Analysis: Three-wheeler industry performance in FY’20

We track the sales number of all the major 3W makers, the performance of each brand, the growth trajectory and market share in FY'19-20.

Indian domestic 3W industry serves the absolute last-mile, semi-urban and rural transportation activities. The ubiquitous 3W delivers all kinds of goods to the consumer’s doorsteps and acts as a mode of transportation for millions of passengers.

The growth of this vital segment is linked with underline economic activities in the country. The widespread landscape of the country and diverse market place in rural and semi-urban areas, the modest 3W are an essential mode to reach every nook and corner of the country both for goods and people. This makes the three-wheeler segment a sizable volume category, and strong OEMs brands are catering to this segment with distinct product offerings.

PASSENGER 3W LEAD THE WAY

While the overall automotive industry was by down double-digit across segments, the 3W segments seem to buck the trend with a drop of 9% in FY’20 with a total sale of 6,36,569 units. (FY’19: 7,01,005 units).

Mass mobility and last-mile connectivity is a challenge in urban and rural areas. The 3W fills the gap of being a convenient mode of transportation across India. Therefore, unlike the other truck segments, in the 3W category, the passenger vehicle segment dominates with a total share of 82% with a volume of 5,25,015 units and the cargo carrier segment stands at 1,11,554 units. In FY’20, both the segments posted a drop of 8% and 13%, respectively.

Growing demand for connectivity in both cities, towns, Tier 3 and 4 cities and rural areas helping to improve the demand for 3W. Also, the availability of easy finance, expanding networks of OEMs and services support also equally crucial for the growth of the segments. This robust growth is likely to continue over the short to medium-term for 3W segment.

BAJAJ AUTO LEADS THE PACK

The domestic 3W industry has fierce competition among key players including Bajaj Auto, Piaggio Vehicles, Mahindra & Mahindra (M&M), TVS Motors and Atul Auto. All the players are trying aggressively to win over the customers. Bajaj Auto, the pioneer in this segment and most recognized brand of three-wheeler in India, has been able to protect its leadership even after decades. Being the oldest brand and extensive range of products with an expansive network across the country gives a definite edge to Bajaj Auto against the rivals.

In FY’20, Bajaj Auto sold a total of 3,64,817 units down by 8% with a market share of massive 57% emerging as a clear leader in the overall 3W segment with an average monthly sale of 30,000 units. Bajaj Auto sold 3,34,714 units of passenger carrier and 30,103 units of goods carrier; hence, the passenger segment contributes the maximum volumes.

Piaggio Vehicles is the second-largest player in the 3W segment in India with a market share of 24 percent, in FY20, the company sold a total of 1,52,366 units, a drop of 10%. Piaggio Vehicle is a strong player in both passenger and goods carrier segments with 1,05,460 and 46,906 units sold, respectively.

Mahindra &Mahindra (M&M), Atul Auto and TVS Motors are other big OEMs in the segment competing against the strong market leaders to get a bigger slice of this market. M&M sold 58,145 units in FY’20, down by 12%, and a market share of 9%. Atul Auto firmly behind M&M, with a total sale of 40,711 units, it has a market share of 6% in the overall 3W segment. Atul Auto sell a nearly equal number of vehicles in both the passenger and goods carrier segment. Similarly, TVS Motors with sales of 11,934 units, has a market share of 1.8%. Scooter India is another tiny player in the segment and sold 4,550 units with less than a percentage of market share.

Also, last few years, there is an increasing demand for electric three-wheelers as a feeder last-mile people vehicle. Taking the lead, Mahindra Electric Mobility has started retailing its 3W EVs with some marginal traction in sales. In FY’20, the company sold 4,042 units; this constitutes less than one percent of the overall 3W market, yet, M&M is bullish on this segment as awareness of EVs is on the rise and electric 3W operating economic are attractive enough for the consumer.

EXPORT REMAIN STRONG

Unlike the other segments of the Indian automotive industry, export consist is a large chunk for all the 3W makers. India made 3W are in demand in several African and neighbouring countries, and every Indian OEM takes advantage of this demand by exporting to various markets. In FY’20, OEMs posted a total 3W exports of 5,02,169 units, recording a fall of 10% against FY’19.

Bajaj Auto is again the largest exporter of 3W, in the fiscal, the firm has shipped over 2,96,700 units, down by 22%. TVS Motors is a small player in the domestic 3W industry; however, the company is the second biggest exporters, it has shipped 1,61,977 units in FY’20 up 16% YoY. Piaggio Vehicles exports up by 5% to 37,258 units in the fiscal year. Atul Auto, M&M and Force Motors export marginally compared to their domestic sales, the export number of these companies are 3,371, 1651, and 1190 respectively in FY’20.

The 3W passenger and cargo segment have been maintaining a steady demand in both the rural and urban areas. This underlines the critical part these vehicles play at the bottom of the transportation needs. As the market now shifts to BS6 emission norms, all the OEMs have introduced new engine and powertrain, while the prices are likely to go up which may impact the sales. Yet, the customer would eventually embrace by paying more to the new products as they would contribute less tail-pipe emission and help better air to breathe.