 "TVS Jupiter")
TVS Motors is revving up again. The company that has been finding the going tough in motorbikes, is steadily rediscovering its mojo in scooters. With the recent success of Jupiter, a 110-cc scooter, the company delivered a remarkable increase in sales volumes which increased 39.5 per cent in December, 2013. TVS sold 40,136 scooters last month as compared to 28,763 last December.
The increase in its market share (refer: Jupiter's halo effect) was a result of both its production ramp-up and increased deliveries of its new vehicles, as well as the growth in the scooter segment.
In motorbikes, TVS has not been able to steal a march over its competitors. December-2013 deliveries dipped to 57,576 units against 60,210 in December, 2012, according to market estimates. TVS is facing strong competition in the motorbikes segment with two players strongly entrenched in the upper and mid segments.
Analysts reckon that with the motorcycle segment being dominated by Hero MotoCorp and Bajaj Auto, scooters is the only segment where TVS is better placed to boost its revenues and profits.
Hero is strong in the mid- and lower-end of the motorbike market, while Bajaj dominates the upper-end. Says Yaresh Kothari, automobile analyst, Angel Broking: "It is difficult for TVS to gain traction in the motorcycle market, but it can well do it in scooters, having been in the business for a long time and with some nice products".
And scooters is where the action is. Scooters recorded a strong growth in volumes, surging 20.2 per cent in the last three years, whereas total motorbikes grew in single digits, seeing an increase of only 5.5 per cent.
The scooters market is seeing a sharp growth because a large number of single riders, including men, are buying into the category. Earlier the scooters market was dominated by women buyers or families, with more than one family member riding the two-wheeler.
In the last few years, the trend has shifted. About 36 per cent of the scooter demand is from men who are converting from motorcyles to scooters. Says Kothari: "The demand for scooters is higher than motorbikes and is expected to continue as the demand from rural areas is rising with more people wanting scooters as another mode of transportation" (refer: Scooters steal a march over bikes).
Due to the unisex appeal, improving fuel efficiency and more powerful launches, scooters are seeing a growing acceptance in the two-wheeler space. Analysts are of the view that scooters will outpace motorbikes in growth in the next three years.
All this is expected to benefit TVS Motors. About 22 per cent of TVS' volumes comes from scooters, and the trend could improve further as the company makes new launches in this segment.
TVS Motors is the third-largest player in the scooters segment. A few years ago, it used to be among the top two players in the scooters space with a 20 per cent market share in scooters, but has slipped to third position since. A spate of new launches by competition in the last two years has put a spoke in the wheels of TVS' growth.
TVS is now revving up to regain some of the market share it had lost, and might be in a better position to do so given its legacy as a formidable scooters manufacturer.
TVS is lining up a slew of new launches in the scooters segment. Jupiter has been well-received in the market. The 110-cc, unisex scooter has a waiting period of three months at dealers. At a price tag of Rs 44,220, ex-showroom Delhi, it is lower than the price of Honda's Activa by about Rs 3,000. Jupiter's success has also spurred inquiries for its other scooter products such as the Wega.
The company has said that it plans to launch a new scooter every quarter to increase its presence in the scooters segment. Kothari adds that TVS already had a high market share in scooters, making it relatively easier to regain lost ground.
TVS has been slow in launching new motorcycles and scooters. It launched a the motorbike Pheonix 125 in September, 2012 and followed it up a year later, with a new scooter. Now, the company plans more frequent launches. TVS is slated to launch an upgraded Scooty anytime soon, which is expected to strengthen is scooter franchise.
With four scooter variants now, TVS Motors is the only motorcycle company with the highest number of scooters and analysts say that this could be the key factor in the company gaining further market share.
It remains to be seen if TVS can maintain the momentum it has got following Jupiter's launch, with its spate of new launches.
