Think about the slowest growing segment of Indian automobile industry. It is not the three-wheelers or the commercial vehicles. It is the motorcycle, the biggest segment of the industry by volume, marked by top players like Hero MotoCorp, Bajaj Auto and Honda.
Society of Indian Automobile Manufacturers (Siam) data shows that the Indian motorcycle market has grown by less than six per cent cumulatively since FY14. In the same period, domestic passenger vehicle market expanded by 20 per cent, commercial vehicles grew by 13 per cent and three-wheelers by 12 per cent.
The volume of motorcycles, the largest segment by units sold, has remained stuck between 10 and 11 million units a year in last four years. While two consecutive deficient monsoons (2014 and 2015) were a factor, the larger impact is coming from a shift towards scooters. If we include scooters, the two wheeler market shows growth of 19 per cent between FY14 and FY17. This implies that the all the growth is coming from scooters.
Domestic scooter market has expanded from 3.6 million units in FY14 to 5.6 million units in FY17, growing 55 per cent. However, motorcycle volumes grew only six per cent from 10.48 million units to 11.09 million units in the specified period. This is also visible in the volumes sold by top players. Hero MotoCorp, the country’s largest two-wheeler maker, had sold 5.42 million motorcycles in FY14 and its domestic sales stood at 5.69 million units in FY17, showing a cumulative growth of five per cent.
Bajaj Auto, the second biggest player in the domestic motorcycle market, had sold 2.09 million units in FY14 and sales dipped marginally to 2 million units in FY17.
“There has been hardly any growth in motorcycle sales for the last four years,” said the Pune headquartered company in its FY17 annual report.
The lack of growth to some extent is an outcome of two consecutive years of deficit monsoon (2014 and 2015) which impacted sentiments in rural markets, which accounts for almost half of motorcycle sales. At the same time, there is a shift towards scooters in many urban markets due to the convenience it offers.
Scooters have captured more than one-third of the domestic two wheeler market for the first time in over a decade. A sustained double digit growth in scooter sales year after year has inched up its share to over 34 per cent in the world’s biggest two wheeler market during the first quarter of this year.
The motorcycle segment, which commanded over 70 per cent of share in FY14, is now down to 62 per cent. Mopeds form a small four per cent of two wheelers.
Hero believes that the domestic market has a lot of scope for growth. “The current penetration level of two-wheelers in the country remains low. I, therefore, believe the domestic two-wheeler industry has significant scope for consistent growth in the years to come. As the market leader, Hero is very well poised to drive this growth,” said Pawan Munjal, chairman, managing director and chief executive officer at Hero MotoCorp.
However, Hero is aware that a significant chunk of this growth will come from scooters. “As the market leader, we aim for leadership across all segments, both in motorcycles as well as scooters. Scooters are also witnessing phenomenal growth and our goal is to aggressively gain market share in this category as well. We will be augmenting our scooter portfolio over the next few quarters with multiple new launches,” said Munjal.