Scooter sales point to urban demand worry

Siam says scooter sales growth declined sharply to under 4% in April & May

This article has been modified. Please see the clarification at the end.

Data for the first two months of the financial year show a sharp fall in demand for new scooters, indicating a possible slowdown now creeping into urban and semi-urban markets.

Data from the Society of Indian Automobile  Manufacturers (Siam) shows scooter sales growth declined sharply to under four per cent in April and May, at 708,825 units. In the same period last year, the segment had seen a growth of 25 per cent.

Nine of every 10 scooters (a fourth of all two-wheeler sales) are sold in urban and semi-urban areas.

Yadvinder Singh Guleria, vice-president (sales and marketing), Honda Motorcycle and Scooter India, said: "There is a slowdown we are seeing, especially compared to January-March. There is also a drop in footfalls in showrooms. Conversions are not happening, though we have seen some increase in enquiries since April.”

 

Honda remains market leader in scooters, at 58 per cent. It posted growth of 15 per cent in the two months as against 32 per cent last year.

The country's largest two-wheeler producer, Hero MotoCorp, which trails Honda in scooter sales, saw a 15 per cent fall in volumes in April-May to 107,147, against 126,766 units sold in the same two months last year.

Speaking to analysts, A Srinivasu, head of national sales, Hero MotoCorp, said: "There is a marginal slowing in scooter growth, coming across as urban slowdown. We don't see a big upset in quarter one and quarter two but H2 (second half) should see a revival."

Scooter sales of fringe players like Yamaha, Suzuki and Piaggio have also recorded a fall. However, despite the slowing, new product launch plans of companies are unlikely to change. Both Hero and Honda will lock horns over new products. Yamaha, TVS Motor and Piaggio will also launch new models and upgrades this year.

Analysts said a slowdown in scooter sales was the first of its kind after the segment began defying the downward trend seen in demand for motorcycles.

“Scooters have been growing tremendously in the past few years. Some weakness (in demand) will surely come up,” said a Mumbai-based analyst.

Motorcycles were the first to witness a deceleration in demand, following a weakening of the rural markets. While the segment, failing to meet expectations, grew by only 2.5 per cent last year, it recorded a fall of three per cent in April-May, at 1.83 million units as against 1.89 million in the period last month.

CLARIFICATION
An earlier version of this article had mentioned Honda's market share in scooters at 26 per cent, which has been corrected to 58 per cent. The error is regretted.