MOSL: AUTOMOBILES-Scooterization wave to intensify-Penetration of scooters to improve gradually in the rural markets

​AUTOMOBILES: Scooterization wave to intensify; Penetration of scooters to improve gradually in the rural markets

We met Mr Yadvinder Singh Guleria, Senior Vice President (Sales & Marketing), of Honda Motorcycle & Scooter India (HMSI). He expects scooterization in the Indian 2W space to continue, going forward – the share of scooters is likely to increase to ~40% of the overall 2W market in the next 2-3 years (from 33.7% in YTD FY18), overtaking entry-level motorcycles to become the single-largest segment. He mentioned that the pace of scooter penetration in the rural markets has been slower than expected at the moment, but should increase gradually, led by an improvement in road infrastructure. Deeper rural penetration is the next focus area, with HMSI aiming to take scooterization beyond urban areas with the launch of the rural-focused ‘Cliq’. The company is expected to be the biggest beneficiary of the upcoming CBS norms (up to 125cc) due to its technological edge and tried-and-tested models.

Scooterization to continue, more scope for further penetration

HMSI sounded optimistic on scooter demand, expecting the share of scooters in 2Ws to continue increasing to ~40% over the next 2-3 years. Increasing acceptance of scooters as a family product, easy ride/comfort, improving road infrastructure and e-commerce continue driving sales in the urban/semi urban areas. There is a gradual increase in the acceptance of scooters in the rural markets with an improvement in road conditions. India is likely to follow trends of ASEAN markets, where the share of scooters in the sales mix is as high as 75%. Markets like Indonesia/Vietnam/Thailand almost run on scooter, and India could see similar penetration over the long term.

Scooters to be single-largest segment, overtaking entry-level motorcycles

HMSI expect scooters to grow to become the single-largest segment in domestic 2Ws, overtaking entry-level 100cc motorcycles over the next 2-3 years. HMSI believes that there is still enough room for scooters to grow even in markets where penetration is ~50%. Improving road infrastructure in rural areas and the declining price gap with the launch of Cliq are expected to drive scooter demand in the rural markets. This, along with the launch of suitable products (with aesthetics and utilities like motorcycles), should help HMSI lead scooterization in the rural markets.