The introduction of the BS VI emission norm, from April 2020, is expected to lead to some casualties in the Indian automotive industry primarily due to the additional technology cost implications. One segment is vehicles with small diesel engines below 1.5 litres in cubic capacity and the other is entry-level petrol-run vehicles, primarily mopeds. While the former is happening as expected, the humble moped is set to put up a fight.
Mopeds contributed to 4 percent of the Indian two-wheeler market which sold over 21 million units during FY2019. TVS Motor Company, India's third largest two-wheeler manufacturer, has been the sole player in this segment after its peers Hero and Kinetic exited the space many years ago.
K N Radhakrishnan, director and CEO, TVS Motor, confirmed about the company's plan to continue the moped in the BS VI era too, during a call with analysts today. "Mopeds will definitely be complying with the BS VI norm," he said. The BS VI-related price impact on mopeds can be significant as the additional technology-related cost will be much more than in a scooter or motorcycle as a ratio of the retail price. Prices of TVS mopeds range between Rs 29,000 to Rs 38,000.
"The moped customer looks at convenience. We have to make sure that they get benefit of utility. We have to come up with strategy to support that (price hike)," said Radhakrishnan. Over the past few years, the moped has undergone evolution in terms of getting a four-stroke engine, a bigger engine (100cc), and an electric-start option. The moped segment grew over 2 percent during 2018-19, clocking sales of 880,000 units in the domestic market. Over 16,000 units were also exported last fiscal.
Second product from BMW Motorrad alliance coming up
At the other end of its product portfolio, TVS Motor is set to introduce the second product under its alliance with BMW Motorrad during the current financial year.
TVS Motor expects the industry, currently undergoing a slowdown, to pick up with the arrival of the festive season. It expects a healthy single-digit growth for the industry and expects to outpace the market growth during the year with new introductions and better market penetration.
During FY2019, the company added 150 dealerships to its network. Two-wheeler makers have requested the government to revise the GST rate on two-wheelers from 28 percent to 18 percent. If that happens, TVS and its peers will get more wind in their sails.
TVS Motor also expects a revival of the scooter segment this year. While that happens, the company is also preparing to enter the electric mobility space during 2019-20.
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