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Budget cars may hit two-wheeler sales; says Assocham study

Launch of cheap small cars in 2008 to effect sales of two-wheelers

Apnaloan.com Research Bureau

10 Aug 2007

Budget cars proposed by automakers like Tatas may adversely impact two-wheeler sales in metros and semi-urban areas as consumers await the breakthrough, says a study by Assocham.

The study called Two-Wheeler Vs Small Car revealed that consumers in semi-urban areas were more inclined to buy a small-budgeted car priced at around Rs. 1 lakh to satisfy their quest of prestige. While, in metros cars are purchased because they are needed and offer safety.

Assocham says that about 90% of the respondents of the semi-urban segment "categorically stated" that they would manage their movements with existing possession than invest in buying a two-wheeler. The participants from the metros echoed similar responses.

Assocham estimates that around 3, 000 potential customers from the metros and semi-urban areas prefer to await the launch of a small budget car than to buy new two-wheelers owing to the diminutive cost differential. The small-budget cars may hit the markets in 2008.

The study concluded that declining second-hand car prices, particularly in large cities also poses a threat to sales of two-wheelers.