Brands ride the scooter wave

The year 2015 is shaping up as a golden period for scooter brands. One in every three two-wheeler, sold in India today, is a scooter and; scooter sales have grown by 10 per cent in the April-July 2015 quarter. Naturally therefore, Honda and Yamaha and a clutch of other companies are making the most of a shift in customer preferences - there have been eight scooter launches including new models and upgrades since January this year.

Not only are companies rolling out brands faster than ever before, the new models are attractive, appeal as much to men as to women, are easy-to-drive, have a high utility value (under seat storage and load carrying capacity) and are affordable. Manufacturers have even improved mileage figures to bring scooters on par with motorcycles. Honda's Activa i promises a mileage of 60 kmpl, on par with 100cc bikes like Hero Splendor and also priced similarly.

Even until a year ago companies launched, on an average, one scooter in six months while motorcycles were rolled out at double the speed. In the first half of 2015, there have been eight scooter launches, only marginally lower than the 10 motorcycle brand launches. Honda expanded its Activa range last year with the launch of a 125cc engine and refurbished its other two products Aviator and Activa i when it launched their 2015 versions. The Activa is the largest selling scooter brand in the country with monthly sales of more than 2,25,000 units and HMSI has a share of nearly 60 per cent of the domestic scooter market.

Y S Guleria, senior vice president, Honda Motorcycle and Scooter India (HMSI) said, 'From what we have seen so far scooters are unaffected by seasonality.' He is also optimistic about the rural market and he adds, 'with improving road conditions and bettering mileage we see better penetration and improving acceptability of scooters.'

Yamaha is also making hay while the going is good. In May this year it launched an all-new brand, Fascino, to its portfolio of three scooters Cygnus Ray, Cygnus Ray Z and Cygnus Alpha launched in 2012, 2013 and 2014 respectively. The Italian two-wheeler major Piaggio has made additions to the Vespa range with the launch of Vespa SXL and VXL this month. Roy Kurian, vice president (marketing sales), Yamaha Motor India said 'Yamaha has seen a revival post these launches and our sales figures are incessantly going up. We witnessed a growth of 65 per cent in our scooters in August 2015 compared to August 2014.'

The share of scooters in the overall two-wheeler market at slightly over 33 per cent in July is reminiscent of the 1970s and 1980s - a period when two-wheeler champion Bajaj Chetak ruled the streets. Of the total, the share of automatic scooters, which stood at under 25 per cent as of March 2014 has marked a sharp jump last year and this year so far. Demand for scooters has grown in the midst of flat numbers for the overall two-wheeler segment and a dip in motorcycle sales in the April-July period - motorcycles sales dipped 3 per cent to 3.52 million units while scooter sales grew nearly 10 per cent to 1.51 million units, according to the Society of Indian Automobile Manufacturers.

In India more than half of motorcycle sales are in semi-urban and rural pockets and the rest is in the urban market, which is where scooters have been putting up a tough fight, especially in the entry segment (100-110 cc). Guleria says that while the demand for scooters will continue to grow, it is important to consider a long term horizon. 'In about 3-5 years contribution of scooters will rise to 40 per cent but it has to be achieved on a sustainable basis.' Gradually the urban markets for scooters will slow down and companies will have to go deeper into rural areas just like motorcycles.

Even so, many believe that the scooter market is set to shake up brand hierarchies in the two-wheeler category. And that is perhaps why Hero MotoCorp, one of the worst hit by the slowdown in motorcycle demand, has promised to launch at least two new scooters in the festive season. Hero will launch Dash (110 cc engine) and Dare (125 cc engine) this year.

Not all are jumping on to the bandwagon however. Bajaj Auto, having exited the scooter market years ago, has no plans to return, but it does not deny the rise in demand. Kevin D'Sa, president (finance), Bajaj Auto said, 'Scooter share for the year 2014-2015 may be about 27 per cent but in the last five months or last quarter it will be above 30 per cent.

So, the stake is gradually going up. Scooters will continue to grow at about 8-10 per cent or at least about 5-6 per cent higher than the motorcycle industry.' The two-wheeler industry better get ready for a war of brands.

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