Two-wheeler makers are exploring new ideas to keep going as sales flag

As two-wheelers sales continue to slide and the fuel technology debate adds to the uncertainty, manufacturers are using every trick in the book to keep going. Some are borrowing pages from the four-wheeler makers’ playbook to forge tie-ups and collaborations with players in related segments, others are scouting for new opportunities to stay in the game. The gradual shift among buyers towards rented vehicles rather than owned vehicles, the gap in public transportation systems and the steps taken by state and central governments to encourage and incentivise shared mobility have all come as a ray of hope to them.

Take Honda Motorcycle and Scooter India which has collaborated with the start-up Vogo to venture into the scooter-sharing space. TVS Motor has acquired 29.6 per cent stake in Bengaluru-based Condivision Solutions, an online marketplace. Yamaha’s high-end electric scooter will soon be available on the rental start-up Drivezy India platform.

While Honda, TVS, Hero Moto Corp and Bajaj did not respond to questions put up by Business Standard, start-ups working with these firms say the partnership is a win-win: While the two-wheeler makers bring their years of experience and R&D might to the table, the start-up partners introduce new ideas and a strong IT backbone to the mix.

Take the market for shared mobility. It is swarming with new players. Bounce, Vogo, Rapido, Fae Bikes, QuickRides, Wheelstreet, Yulu and ONN among others are expected to add at least 200,000-300,000 two-wheelers on the road in the next couple of years. The opportunity is immense — the shared two-wheeler mobility market has touched 15 million daily trips already.

Speaking on behalf of Bounce, Ankit Acharya says the company in the last 11 months of its operation, has completed 5.5 million rides. In next two months, it plans to touch about 250,000 rides a day. Present in 28 cities, the company plans to expand to 10-15 more, including some from the tier-II and tier-III markets sooner than later. It will add a minimum of 50,000 scooters in each of these cities in the next year or so.

Acharya adds: “If you buy a scooter, there is an EMI cost attached to it, there is a maintenance cost and a fuel charge attached to it. If you calculate multiple expenditures, it would be around Rs 8,000-9,000. When you choose the shared mobility option, you are not only decongesting the road, you are also spending only half of whatever you spend otherwise.”

So what is the cost benefit these players offer? Vogo and Bounce offer a kilometre’s ride at Rs 4-6; Yulu does the same distance at Rs 5-6; Rapido Rs 10-12 per km; and Uber Pool and Ola share at a comparable Rs 15-20 per km.

That also explains the investor interest in this space. Venture Intelligence data shows, start-ups in this space have raised nearly $230 million in the last 20 months.

Most of these players depend on the self-drive model. Bounce, for instance, offers dockless scooters, which means you can pick one from a location closest to you and drop it off at any parking site that is convenient to you. Vogo banks on its designated sub-stations — that is, you hire from a sub-station near you and drop of the vehicle at another sub-station near your destination.

Not everyone is impressed though. For Sohinder Gill, CEO, Hero Electric India, and director general of the Society of Manufacturers of Electric Vehicles, thinks these players will make things worse. He says shared mobility will subdue the overall demand for two-wheelers — that is what has happened worldwide. 

“The industry should accept the fact that achieving 15 per cent plus annual growth rate, as was witnessed earlier, will be difficult here on. It will be much less — the customer base would shrink now as the young generation doesn’t want to own a house or a vehicle and many of them are going for alternative modes of transporation or switching to public transport.”

Anupama Arora, vice-president & sector head, corporate ratings, ICRA Ltd, differs. While these new ventures offer new ideas in transportation, they will not affect retail sales of private two-wheelers — they will in fact improve connectivity in remote places and decongest urban roads.

There are some regulatory hurdles one should be mindful of in the sense that the rules for bike taxis are not yet well established. Rapido and Ola have had run-ins with the law already. In June, the Karnataka government had seized the vehicles operating under the Rapido banner and had asked it to halt operations. Ola drew a fine for operating its two-wheeler taxis in the same city.

The operators and their OEM partners none-the-less remain optimistic. As an operator pointed out: “In a country where the public transportation system is insufficient and the gap between the those who can afford a private ride and those who cannot is high, we will be in demand as we are the bridge between affordability and connectivity.”

Anand Ayyadurai, co-founder and CEO, Vogo adds, "between two of the biggest players in the space, more than 100,000 rides are being completed in a day and they have reached this number in just one year. Even tier-2 cities have taken to shared two-wheeler services in a big way because the cost structure fits right, there is no additional cost of a driver or a rider, and customers don't have to depend on another person to go places."

"Public transport is affordably priced at about Rs 3 per km but is inconvenient, whereas driver-based services like cars and autos charge around Rs 13 a km, but they are convenient. There is a huge gap in between and there is want of an option that is affordable and convenient. Companies like VOGO try to fill this gap. The shared two-wheeler mobility market in India has the potential of 15 million daily trips."