As scooters fly, a seven - way war looms

Scooters are blazing a long, wide trail.

The segment, written off by many not so long ago, is getting crowded with each passing year as demand rules strong.

As of January this fiscal, the segment has logged 23% growth, followed by motorcycles with 14%, according to data provided by the Society of Indian Automobile Manufacturers. Overall two-wheeler industry growth was at 15.06%. What's more, at 2,067,504 units, scooters accounted for nearly 18% of two-wheeler industry volumes, too.

Honda Motorcycles and Scooters (HMSI) dominates the segment — once the stranglehold of Bajaj — with a market share of 46%. TVS (20%), Hero Motocorp (16%), Suzuki (10%) and Mahindra 2 wheelers (5%) are the other major players, while Yamaha and Piaggio have announced plans to drive in next fiscal.

Driving the demand for scooters are female and young customers. And gearless scooters, flying at around 20% a year, are the top pick.

"The main driving factors are convenience and the fact that every family member can use the product easily. With improved fuel efficiency and better styling, scooters satisfy the need of the entire family," said Naresh Rattan, vice-president, sales and marketing, HMSI.

Predictably, geared scooters are still losing out. In the 90s, the likes of Kinetic Motor, Majestic Auto and LML had fallen by the wayside due to their inability to offer products in line with demand.

The big turning point came with the introduction of the Honda Activa. Its runaway success was enough for existing players like Hero Honda (now Hero Motocorp) and Suzuki to realise the magnitude of demand for scooters that is waiting to be tapped.

Next thing one knew, companies were lining up products keeping in mind customer profiles. While TVS Scooty courted young buyers, the likes of Honda Activa were a big draw with female customers.

In fact, females constitute 25% of buyers for scooters in India, and growing.

"The scooter segment will continue to attract attention with increasing demand coming from college students and working women. The market is expected to become more competitive with new players entering and multiple product launches at attractive price points," said Abdul Majeed, auto practice leader, PricewaterhouseCoopers.

Surjit Singh Arora, analyst with Prabhudas Lilladher, concurred. "The motorcycle segment is expected to see a slowdown next year or witness a flattish growth. However, the scooter segment looks positive with new launches lined up," he said.

Icra analysts Subrata Ray and Jitin Makkar feel there is enough room for everybody to grow. "Icra expects the scooter segment to gradually increase its share in the domestic 2W market from 17.6% in 2010-11 to 21% by 2014-15. With this, the domestic scooters market is estimated to nearly double in size by 2014-15," the duo noted in a report.