The Hindu Business Line : Fall in passenger carrier sales hits 3-wheeler industry growth

EVEN as a range of domestic and multi-national players are drawing up plans to enter the category, the three-wheeler industry seems to have lost its double digit growth momentum over last year.

In fact, according to industry data, while the industry grew by about 21.4 per cent between April-December 2002 to April-December 2003, the growth was only 9.4 per cent in the period between April-December 2003 to April-December 2004.

Market watchers point out that the deceleration in growth has much to do with the slowdown in sales of passenger carriers with many State Governments implementing restrictions on its sales due to pollution and other related reasons.

Resultantly, most of the current demand that is coming in for three-wheelers is through replacement demand, and not new vehicle purchases.

"It is the prerogative of the State Government to issue permits to new three-wheelers. If the number of vehicles on the road is more, there is a reluctance to issue permits for passenger carriers. Also it has been seen that Andhra Pradesh, which is a big diesel market, has seen a slowdown in demand. We expect the scenario to show some changes once States start renewal of permits and with the introduction of alternative fuels," Mr R.L. Ravichandran, Vice-President, Business Development and Marketing, Bajaj Auto, said.

Data for the last few months shows that the passenger carrier category which accounts for a major part of total three-wheeler sales has actually degrown from 16,150 units in September 2004 to 13,058 units in December 2004.

In fact, analysts have blamed the marginal increase in Bajaj Auto's Q3 profit to a drop in its three-wheelers sales. However, the company states that it has sold 1,68,000 units in the first nine months of the current fiscal, which is exactly the same as last year, and is aiming at three-wheeler sales of 2,00,000 units in the current fiscal.

Further, its exports in this category have been impacted by the Bangladesh Government's proposal to introduce CNG/LPG compliant three-wheelers. Most of the company's three-wheeler exports are to Bangladesh.

Within the country, Bajaj Auto is by far the leader in the passenger carrier segment, with a market share of about 75 per cent. The company plans to launch a six-seater variant in the coming weeks to better cater to replacement demand in the segment. The domestic goods carrier segment, on the other hand, has been seeing steady growth of upwards of 25 per cent. The segment grew by 26.1 per cent from 75,233 units in April-December 2003 to 94,857 units in April-December 2004. Piaggio India is the current market leader in this segment with sales of 31,503 units in April-December 2004.

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