Motorcycle manufacturers in the county have raised prices of two-wheelers across different variants. But this is unlikely to put a dent on demand. The sheer growth in motorcycles is such that the total unit sales in a month are often equivalent to the sales in the car segment in an entire year. According to data reported by PAMA, on a monthly average, 128,000 two-wheeler motorcycles were sold during 9MFY17 while this number is 147,000 units during FY18 so far. This monthly average has gone up by 15 percent. Perhaps it is an unfair comparison to make given the affordability factor between the two segments and different target markets, but car sales stood at 139,000 in the 9MFY17 period and 161,000 units during 9MFY18.
These dynamics are similar in India where motorcycles carry more than 75 percent of total auto production and cars take up 15 percent. In Pakistan, the share of two-wheelers is 82 percent against 10 percent for cars. Daily, nearly 5000 motorcycles hit the roads of Pakistan but the demand is consistently growing despite competition in the sector among a number of Japanese and Chinese players.
Growth is unwavering not only because of the organic demand for easy transportation on busy, congested roads created by the growing youth population but also because of the competitive and more or less steady prices of two-wheelers with nominal down payment, financing options, and relaxed installment plans available to purchase them.
Current prices lie anywhere between Rs50,000 and Rs200,000 with a variety of vehicles available for the consumer. Neither the price hikes in cars (between 2-9 percent across different variants), nor the motorcycle price increases will be expected to affect sales. Honda, Suzuki and Yamaha raised prices of their motorcycles by only 2-3 percent; with Suzuki’s hike across all variants at Rs3500; Yamaha between Rs2000-3400 while Honda raised prices in January between Rs500-1000 and in April between Rs500-3000.
Although the sector is not as dependent on imports as the car manufacturers and considerable localisation (Honda is over 90 percent)—the devaluation of rupee against dollar by 9 percent and by 14 percent against Japanese Yen will hit their margins. A comparative 2-3 percent price hike is bearable.
Going forward, while much of the demand is still in the low-engine categories (like 70cc), it is possible the Pakistani market will follow trends familiar to Indian market where the premium motorcycle segment (150cc and above) outpaced the growth in the whole segment as the demand picked up. With greater competition, affordability grows as the price gap between variants closes.
This gives consumers the ability to opt for better quality. Higher engine two-wheelers also have higher resale value, which is important in economies that have vibrant second hand markets.
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