The Hindu Business Line : `Fuel price hike will not hit 3-seater auto market'

IF you are alone and travelling in a regular three-seater autorickshaw, you would loathe the steep fare you have to pay. Particularly that short haul, the cost of which leaves you seething like a fool.

Is it the driver's avarice or poor economics that is to blame?

Given the trajectory of crude oil prices, a fuel price increase is inevitable. Is the culprit the traditional three-seater format of the autorickshaw, which passes on the pinch to the lone customer, unlike three-wheelers of greater seating capacity that restrict per capita pinch due to a higher headcount aboard?

Three-seaters are valued for the flexibility they offer. They take passengers anywhere and don't seek a minimum quota of passengers to undertake a journey.

A vast majority of vehicles in this category are petrol driven, diesel variants don't form a big base yet. It is only Delhi and Mumbai that have access to cheap CNG.

Mr C.K. Rao, General Manager (Marketing), Bajaj, estimates the number of three-wheeler passenger carriers in the country at around 20 lakh. Of this, diesel vehicles will be just 1.5-2 lakh; those running on CNG account for another one lakh. The rest, nearly 17 lakh vehicles or 85 per cent of the category run on petrol, price of which is the highest among the three main automobile fuels.

Autorickshaw drivers sometimes blame the lack of alternative fuels for the steep fares. For instance in Navi Mumbai, the arbitrary fares are blamed on the absence of CNG - a stark contrast to near-by Mumbai with its more stable tariff.

Mr Rao disagreed with the argument that high fuel price posed a generic challenge to three-seater autorickshaws. He said the Indian transport market was sufficiently segmented to keep the three-seater configuration economically viable.

As he put it, almost every category of consumer can afford a certain means but not the next higher one. Those using a three-seater autorickshaw are no different and belong to a definite niche in much the same way as those who wait for the point-to-point service offered by a Minidor boasting higher seating capacity, said Mr Rao.

Further, the three-seater's place is secure thanks to the vehicle's unique capabilities. Shift to a larger three-wheeler and point-to-point operations, you may find yourself competing with other modes of transport such as buses, he said.

"That is too uncertain a situation to do business in," Mr Rao said, adding that Bajaj Auto is not looking at three-wheelers of higher seating capacity.

The company's sales of passenger three-wheelers have been growing at 3-4 per cent, fuelled mainly by replacement demand. That is until this October when an unprecedented 14 per cent fall in sale of passenger carriers saw its entire three-wheeler volume decline by 8.5 per cent from 20,834 units to 19,062 units.

In sharp contrast, its sale of goods carriers for the month was up 20 per cent and for the April-October 2004 period, it was up by 77 per cent.

So, what went wrong?

Mr Rao attributed the fall to the ban on vehicle registration in select volume markets. When States wish to correct congestion or pollution, the stick easily lands on three-wheelers. It is a market replete with variables beyond the ability of manufacturers to control.

"I expect registrations to start again in another month or two. October was an aberration," he said.

Bajaj Auto has been improving the three-seater's fuel efficiency and increasing the durability of its components to contain the driver's operating costs.

True, flexible transport comes at a price and the profile of the three-seater's market may want a certain level of economic well-being as a pre-requisite. But the market, so far, has been the country's top 150-200 towns.

"It is the next 100 towns that will now bring in the growth," Mr Rao said.