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MOTORINDIA
l
July 2012
81
India is the world’s foremost pro-
ducer, consumer and exporter of
three-wheelers with domestic sales
of almost 5.13 lakh units and exports
of 3.63 lakh units in the financial
year ended March 31, 2012.
Three-wheelers are widely used
in India as an affordable means of
short-to-medium distance public
transportation and last-mile con-
nectivity for goods transportation.
Apart from domestic demand, India
has also emerged as an important ex-
port hub for three-wheelers with its
presence in some of the South Asian,
African and Latin American markets
that are replicating the Indian three-
wheeler story with rising disposable
incomes but inadequate public trans-
port systems. Overall, this industry
has witnessed relatively healthy 15
per cent CAGR volume growth over
the last decade, driven by moder-
ate domestic growth (10 per cent
CAGR) and robust exports growth
(38 per cent CAGR).
ICRA Research expects the do-
mestic three-wheeler passenger
segment to benefit from product
upgradations (2-stroke to 4-stroke,
petrol/diesel to CNG, front engie to
rear engine vehicles) as well as of-
fering of fresh permits by various
State Governments. Despite stiff
competition from small commercial
vehicles (SCVs), the domestic three-
wheeler goods segment continues to
benefit from its favorable operat-
ing economics for the first-time us-
ers (FTUs). Lastly, ICRA expects
three-wheeler exports to remain the
main growth driver for the industry
due to rising disposable incomes,
evolving travel & consumption pat-
terns, improving road infrastructure,
increasing demand for motorized
transportation and inadequate public
transport systems in the emerging
target markets.
According to Mr. Subrata Ray,
Senior Group Vice President, ICRA
Research, the successful launch of
four-wheeled small commercial ve-
hicles (mainly Tata Ace in 2005-06)
has altered the industry dynamics
considerably over the last five years.
The high tonnage three-wheeler car-
go segment (0.75T and above) has
already made way for four-wheeler
SCVs that provide higher stability,
safety, speed, space and style.
Moreover, slowing economic
growth, moderating consumer
goods consumption, high inflation,
increase in financing costs, rising
fuel prices and absence of fresh per-
mits by the State Governments im-
pacted domestic three-wheeler sales
in FY12.
“Despite the near-term headwinds,
we expect the 3W industry to report
a moderate volume CAGR of 7-8%
over the next five years. We expect
the long-term sales growth to be the
highest in the exports segment, fol-
lowed by that in the passenger car-
rier segment and the lowest in the
goods carrier segment due to intense
competition from the four-wheeler
small commercial vehicles”, says
Mr. Ray.
w
vehicle zone
SCVs are increasingly gaining popu-
larity even in the lower tonnage
(0.5T) cargo segment with the recent
introduction of smaller vehicles by
CV OEMs. While the domestic three-
wheeler goods segment has de-grown
at nine per cent CAGR over the last five
years, SCVs have reported robust 21
per cent CAGR growth over the same
period.