India is the largest three-wheeler industry globally

FINANCIAL CHRONICLE
Published Mar 15, 2016, 10:30 am IST
Updated Mar 15, 2016, 10:30 am IST
The domestic 3-wheeler market stood at 5,32,000 units, registering a CAGR of 4.4 per cent
 Indian 3 Wheeler industry grew at annual growth rate of 8.9 per cent in unit sales driven by steadily rising exports as well as domestic demand.
  Indian 3 Wheeler industry grew at annual growth rate of 8.9 per cent in unit sales driven by steadily rising exports as well as domestic demand.

Pune: India has emerged as the largest three-wheeler industry with a large domestic market and export base on the back of strong demand from local as well as international markets.

“With industry volumes of 9,40,000 units in FY 2015, India is positioned as the largest manufacturer as well as market for three wheelers, globally,” an ICRA research report on the Indian commercial vehicle industry said on Monday. The three-wheeler market includes both passenger and cargo segments.

 

The top-three players such as market leader Bajaj Auto, second largest manufacturer Piaggio and Mahindra and Mahindra accounted for 87.3 per cent of the industry sales at 10 million units in FY2016.

Over the past decade during FY 2006-15, the Indian 3W industry grew a compounded annual growth rate (CAGR) of 8.9 per cent in unit sales driven by steadily rising exports as well as domestic demand. Within the overall industry, the domestic 3W market stood at 5,32,000 units in FY 2015, registering a CAGR of 4.4 per cent over the past ten years, the report said.

In contrast to domestic demand, exports of 3W from India have grown at much higher pace (i.e. 20.4 per cent) during the same period. As a result of this trend, the share of exports in 3W industry volumes rose from 18 per cent in FY 2006 to almost 43 per cent to 10 million units in FY 2016.

“This trend has been supported primarily by two factors. Firstly, strong demand from international markets on the back of rising demand for last-mile connectivity owing to lack of well developed public transport system in emerging markets in Africa and South-East Asia and secondly, declining trend in demand for 3W goods carriers in the domestic market due to competition from small commercial vehicles (SCVs),” Subrata Ray, senior group vice president at ICRA Research told FC.

He said with annual sales volumes of 4,32,000 units in FY 2015, the passenger carrier segment accounted for almost 80 per cent of domestic 3W industry sales. Accordingly, the growth drivers of the domestic 3W industry are majorly influenced by factors that drive demand for passenger 3Ws.

Over the past decade (FY 2006-15), the passenger carrier segment has witnessed a CAGR of 8.2 per cent driven by increasing demand for last-mile connectivity in metros and major cities, improving penetration in tier III/IV towns and rural areas, and gradually increasing availability of funding through organised channel.

In urban markets, replacement demand has also been an important growth driver where in improving network of CNG fuel stations is driving replacement of older petrol or diesel powered 3Ws with ones based on CNG, the report said.

Despite the fact that the usage of CNG is only mandatory in Delhi, the acceptance for CNG-based 3Ws has caught up in other cities as well primarily on back of favorable operating economics, it said. The report said the cargo variants face tough competition from small CVs but certain attributes support their sales.

With annual sales volumes of 1,00,000 units in FY 2015, the goods carrier segment accounted for almost one-fifth of domestic 3W industry sales. Unlike the passenger segment, which has grown, the demand for goods carriers has actually declined by 4.2 per cent over the same period.

“This trend has been driven by the acceptance of 'Mini Trucks/SCVs’ with payload capacity of less than two tons over three wheelers as preferred alternative for providing last mile transportation. Compared with three wheelers, SCVs offer greater sturdiness and stability owing to four-wheel vehicle architecture, higher load carrying capability, faster turnaround due to bigger engine output, and easier maneuverability and driving comfort,” Ray said.

Location: India, Maharashtra, Pune




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