Motorcycle sales have been going through a rough patch in recent times. So far in the financial year beginning April 2015, sales volumes have been 2 per cent lower than what they were in the same period last year. Scooters, however, did much better. During this period, scooter sales improved by 12.4 per cent in volumes over last year.
This trend of scooters overtaking bikes is nothing new. It has been happening for six years now. Vehicle sales typically go through cycles, with a few years of high growth followed by a period of fall in sales. And in the last few years, be it a slowdown or upturn for the auto industry, scooters have always done better than bikes.
When auto industry sales were in full throttle in 2009-10 and 2010-11, sales growth in scooters outperformed that in bikes. Even as the industry slowed down in 2013-14 and 2014-15, with motorcycle sales growing just 2-4 per cent, scooter sales were still up 23-25 per cent.
Reasons for growth
That the scooter market is in the early to mid stages of growth compared with the more mature market for motorcycles may be one reason for the high growth in this segment. Even today, after five-six years of solid growth, scooters form only about 30 per cent of the total two-wheeler sales volumes (scooters, motorcycles and mopeds put together). So, a part of their high growth during this period can be attributed to a small base.
Thanks to this steady upswing, though, scooters have slowly been gaining a larger share of the two-wheeler pie. Since 2009-10, the share of scooters in total two-wheeler sales has steadily moved up from 15 per cent to double that number.
Second, unlike bikes, riding a scooter has also been made simpler, with the introduction of the gearless models. Many scooters available in the market today are gearless. Crowded traffic conditions, poor connectivity through public transport, availability of storage space in the vehicle, more women drivers, style and unisex appeal have all been driving the demand for gearless scooters, especially in urban areas.
Companies cash in
Given that scooters have steadily been seeing good demand, two-wheeler manufacturers have added scooters to their product line to bring in the necessary diversification during the slowdown in motorcycle sales. Today, almost every motorcycle manufacturer, such as Hero, Honda, Yamaha, Suzuki and TVS, offers multiple products in the scooter segment too.
The growing potential for scooters also saw Mahindra and Mahindra acquiring Kinetic Motors, maker of the popular Kinetic Honda scooter as early as 2008. Today, Mahindra Two-wheelers sells scooters such as Gusto, Duro and Rodeo.
However, with products such as the Activa , Dio and Aviator, Honda has always been the market leader in this segment. The year 2010-11 saw the company ceding a bit of market share to TVS and Hero. But that was short-lived. From 43 per cent then, Honda’s market share has moved up to 56 per cent now. The aggressive marketing strategies followed by the company after the split with Hero a few years ago, has helped.
High-end segment
Manufacturers are also focusing on higher segment (90-150cc) scooters, which bring in greater realisations and better margins than lower segment vehicles. TVS Motors, for example, was initially focused only on the 75-90 cc displacement segment, with the Scooty and its variants. It has since branched out into the 90-150 cc segment, with the introduction of the Wego and Jupiter.
Similarly, Piaggio’s decision to go retro with the launch of the Vespa has also paid off well for the company. Though priced at a premium to many of the scooters in its category, the Vespa has done well because of the retro appeal. The company launched a Vespa in the 125-150 cc segment recently.
Ironically, Bajaj Auto, creator of the iconic Chetak scooter, discontinued production in 2009 and has chosen to remain out of the scooters segment till date. But its product portfolio is still well-diversified with exposures to higher segment motorcycles such as the Pulsar , Avenger and its variants, three-wheelers ( auto-rickshaws and goods carriers) and exports (one-third of revenues), all of which are high-margin segments.