Automobile sales data has been throwing surprises every month. While all categories have been registering a volatile trend in sales in the past few months, the contraction in scooter sales has come as a bolt from the blue as the country heads to an unprecedented rural economic crisis.
In July this year, total dispatches in the segment saw a drop of 12 per cent at 5,26,504 units. Sales further plunged 22.19 per cent in August with volumes of 5.2 lakh units, down from 6.69 lakh units a year ago, shows SIAM data.
Honda Motorcycle & Scooter India, the country’s largest scooter maker, has recently altered its two-wheeler production plans amid weak sales. In April-July 2019, Honda sold a total of 11,48,794 units of its best-seller Activa, down 21.18 per cent as compared to a year ago period. In the process, its scooter market share has reduced by about 4 per cent to 56.29 per cent from 60.30 per cent in April-July 2018. Scooters contributed 64 per cent to the total sales volume. Another sizeable market share drop is with Hero MotoCorp, which sees its share drop to 7.59 per cent from 10.02 per cent a year ago. The company sold a total of 1,54,922 units in April-July 2019, which marks a sharp YoY decline of 36 per cent. However, TVS Motor Company and Suzuki Motorcycle India seem to be benefitting from the slowing sales of HMSI and Hero. TVS Motor sold a total of 3,81,762 units in April-July 2019, down a marginal 1.52 per cent YoY, which can be put down to poor consumer sentiment.
This decline, analysts say, comes as surprise primarily because even as the two-wheeler industry has been under an analytical microscope with volumes slowing down and even showing a negative growth, the scooter segment was a darling in the two-wheeler space not too long ago, registering double-digit growth. Declining sales notwithstanding, the silver lining is that the share of scooter in the overall share of the two-wheeler market remains a good 31 per cent.
However, industry executives say the plunge is because of the price hikes. “While much of motorcycle sales has fallen on the back of weak demand from rural economy, scooter sales has fallen mainly because of price hikes,” said the senior executive of a leading OEM. “Since the change in third-party motor insurance norms in 2018 and the addition of safety features, scooter prices have gone up by nearly Rs 5,000-7,000 per unit. As a result, the price-sensitive urban consumers, who are the main buyers of scooters, have gone to the wait-and-watch mode. Any relief on the GST front, which would enable us to pass the benefit, may help in the revival of scooter demand,” he said.
Meanwhile, the biggest market share gainer is Suzuki Motorcycle India, which sold 2,25,741 scooters in April-July 2019, seeing 26.34 per cent growth YoY.