Despite state government schemes that offer bicycles to low-income households, 'roadster' bicycles have seen subdued demand. The share of the ‘roadster’ segment in the bicycle industry has fallen from as much as 70 per cent to around 55 per cent, while the ‘fancy’ segment has been gaining market share.

The Indian bicycle industry counts ‘roadster’ and ‘fancy’ as the two primary segments. The ‘roadster’ segment, priced at Rs 2,500 to Rs 4,000, is mostly used in rural areas for commuting, while the ‘fancy’ segment at is priced above Rs 4,000 and can go all the way up to Rs 10 lakh.

K.B. Thakur, Secretary-General, All-India Cycle Manufacturers’ Association (AICMA), told BusinessLine that retail sales of ‘roadster’ bicycles or so-called ‘black’ bicycles, has been declining due to a lack of financing options, upgradation to two-wheelers and the use of alternate transport options driven by better public transportation facilities. AICMA is the apex national body representing the Indian bicycle industry.

However, institutional sales demand has been steady on the back of state government schemes that offer bicycles to low-income households, said Thakur. Last year, almost five million cycles were purchased by state governments, helping the cycle industry maintain its growth path, said Onkar Singh Pahwa, CMD, Avon Cycles Ltd.

“The less affluent section faces the problem of not having enough disposable income to buy a bicycle.. Finance companies have historically been unwilling to provide finance for the bicycle as the amount is very small. For a daily wage earner, this would mean a savings of more than a year or even several years to buy a bicycle. He would rather walk several miles to work than spend his savings on a bicycle and in the absence of financing options, he would not be able to buy a bicycle,” said Pankaj M Munjal, Chairman and Managing Director, HMC, a Hero Motors Company, which accounts for around 40 per cent market share.

Better financing options are also a driving factor for people to upgrade to entry-level two-wheelers instead of roadster bicycles, said Anupama Arora, Vice-President & Sector Head, Corporate Ratings, ICRA.

Meanwhile, the ‘fancy’ segment, armed with better features, has been growing faster -- and will continue to grow -- due to rising aspirations and health or fitness considerations among the urban populace, said Thakur.

For the fancy segment, factors such as a changing lifestyle, increasing purchasing power, increasing demand for kids’ bicycles, and a focus on infrastructure development and environment consciousness, have ensured growth at a healthy pace, and will continue to do so, said ICRA’s Arora.\

Thakur said the features in premium bicycles erodes the common association of bicycles with the poor, which also works in favour of its growth. He drew an analogy to how even the affluent people have a Firefox bicycle, priced at Rs 30,000 or so, along with their BMWs, with such bicycles being used for recreational activities, and increasingly perceived as a style or fashion statement.

Buoyed by this potential, bicycle makers such as Hero Cycles and Avon Cycles are betting on their respective fancy segments.

Avon Cycles will be creating 25 retail outlets across the country in the next two months to meet the requirements of the premium segment, with the number set to go up to 100 by the end of this financial year, said Pahwa.

Munjal said while Hero’s offerings cuts across all categories, the company has “taken cognizance of the lacklustre performance of the bicycle industry as a whole” and it intends to position Hero as a premium brand.

“Since Hero has traditionally been a people’s brand, we have had to make an effort to launch premium products under new brands. Imagine Hero as the Maruti and we are looking to enter the BMW segments with new offerings,” said Munjal. It is aiming to “uplift the image of cycling as a healthy and fun lifestyle choice, as against the earlier perception of it being a poor man’s commute.”

Munjal pointed out some measures in the recent past and some set for the future, to drive home this point. Hero Cycles acquired the premium bicycle brand Firefox in 2015. Thereafter, it also launched premium brands like the Hero Sprint and Hero Sprint Pro. It has also launched an electric bicycle called Lectro, along with its new non-geared version. It is launching the Octane series, which Munjal said is superior in technology and performance.

“Companies can capture the special market (fancy segment) by focusing on factors such as brand loyalty, recognition, distribution network, events, etc,” said Arora.

However, this was not to say that factors weighing on growth were limited to retail sales in the roadster segment alone. The bicycle industry, in its entirety, is saddled with various dampening factors, which hinders its growth and potential.

The bicycle industry has been seeing slow growth rates, with the past few years being witness to an even bigger slump due to demonetisation and GST hiccups, said Munjal. “The overall domestic retail sales saw a decline of 4 per cent in FY17-18 as compared to the previous year. However, in FY18-19, overall domestic retail sales grew by 6 per cent over the previous year (sales in numbers) and we are hopeful that this number will continue to rise in the coming years,” he said. This number pertains to the domestic retail segment alone and does not include exports or sales made to governments for distribution.

The annual growth rate of the bicycle industry is 2-3 per cent, said Thakur. The flat to modest growth has been driven by increasing demand for the fancy segment as well as steady institutional purchases of roadsters, said Arora.

Bicycle ownership has also seen a sharp decline over the years in almost all major cities such as Bengaluru, Delhi, Hyderabad, Chennai and Pune, said Munjal. Smart cities should incorporate bicycle tracks from the design stage itself, he added.

All the industry experts BusinessLine spoke with identified the lack of infrastructure as the biggest challenge to the growth of bicycles in India, particularly in urban areas. In contrast to countries such as the UK, Taiwan, the Netherlands and Germany, Indian cities are being modified every day to accommodate growing four-wheeler and two-wheeler traffic, said Munjal. In cities, factors like safety concerns, increasing traffic and discomfort due to weather and pollution dissuade,people from cycling, he added.

India has a tremendous potential for the growth of bicycles, said Pahwa, even as the per capita cycle ownership in India is one of the lowest compared to developed countries.

Munjal concluded by pointing out two factors that speak of the larger significance of the bicycle industry. 200 million people walk up to 10 km to reach their place of work in rural India, and providing them a bicycle will aid in increasing their productivity and standard of living. Studies by TERI have also estimated that the GDP of the country can grow up to 1.5 per cent if 50 per cent of all work trips made using motorised transport is converted to cycling.

comment COMMENT NOW