A BUMPER wheat crop of 27.5 million tonnes this year has brought a ray of hope among the stakeholders in the two-wheeler industry in reviving the sales of bikes in the rural areas, especially after a massive overall sales drop in 10MFY23. However, industry players are not upbeat about bike sales in urban areas owing to soaring food prices and inflated power and gas bills.

The sale of bikes in rural areas shows the spending pattern of growers depending on whether the crop was good or bad, especially wheat and cotton. The share of the rural regions in total bike sales in the country is 55 per cent, while the urban areas hold 45pc.

A Lahore-based bike assembler said that motorcycle demand is gradually improving in Sindh and Punjab, where wheat is being harvested thanks to a good crop this year. The government had almost doubled the wheat support price for the growers to Rs4,000 per 40kg.

However, he said that the two-wheeler sales in wheat growing areas have not been at par with previous years as growers feel the pinch of cash flow issues since the cost of inputs was higher. Growers` disposable income has also dropped.

He was of the view that high prices of two-wheelers on account of rupee depreciation, parts shortage and plant shutdowns due to restrictions on opening letters of credit and rising raw material prices adversely affected sales volumes, making the cheapest mode of personal transport unaffordable for many people.

As per data from the Pakistan Bureau of Statistics (PBS), the overall production of two-wheelers has drastically plunged by 49 per cent to 1.012m units in 9MFY23 from the last fiscal year. In March 2023, bike production declined to 94,922 units versus 185,174 in March 2022.

Director of Road Prince Motorcycle, SohailUsman, said, `I am optimistic about improvement in bike sales in coming months in anticipation of better sales in the rural areas due to a handsome support price fetched by the wheat growers for harvesting a bumper crop.

`I think that wheat growers in Sindh have not yet bought bikes in higher numbers, and perhaps they have been waiting to earn returns of a good wheat crop,` he said. The industry is also expecting some brisk sales based on the higher rate of cotton crop in October while the rate of cash crops is also high, he added.

`How can a buyer earning Rs 50,000 buy a new bike amidst the cost of living crisis? It is hard to manage Rs 10,000-12,000 monthly instalments if he does not have cash upfront, he says.

When asked why bike prices are hitting the ceiling despite achieving 96pc localisation in 70cc bikes, he said the cost of producingparts by local vendors has soared sharply as they depend on imported raw materials.

A senior market leader at Akbar Road, a hub of used and new bike sales, Mohammad Sabir Shaikh, said the high bike price factor and parts shortage in the assembling units had derailed the two-wheeler sector.

He recalled that Akbar Road was bustling in January-March this year when many people thronged the markets to lift Honda CG125 and Honda CD70 and took them away to Afghanistan. This had created a shortage, especially in CG125 models, and even Afghanis paid a heavy premium or `on` to purchase two-wheelers, changing the fortunes of dealers sitting idle due to sluggish sales.

In urban cities like Karachi, buyers have lost hope in Chinese bikes, which were dubbed as the cheapest bike option in contrast to the skyrocketing price of the Honda CD70cc.

`An urban buyer cannot afford a Chinesebike at a price of over Rs100,000, which cost Rs50,000-55,000 a few years back with registration charges,` Mr Shaikh said.

Buyers who wish to purchase two-wheelers on monthly instalments basis have also disappeared due to rising food prices and utility bills. With a price tag of Rs410,000 for Yamaha 150cc, dealers demand Rs280,000 in advance and set a six-monthly instalment plan for the rest of the amount. This is unaffordable for buyers facing a cash crunch, including ones belonging to the upper-middIe-income group people, he said.

Consumers are trying to buy used bikes whose prices have also escalated after substantial jumps in new bike prices.

A few months back, some upper-middle-income people were in the market for g 125150cc Japanese assembled bikes due to their quality and to cut the petrol bill of moving in four wheelers. But after massive price shocks by assemblers, demand has fallen further.

Production shutdowns in the auto, vending, steel and textile-related units have rendered thousands of people jobless. It means a sizable number of people would first strive to get a job and then think about purchasing a used or new bike. `The Chinese bike assemblers will certainly feel the negative impact of unemployment in their daily sales,` Mr Shaikh said.

New public transport buses in Karachi with reasonable fares have provided a big relief to the low-income group of people who cannot afford used bikes, he added.

Meanwhile, a private bank official in the bike leasing section said due to higher prices of bikes, market dealers are offering new bikes at very high amounts of advance payments and monthly instalments. In contrast, private banks offer flexible packages for a longer monthly payment duration. `The buyers are coming towards bike financing in our bank,` he added. •