Scooter share hits multi-year low as urban lockdown cripples demand

Scooters, a common sight in urban jungles, saw sales take a beating during the lockdown as buyers were either forced to put off purchases due to financial constraints or return home disappointed due to dealership closures.

As a result, the market share of scooters in the two-wheeler segment fell to 27.36 percent during the April-August period, its lowest level in six years.

Scooter sales had touched a lifetime high of 33.21 percent in FY18, according to data shared by the Society of Indian Automobile Manufacturers (SIAM).

An urban phenomenon

Though the launch of the Honda Activa, India’s highest-selling scooter, took place nearly 20 years ago, scooters have largely remained an urban phenomenon. This is due to reasons such as underdeveloped roads outside cities, low mileage and lower power compared to bikes.

Rural markets were the first to be eased out of the Centre’s Covid-19 lockdown, leading to dealers opening their doors. Urban pockets, however, were the last to see two-wheeler dealerships reopen. This, say manufacturers, was the primary reason for the sharp swing in market share towards motorcycles.

SIAM figures show scooter sales declined 56 percent during the April-August period to 1.13 million units from 2.56 million units clocked in the same period last year.

The decline in motorcycle sales during the same five months was less severe — a fall of 46 percent to 2.82 million units.

The pecking order

Honda Motorcycle and Scooter India (HMSI) is the largest player in the scooter segment, with a share of 52 percent. TVS Motor Company is second with 21 percent and Hero MotoCorp third with 10 percent.

Suzuki, Yamaha and Piaggio make up the rest of the India market share.

“In FY20 and FY19, the contribution of scooters did not change from 32 percent. The majority of volumes from scooters come from urban and semi-urban India and this is where the maximum lockdown happened,” said YS Guleria, Director (sales and marketing) HMSI, speaking to Moneycontrol.

No change in trend

Honda believes that there has been no shift in the buying pattern of consumers since the lifting of the lockdown. The Japanese company, whose scooter brands in India include Activa, Dio and Grazia, blames the disparities in areas under lockdowns for the loss in share of scooters from the domestic two-wheeler market.

“The moment unlocking started going up to Unlock 5.0, when the majority of the country reopened, we were not in a position to dispatch scooters to these urban markets because the network itself was closed. Once they opened up we have been able to add volumes on a month-on-month basis,” added Guleria.

Expectations of a revival

Scooters are estimated to have generated only 20 percent of their sales from rural markets, while the penetration of motorcycles is more than 70 percent. The balance is steered by mopeds. But demand for scooters, says Honda, is once again gaining momentum in urban markets

“Scooters are consumed more in urban India and they are coming back. Over the coming months we will see the scooter contribution going up. It is not that there has been any change in terms of usage pattern as such. Different geographies were under different stages of lockdowns”, added Guleria.