Analysis: Three-wheeler industry performance in H1 FY19-20

We track the sales number of all the major 3W makers, the performance of each brand in the first six months of FY19-20. Taking a closer look at the growth, performance of the different segments and forecast of the second half of this fiscal.

Indian domestic the 3W Industry is intrinsically linked with the absolute last-mile and semi-urban and rural transportation activities. The ubiquitous 3W delivers all kinds of goods to the consumer’s doorsteps and acts as a medium of connectivity to millions of passengers. The growth of this important segment is linked with underline economic activities taking place in the country. India a geographically widespread country, the 3W is an important mode to reach every nook and corner of the country. This makes the three-wheeler segment substantially big and hence caters to several major OEMs. In the last three years, the annual sales of 3W stood between 600,000-700,000 units per annum including passenger and goods carrier segment.

PASSENGER CARRIER DOMINANCE

Despite the overall automotive industry slowdown with double-digit dip across segments, the 3W segments seem to buck the trends with a moderate fall of 6.6 percent in H1 FY19-20. In April-September 2019, total 3W industry posted total sales of 3,30,696 units down by 6.6% (April-September 2018: 3,54,279 units).

Mass mobility and last-mile connectivity is a challenge in urban and rural areas. In the absence of buses, 3W fills the gap of being a convenient mode of transportation.  Evidently, the passenger vehicle segment dominates the overall 3W market with a total share of 83% with a volume of 2,73,370 units and 57,326 units of goods carrier segment. In H1 FY2019-20, both the segments declined by 6.3% and 7.9% respectively, a much softer drop than any other segment in the domestic auto sector.

Growing demand for connectivity in both cities and towns, Tier 3 and 4 towns and rural areas helping improve the demand for 3W. Also, finance companies are penetration these areas to help fund 3W buying, this is expected to drive the demand even stronger over the short to medium-term.

BAJAJ AUTO CLEAR LEADER

The domestic 3W industry sees fierce competition among key players including Bajaj Auto, Piaggio Vehicles, Mahindra & Mahindra (M&M), TVS Motors and Atul Auto. All the players trying to aggressively win over the customers, Bajaj Auto is clearly an undisputed leader in the overall 3W segment in India. Being the oldest brand and range of products with expansive networks across the country gives a clear edge to Bajaj Auto against the competition.

During April-September 2019 Bajaj Auto retailed a total of 1,93,131 units down by 6.2%, the company grabbed a market share of massive 58% emerging as a clear leader in the overall 3W segment with an average 30,000 units a month. Bajaj Auto sold 1,76,473 units of passenger carrier and 16,658 units of goods carrier; hence, the passenger segment is the most important for the company with maximum volumes.

Piaggio Vehicles is the second-largest player in the 3W segment in India with a market share of 24 percent, in H1 FY19-20, the company sold a total of 77,894 units, a drop of 9%. Piaggio Vehicle is a strong player in both passenger and goods carrier segments with 56,954 and 28,703 units sold respectively.

M&M and, Atul Auto and TVS Motors are other big OEMs in the segment competing against the strong market leaders to get a bigger slice of the market. M&M sold 29,329 units in H1 FY19-20, down by 4.7%, and a market share of 8.7%. Atul Auto closely behind M&M, with a total sale of 20,741 units, it has a market share of 6.3% in the overall 3W segment. Atul Auto sells a nearly equal number of vehicles in both the passenger and goods carrier segment. Similarly, TVS Motors with sales of 6,206 units has a market share of 1.8%. Scooter India is another small player in the segment which sold 2,054 units and been able to get a market share of less than one percent.

DEMAND FOR EV  

 Interestingly, taking advantage of the growing demand for electric 3W for the last-mile people transportation, Mahindra Electric Mobility has started retailing its 3W EVs, selling a total of 1,341 units between April-September 2019. Mahindra is quite bullish on the electric 3W market and expecting the demand to soar considerably over the next few years.

This electric 3W is easy to operate, and the total cost of ownership is superior to the conventional three-wheeler, this also visible in the sales as most of the buyers are deploying these vehicles on the last mile feeder routes, especially at the Metro station or small distance routes. However, a lot of unorganised players operate in this space, therefore, accessing reliable data is not easy.  

HIGH ON EXPORT

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 neighboring countries, and every Indian OEM takes advantage of this demand by exporting to various markets. In H1 FY19-20, OEMs posted a total of 3W exports of 2,56, 403, a drop of 12%.

Bajaj Auto is again the largest exporter of 3W, in the H1 FY19-20, the company has shipped over 1,56,505 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 76,712 units in H1, up by 16% YoY. Piaggio Vehicles exports up by 7% to 20,065 units in the first half of this fiscal. Atul Auto, M&M, and Force Motors exports marginally, the units by these companies are 2,032, 392, and 685 respectively in between April-September 2019.

In the small commercial vehicle segment, there is a shift of some customers from conventional 3W to 4W mini-truck due to a variety of reasons. This could possibly see some contraction in demand, yet the 3W segment remains strong and likely to grow in both urban, semi-urban and rural areas. As the industry makes a shift towards BS-VI, the vehicle prices certainly go up, this could marginally impact the demand. Stay tuned at TrucksDekho for the complete FY19-20 performance of the 3W industry.