2-wheeler Prices, Loan Rejections Spike | Ahmedabad News

Ahmedabad: With two-wheelers getting costlier by 40%, or more on certain models, the demand has barely recovered to the pre-Covid levels.
From January to June, even though economic activity picked up, two-wheeler sales went down 16% from 5.29 lakh in 2019 to 4.46 lakh this year, according to the data compiled by Federation of Automobile Dealers’ Association (FADA).
The price hike has slowed the pace of recovery of two-wheeler sales, dealers said.
“Due to a hike in the price of vehicles, the consumer sentiment has dampened. A large chunk of the demand comes from youngsters. So the rise in prices has curtailed purchases,” said Pranav Shah, chairman, FADA-Gujarat chapter.
“It was only in June that the demand just about recovered against the pre-pandemic period of 2019.”
With prices of two-wheelers — from gearless scooters to motorcycles — going up, the overall demand has declined. As a consequence, the dependence on financing options has increased. However, with the ticket size of loans going up, the rejection levels have also risen. Estimates of FADA-Gujarat suggest that loan rejections have surged as high as 35% across the state. The figure was 15% in the case of two-wheelers over the past month.
Gujan Mehta, MD, Simandhar Finlease, said: “The ticket size of loans has increased by at least 25-30% over the past couple of years. This clearly indicates a rise in prices of vehicles.”
Mehta added: “On the other hand, finance companies as well as banks have made lending norms stringent, especially for customers who had availed of the moratorium. As a result, the rejections of automobile loan applications are high.”
Industry sources suggest that some finance companies have shut their two-wheeler loan divisions in the wake of the increased risk factors.
Shah said many customers’ credit scores have been impacted as a result of which loan rejections spiked.