacity before 2020, despite operating its existing plants at an average utilisation of over 95 percent.
"We expect overall two-wheeler volumes of the industry to go down post the implementation of Bharat Stage VI (BS-VI). There will be a price increase because of the mandatory implementation of ABS technology from April 1, 2019 and because of the BS-VI from April 1, 2020," Minoru Kato, President and CEO, HMSI, told Moneycontrol.
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