Mopeds zoom ahead after demand picks up

Segment sees strong growth, but sales of electronic two-wheelers have stagnated

The domestic sale of mopeds for April-October 2009 grew nearly 27% on the back of availability of finance, lower interest rates and the festive season. TVS Motors, which is the only company to manufacture mopeds, sold 320,207 vehicles compared to last year’s 250,896, according to a report from the Society of Indian Automobile Manufacturers (SIAM).
 
“TVS Motors is heavily dependent on financing for the sale of (its) vehicles. In 2008-2009, the overall financing had reduced to 40% as compared to 66% in 2005-2006. Now with financing conditions improving, the sale of mopeds has increased,” said Sandeep Patil, an auto analyst from Kisan Ratilal Choksey Shares and Securities.
 
The sales of mopeds are dominant in semi-urban and rural areas especially in southern states like Andhra Pradesh, Tamil Nadu and Karnataka which account for 85% of the total market share.
 
Another factor which has boosted the sales of mopeds was the good monsoon in the southern peninsula which had been at 96% of the long-term average, according to the Meteorological Department. Agriculture output, which depends on the rainfall, provided an indirect boost to the sales of mopeds, the analyst added.
 
Again, the Bharat Stage IV (BS IV) implementation in April 2010 would mean lower levels of vehicular emissions—comprising hydrocarbons, nitrous gases, sulphur, carbon monoxide and particulate matter—which will ensure pre-sales in the months of February and March next year and increase the sales of mopeds to 538,000 units, an increase of 22% over 2008-2009.
 
These factors might not lead to significant rise in the domestic sales of mopeds in the long-term as there are signs of interest rates tightening, a view which is being maintained by a SIAM official.
 
However, if mopeds exhibited a stellar performance for the first seven months, Electronic Two- Wheelers (ETWs) put up a disappointing show. The domestic sales of ETWs for April-October 2009 dropped 83.8% to 3,001 units. Electrotherm (India) Ltd, the largest manufacturer of ETWs, did not respond to an email sent to it by Moneylife.
 
A factor which has affected ETW sales is the good performance put up by non-geared scooters (below 100cc), which are becoming increasingly popular among urban women and younger customers.
 
“The ETW market is still in the nascent stage, with its usage limited to urban areas only. There are other limitations also like infrastructure problems related to battery charging, total running capacity and maximum speed going to only 50-60 km per hour,” Mr Patil added.
 
The problem facing ETWs is that the market has not yet stabilised. Further, this segment is dominated by regional players and it is waiting for the entry of big brands like TVS and Hero Honda, the SIAM official said.

- Aaron Rodrigues [email protected]

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