As incomes and aspirations rise, the two-wheeler is no longer the ride of the poor, or considered lowly. Hot in this segment are premium motorcycles and automatic scooters, whose sales are in the fast lane. Interestingly, this upgrade has not brought good news for the numero uno player in the segment, Bajaj Auto, whose market share has significantly dropped by more than 500 basis points, to 27.5%, in the April-August period of this fiscal. The beneficiary has been Motorcycle and Scooter India (HMSI), especially in the automatic scooter segment. Till the end of the last financial year, HMSI had 11.5% share in the premium motorcycle segment, which has shot up by more than 400 basis points, to 15.6%. Analysts at Axis Capital feel Bajaj Auto’s domestic motorcycle market share has suffered owing to the recent transition from BS III (Bharat Stage 3) to BS IV emission norms, where all players, except Bajaj, saw huge pre-buying (at high discounts), and consequently, there was a re-stocking at dealerships in the first quarter of FY18.
Says YS Guleria, senior VP, sales and marketing, HMSI, “Earlier we were struggling with capacity constraints. But with the opening of our 11th assembly line in India, we have been able to meet demand better and increase our volumes. While the premium motorcycle industry has grown by 41% this fiscal, HMSI has grown by 58%.” He added that the company is currently selling around 16,000 units of the CB Hornet 160cc, while sales of the CB Unicorn 150cc and 160cc are above 20,000 units every month. The company’s manufacturing plants in India, buoyed by the recent capacity expansion in its Karnataka plant by 60,000 units, are running on full capacity.
Bajaj Auto’s monthly sales have seen a month-after-month decline since demonetisation in November last year. The firm witnessed positive growth in its volumes for the first time in September this year due to festive sales. Meanwhile, Honda has seen continuous growth in sales and HMSI has crossed 1 million retail unit sales in the festive season alone. Analysts at Axis Capital add, “Considering the overall two-wheeler segment, Bajaj Auto’s market share has fallen to a single digit (9% year-to-date, down 270 bps year-on-year).”
They add this is because scooters gained further market share (34% of two-wheeler industry versus 32% yoy) and its motorcycle market share continues to fall — down 390 bps YTD to 14.6%. The April-August period of this fiscal, Bajaj Auto’s market share in the two-wheeler space fell to less than 10% for the first time ever. There is another first in the same period — Honda’s market share in two-wheelers has shot up to more than 30%. Besides HMSI, even TVS Motor is on a high-growth trajectory. The company’s market share in the premium segment has risen to 13.9% in the April to August period this fiscal, compared to 11.7% in the last financial year.
Arun Siddharth, vice-president, marketing, premium and international business, TVS Motor, says, “For the period April-August, we sold a monthly average of over 42,000 motorcycles from our premium segment. Our plan is to leverage our presence across all segments of the two-wheeler market for growth. We will focus on improving market share and grow consistently. For the premium segment, we are growing at over 35% currently and are confident of growing at a higher rate for at least the next five years.”
As per data provided by Crisil, around 23% of the motorcycles sold in the country are in the premium category. The premium segment has a market size of around Rs 2,500 crore.