Modest moped gets slowdown blues: production down 30.64 % in April-July

TVS Motor Company, the country's only manufacturer of mopeds, says it's committed to keep manufacturing the multi-utility vehicle.

The production of mopeds—the cheap light-powered two-wheeler used in towns and villages—dropped nearly 30.64 per cent in April-July 2019 as sales decline and the country's automobile sector faces one of its worst downturns.

TVS Motor Company, India's third largest two-wheeler maker, is the sole manufacturer of mopeds after Hero and Kinetic exited the sector many years ago.

TVS Motor produced 2,15,247 mopeds in April-July compared to 3,10,330 units during same period last year, marking a decline of 30.64 per cent. Overall scooter production in the country declined by 15.31 per cent and motorcycles by 6.52 per cent during the same period.

Traders in towns and villages use mopeds to carry newspapers, groceries, and fruits and vegetables. In the past few years, the moped improved by getting a four-stroke 100cc engine and an electric-start option.

TVS mopeds cost between Rs 29,990 and Rs 38,474 ex-showroom price in Delhi and give a mileage of around 60 km to a litre of petrol, making it lucrative for price-conscious Indians.

But the automobile industry is in crisis. Domestic passenger vehicle sales in July fell at the steepest pace in nearly two decades, said the Society of Indian Automobile Manufacturers last week.

Moped sales dropped by 20.17 per cent in the domestic market during April-July 2019 to 2,19,279 units from 2,74,672 units, a year ago. Exports dropped by 51.95 per cent to 4,988 units from 10,381 units.

Mopeds comprised around 32 per cent of TVS Motor's total sale volume in fiscal year 2017 but the figure has dropped to 18 per cent in the first quarter of 2019-20.

TVS Motor refused to comment, but analysts and market experts said moped sales were hurt by liquidity crisis, price increase after the implementation of new safety and emission norms, and hike in insurance premium.

The implementation of new pollution norms called BS VI from April 2020 may increase prices of mopeds by around 15-18 per cent, said TVS Motor adding it will continue to manufacture mopeds.

“We have unique attractive qualities which can cater to the bottom of the pyramid and it will completely comply for BS VI,” said K N Radhakrishnan, president, CEO and additional whole-time director of TVS Motor, during an analyst call. The cost increase will be across the board, and not for mopeds alone.

Vivek Kumar, an analyst on the auto and auto ancillaries sector with JM Financial Institutional Securities Ltd, said entry-level two-wheelers require highest reduction in pollution for the BS VI changeover .

“In terms of per cent of vehicle price, mopeds may see 15-18 per cent effective price increase to the customer vis-à-vis less than 10 per cent for a premium motorcycle,” said Kumar.

"BS-VI as a technology, we are confident that it will work in mopeds too. We have to study what is the cost increase and what is the price increase in this category and we have to come up with a strategy how to support these set of customers, because customers are there. We are confident that we should be able to get over it," said Radhakrishnan.