Brands play fast and furious on two wheels
TVS Motor, Hero MotoCorp, Piaggio, Yamaha eye a bigger share of the growing scooter market with a slew of launches in the 125cc segment
As the Indian scooter market matures, automobile companies are pulling out all stops in expanding their brand footprint in the category. They are stepping up the pace of launches, expanding the range and; over the past month and more, companies such as TVS Motor, Hero MotoCorp, Piaggio and Yamaha are also raising the dust in the hitherto slow-paced 125cc scooter segment, changing their product and branding strategies to suit a changing customer.
The consumer is trading up, say companies. They want more than fuel efficiency and mileage from their bikes; sleek, powerful, tech-enabled speed machines are the order of the day. And companies see an opportunity here.
Keen to ride the two-wheeler boom and widen their reach in the category, they are all stepping up their brand play in the 125cc scooter segment. A more expensive segment, this is where companies expect to see the most action in the coming months. Their enthusiasm was evident at the recently held auto expo in New Delhi where several auto majors showcased their new models in the category.
It is more than just dazzle and talk however. Over the past few weeks, Piaggio, Hero and TVS have launched their first 125cc scooters. Hero made its debut with Maestro Edge 125 and Duet 125, Piaggio has the Aprilia SR 125 and TVS launched NTORQ. Even Suzuki Motorcycles India, an old hand in the 125 cc segment, has strengthened its portfolio with Burgman Street, a premium offering.
Malo Le Masson, head of Global Product Planning at Hero MotoCorp says, “Our 125cc scooters will grasp the shift happening towards higher capacity segments in scooters, enabling us to cover 99 per cent of the scooter segment.”
More brands on the road
Unlike the 110 cc or the entry level segment that has a profusion of brands and the bulk of the consumers, the 125cc segment is dominated by two big players: Suzuki (Access) and Honda (Activa and Grazia). Brands have been slack given the low consumer interest in the category in the past. Now that is about to change.
With the entry of TVS and Hero, the top three two-wheeler majors are now present in the category. After Honda, TVS is the second biggest player in the scooter segment with 16.2 per cent market share, while Hero has around 12.9 per cent.
TVS Motor CEO, K N Radhakrishnan, says that there are many young aspirational consumers looking for scooters, which are not just fuel efficient. “Mileage is important, but that is not the only one thing, they are looking at many things,” said Radhakrishnan. The sentiment is shared by rival Hero. Pawan Munjal, CMD, Hero MotoCorp, speaking to the media earlier had said that the company is seeing the 125cc growing faster than the rest in the two-wheeler space.
“There is lot of traction happening, people are moving from 100 cc to 125cc scooters, especially in tier 1 and tier 2 cities,” said Roy Kurian, senior vice president, Sales and Marketing, Yamaha Motor Company. According to SIAM (Society of Indian Automobile Manufacturers), the overall domestic scooter sales between April 2017 and January 2018 was 56,41,243 as against 46,65,774, a year ago, an increase of nearly 21 per cent. During the same time motorcycle segment grew by close to 12 per cent. While the 110cc dominates the scooter segment, 125cc currently constitutes nearly 10 per cent of total scooter sales. This is expected to rise significantly in the coming year say analysts.
Riding up the curve
The opportunity is huge. There are more riders on two wheels because of the state of urban infrastructure and the gender shift within the category (more women are scooter riders). But more significantly the two-wheeler riders are looking to trade up.
Analysts are particularly optimistic about the 125cc since 150cc models are much more expensive and not as fuel-efficient. This category hits the sweet spot for consumers aspiring to upgrade without going far off the mark with their budgets, they say.
The young are driving sales according to TVS. “The size of the opportunity is about 10 per cent of the market now. This new scooter has been designed keeping them in mind,” said Aniruddha Haldar, vice-president (Marketing), Commuter Motorcycles, Scooters and Corporate Brand at TVS Motor.
Companies say that the category is also being blown wide open due to technological innovations. Two-wheeler makers have developed smart technology-enabled scooters that are also high on performance and style. Markus Braunsperger, chief technology officer at Hero MotoCorp claims company's new scooters are the first and only ones in India that feature a start-stop system, based on Hero’s i3S technology.
The challenge, however, is how soon the brands can go national with the models and how long they run their national advertising campaigns. Familiarity with the brand along with easy availability is critical if the brands are to capitalize on the opportunity. There is an audience for the brand, but can companies get out there fast enough, ask analysts.