Thursday, October 6, 2016

Humble moped vrooms on Indian roads again


The humble moped is back. And driving its return is TVS.
After seeing falling sales in two of the past three years, moped sales grew a whopping 23 per cent in the first five months of this fiscal, registering sales of 3.67 lakh units.
The factors driving the turnaround were the launch of the new 100 cc moped, and the good monsoon that has raised rural sentiment.
The TVS XL 100 is a more powerful moped than its 70 cc predecessor, and has drawn customers from the lower engine categories of motorcycles and scooters with its competitive pricing.
For TVS Motor Company, which enjoys a monopoly in this segment, mopeds still bring a significant portion of sales — it sells more mopeds than motorcycles or scooters. During April-August 2016, TVS Motor sold 367,257 units of bikes and 322,219 units of scooters, while moped volumes were 367,475 units.
“The new XL 100, which was launched in 2015-16, will replace XL Super and XL Super HD,” TVS Motor Chairman and Managing Director Venu Srinivasan at the company’s recent AGM.
“Multiple factors like affordability, ease of handling and load carrying capacity favour the purchase of mopeds over other two-wheelers. Further, a moped with an engine capacity of 100 cc and attractively priced at about ₹30,000 is able to compete directly with the entry segment of motorcycles as well as the scooter segment,” said Subrata Ray, Group Vice-President, Corporate Ratings, Icra Ltd.
Biggest market
Industry analysts BusinessLine spoke to pointed out that mopeds are an attractive proposition due to lower price, easy manoeuvrability and load carrying abilities for people, especially in rural areas.
South India accounts for about two-thirds of moped sales in the country. In FY16, Uttar Pradesh accounted for a sizeable 16 per cent of sales, while Odisha accounted for close to 6 per cent.
Why have most of the other manufacturers given up on this segment, leaving the field open to TVS?
“Since this segment has products priced at the lower end of the price spectrum for two-wheelers, the profit margin may be quite moderate and may not interest many two-wheeler OEMs,” observed Icra’s Ray.
The TVS Motor management declined to discuss the moped market.
This fiscal again promises healthy growth for mopeds, say industry analysts, citing increasing acceptability in more States. Also, 100 cc mopeds are likely to woo price sensitive customers away from other 100 cc offerings — motorcycles or scooters.
According to Mayur Milak, research analyst at Anand Rathi Financial Services, mopeds are expected to post a CAGR of 13 per cent between FY16 and FY18.
However, it will still remain a marginal segment in the domestic two-wheeler industry, accounting for about 5 per cent of volumes.

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