Growth Opportunities for Two-wheeler Financing in India

Growth Opportunities for Two-wheeler Financing in India

Digitalization and Rapid Adoption of Electric 2Ws Drive Transformational Growth

RELEASE DATE
07-Jun-2022
REGION
South Asia, Middle East & North Africa
Deliverable Type
Market Research
Research Code: PD53-01-00-00-00
SKU: AU02341-SA-MT_26590
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Description

The two-wheeler (2W) financing market experienced significant growth before the COVID-19 pandemic as 2W adoption growth rates were on the rise in India. Origination value and volume increased steadily between FY 2017 and FY 2020, but the pandemic had such a negative impact on 2W market sales in FY 2021 that it hampered the 2W financing market in India. After FY 2021, the 2W financing market is headed towards returning to pre-COVID-19 levels as the electric (e2W) market expands and most banks and non-bank financial companies (NBFCs) have started lending to electric vehicle (EV) consumers.

NBFCs have dominated the Indian 2W loans space, with a share of more than 50%. NBFCs have maintained a larger market share because of flexible formalities and the availability of larger loans. However, because of changing market dynamics, increasing electrification, emerging fintechs, and better private banking services, NBFCs have lost market share since the COVID-19 pandemic began.

The 2W financing market targeted commuter and premium 2Ws with a ticket size between 1 CC and 110 CC (i.e., more than 1.5 liters). As consumer demands for new models with better features have increased, market share has shifted significantly from the commuter segment to the 2W mid segment, with 126 CC to 150 CC and 150 CC to 200 CC 2Ws in 2021. Additionally, ticket sizes above 1.5 liters have decreased because mid-segment 2W models with similar features are now more affordable.

Further, the latest trends, such as digitalization and new business models, have helped financial institutions reach customers in rural and semi-urban areas across India and cater to their increasing demand.

This study offers a look at the growth opportunities for the 2W financing market in India, including a review of the competitive landscape among financial institutions and banks as well as the top 3 trends impacting the market.

Author: Shraddha Manjrekar

Table of Contents

Why Is It Increasingly Difficult to Grow?

The Strategic Imperative 8™

The Impact of the Top 3 Strategic Imperatives on the Two-wheeler (2W) Financing in India

Growth Opportunities Fuel the Growth Pipeline Engine™

The Indian 2W Market Scenario

The Indian e2W Market Scenario

The Indian 2W Financing Market

The Indian 2W Financing Market by Lender

The Indian 2W Financing Market by Ticket Size

Emerging Start-ups for the 2W Financing Market in India

Emerging Start-ups for the 2W Financing Market in India (continued)

Collaborations between e2W Start-up and Financing Companies in India

Comparative Analysis of 2W Financing Players in India

Shriram City Union Finance Ltd.

Hero FinCorp Ltd.

Bajaj Finance Limited

L&T Finance Holdings Limited

Mahindra & Mahindra Financial Services Limited

ICICI Bank

SBI Bank

HDFC Bank

Trend 1—Digital Financial Inclusion Impacting 2W Financing

Trend 2—Booming eCommerce Market in India

Trend 3—Emerging Fintech Platforms Offering Multiple Financing Options

Growth Opportunity 1—Digitalization Aids 2W Financing

Growth Opportunity 1—Digitalization Aids 2W Financing (continued)

Growth Opportunity 2—Disruption of Start-ups in the 2W Financing Space to Accelerate Adoption of e2W

Growth Opportunity 2—Disruption of Start-ups in the 2W Financing Space to Accelerate Adoption of e2W (continued)

Growth Opportunity 3—Collaborations to Offer Consumers Attractive Financing Options

Growth Opportunity 3—Collaborations to Offer Consumers Attractive Financing Options (continued)

List of Exhibits

Legal Disclaimer

The two-wheeler (2W) financing market experienced significant growth before the COVID-19 pandemic as 2W adoption growth rates were on the rise in India. Origination value and volume increased steadily between FY 2017 and FY 2020, but the pandemic had such a negative impact on 2W market sales in FY 2021 that it hampered the 2W financing market in India. After FY 2021, the 2W financing market is headed towards returning to pre-COVID-19 levels as the electric (e2W) market expands and most banks and non-bank financial companies (NBFCs) have started lending to electric vehicle (EV) consumers. NBFCs have dominated the Indian 2W loans space, with a share of more than 50%. NBFCs have maintained a larger market share because of flexible formalities and the availability of larger loans. However, because of changing market dynamics, increasing electrification, emerging fintechs, and better private banking services, NBFCs have lost market share since the COVID-19 pandemic began. The 2W financing market targeted commuter and premium 2Ws with a ticket size between 1 CC and 110 CC (i.e., more than 1.5 liters). As consumer demands for new models with better features have increased, market share has shifted significantly from the commuter segment to the 2W mid segment, with 126 CC to 150 CC and 150 CC to 200 CC 2Ws in 2021. Additionally, ticket sizes above 1.5 liters have decreased because mid-segment 2W models with similar features are now more affordable. Further, the latest trends, such as digitalization and new business models, have helped financial institutions reach customers in rural and semi-urban areas across India and cater to their increasing demand. This study offers a look at the growth opportunities for the 2W financing market in India, including a review of the competitive landscape among financial institutions and banks as well as the top 3 trends impacting the market. Author: Shraddha Manjrekar
More Information
Deliverable Type Market Research
Author Shradha Manjrekar
Industries Automotive
No Index No
Is Prebook No
Podcast No
WIP Number PD53-01-00-00-00