Economy

After seven quarters, scooters on a comeback trail

G Balachandar Chennai | Updated on January 24, 2021

Scooter makers and industry analysts attribute the positive growth to the low base of year-ago quarter, pick up in mobility in cities and gradual recovery in economy   -  The Hindu

Growth in December quarter attributed to pent-up demand

Helped by a combination of factors, the domestic scooter market returned to the growth mode in December 2020 quarter after reporting year-on-year decline in volumes for seven preceding quarters.

The total domestic scooter volumes grew by five per cent to about 1.42 million units in October-December 2020 period as against 1.35 million units in the year-ago quarter.

Scooter makers and industry analysts attribute the positive growth to the low base of the year-ago quarter, pick up in mobility in cities and gradual recovery in economy, among other factors. “After the positive Y-o-Y growth in November, momentum continued in December on back of pent-up buying,” said Yadvinder Singh Guleria, Director – Sales & Marketing, Honda Motorcycle & Scooter India (HMSI).

“The recent months saw a small hiatus, due to some new factors interplaying — the phenomenon of work from home and school closures dampened demand. At the same time, there is an enhanced need for personal mobility due to avoidance or lack of mass transit owing to the pandemic. Now, as the country returns to normalcy, we see the demand picking up significantly for scooters,” said a spokesperson of TVS Motor Company.

While commuter bike sales are dependent more on small towns and rural areas, cities make up bulk of scooter volumes. “The growth of scooters can be ascribed to the low base (-14 per cent) in the year-ago quarter owing to inventory liquidation. This, coupled with increased demand on account of re-opening of offices and an uptick in income sentiments, propelled the demand for scooters during the quarter,” said Hetal Gandhi, Director, Crisil Research.

Hero gains share

Meanwhile, scooter makers have also managed to achieve gains from the demand recovery. Aggressive focus on the scooter segment, backed by new product launches, has helped Hero MotoCorp to report significant increase in its market share in the December 2020 quarter.

Hero’s market share in scooters grew to double digits (10.57 per cent) from 7.59 per cent in the December 2019 quarter. With wide offerings now, the company hopes to maintain the momentum.

TVS Motor, the second largest scooter brand, and Yamaha saw marginal increase to 20.99 per cent (from 19.68 per cent) and 4.96 per cent (3.76 per cent), respectively. “TVS scooters have performed well despite ups and downs of the industry owing to its rich portfolio,” said TVS Motor’s spokesperson.

Suzuki maintained its share at 11 per cent, while market leader Honda saw a decline in the market share to 50.81 per cent from 55.87 per cent in the December 2019 quarter.

Recovery in scooter demand is expected to accelerate in the coming months due to new model launches andgradual reopening of schools and colleges.

“We expect scooter demand growth to continue in Q4 FY21 -- a low double-digit growth over a low base (-20 per cent). In the year-ago quarter, OEMs were unable to dispatch vehicles to dealerships at the end of March 2020 due to the nation-wide lockdown, while dealers were focused on liquidating BS IV stock,” said Gandhi.

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Published on January 24, 2021
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