India's lone moped model TVS XL's demand decelerates



  The TVS XL 100, the last man standing in the mopeds category in India, has sold 565,860 units so far this fiscal - still a sizeable number for a single model, but the sales are albeit on a slow lane - down 7.26 per cent. After growing by 28 per cent between April-November 2016-17, and ending the FY17 fiscal with a 23 per cent growth, the XL100 started to lose traction since the beginning of FY18. 


What is interesting to note here is that the in FY17, TVS had managed to sell more mopeds than scooters. While it sold 890,367 units of the TVS XL 100, the company had clocked scooter sales of 826,291 units only. In fact, the XL100 sales were not dampened by demonetisation either - during November to January 2016-17 sales of XL100 grew by 25 per cent compared to the same period in the previous fiscal. In November alone (demonetisation was announced on November 8, 2016), XL100 witnessed a 32 per cent YoY growth. 

The model contributed to over 17 per cent of the company's sales revenue in FY17. 

2017-18, however, has been a different story altogether for the XL-100, a 100 cc four-stroke engined powered moped priced in the range of Rs 38,400 to Rs 39,200 varying with the city. 

XL 100 Sales in April 2017 was down 13.5 per cent on a year-on-year (y-o-y) basis. It fell further in July (60,589 units), down by 19.2 per cent. There was some recovery after September and the April to November period sales stood at 565,860 units down from 610,158 units in the same period last fiscal. 

TVS Motor did not wish to comment on the story. Analysts, however, point out that the increasing adoption of the scooter in the semi-urban and rural market, the major markets for the moped, has led to the old moped losing steam. TVS too has seen traction come from its other models, its scooter Jupiter witnessing good growth during the fiscal. 

Subrata Ray, Senior Group Vice President of ICRA said, "Scooters have found acceptance in the rural pockets with road penetration and the scooter emerging as a multi-utility vehicle. Earlier, the scooter was positioned primarily as an urban vehicle and that too targeted at the male customer. It gradually evolved to become a preferred way of the commute for the urban female. And now it has also spread wings to the rural and semi-urban pockets." 

In fact, in June this year, when the country's second largest two-wheeler maker Honda Motorcycle and Scooter India (HMSI) unveiled its 110-cc scooter Cliq (priced aggressively at around Rs 42,000), the company described it as the next big step on taking 'scooterisation' beyond metros. HMSI has given the Cliq block pattern tyres with deep grooves to provide extra grip and better control over patchy roads, making it suitable for rural commuting needs. 

Motorcycles, on the other hand, have always been a preferred vehicle in rural areas for maneuverability. In its December 2017 analysis of the two-wheeler industry, ICRA has said that mopeds have recorded a de-growth due to customer migration towards lower displacement motorcycles. 

The TVS XL has been selling for over three decades now, and the look has hardly changed over the years. The model has drawn steady sales for TVS even when some of its other models have seen ups and downs. TVS is the only original equipment manufacturer (OEM) that sells mopeds in India now - Kinetic (Luna) and Hero Cycles (Hero Puch) have exited the segment long back.

A strong distribution network for the vehicle and consistency in terms of performance has augured well for the TVS XL so far which has sold over 12.75 million units cumulatively over all these years. The bigger question now is whether mopeds are losing relevance. A Mumbai-based analyst who did not wish to be quoted said, "The market for mopeds have shrunk and South now remains the only major market for these vehicles." 

Dealers confirm this - while a Mumbai based dealer of TVS XL said that this year the demand for the vehicle was on the slower side (bulk of the bookings went to TVS Jupiter), a Chennai based dealer said that they are selling more mopeds than the TVS scooters. In fact, he added that in his dealership in Chennai there was a short wait period for the vehicle now. Dealers point out that the moped is preferred by the small time businessman who has a requirement to carry the load in his vehicle. The light-weight and economical moped make good business sense for him. 

Scooters, which have continued to clock double-digit growth in the past few years, have also emerged as a cost-effective option. 

ICRA analysis shows that the cost of ownership of a 110 cc scooter has increased at a modest rate over the years in comparison to consumer price inflation (CPI). "The operating cost of 110 cc scooter with monthly usage of 1500 km in 2008-2009 stood at Rs 3059 per month as against Rs 3926 per month during FY18, a CAGR of 2.8 per cent as against CPI (annualised) growth of 7.9 per cent during 2008-09 and FY17," it said. 

Scooter sales have grown by 16 per cent during April-November period this year and the robust growth rate is unlikely to slow down in the medium term. 

Ray felt: "Selling over 5 lakh units of a single model is still very commendable. But, TVS perhaps needs to bring in some innovation to catch the consumer's fancy. People are increasingly looking at utility and the TVS XL perhaps now needs to reinvent itself a bit."