Indian Three Wheeler Industry (Performance FY 2010-2011)

The 3 wheeler Market in India is over four decades old. Initially, only 3 seater passenger autos were introduced. In eighties, lower capacity cargo carriers were introduced – 0.5 Tons open body Pick-up van. Till late eighties, 3-Wheeler market was virtually ruled by Bajaj Auto Ltd (the only manufacturer). In late eighties - early nineties, new manufacturers developed higher capacity category by introducing 6 seaters & 0.75 Tons Cargo carrier. And late nineties saw a renewed interest in the 3-Wheeler market. Optimism about growing need of free mobility as well as the need for remote and efficient distribution of the goods and services was the key factors for the same.

But the growing consumer demands for safety, comfort and space led to the evolution of 4Wheeler in this segment in the form of Tata’s ACE in 0.75 T segment (year 2005). And it offered all the advantages over a 3W. The idea clicked and the market changed drastically. The advantages included car like driving, higher speed, larger cabin space, more balanced structure and stylish looks. The market changed radically and today 4W numbers are higher than 3W.

The 4W introduced ate into the market share of 0.75T 3W more than 0.5T 3W. But, smaller 3 Wheelers were still preferred in load segment as compared to large 3 W. The primary reason for this was the higher operating cost as result of lower mileage and higher maintenance cost of the newer 4 wheeler cargo loaders.

Classification:

In the three wheeler segment, the classification is broadly in terms of carriage (load) and passenger vehicles. Since the former does have a very limited capacity to carry goods and is not preferred by many, the three wheeler manufacturers are more into the passenger three wheelers. And the cargo/carriage segment is bifurcated into 0.75T and 0.5T. And the customer groups involve market load operators and the captive customers.

                                                 

The emergence of three wheelers as an effective mode of transportation has benefited millions of Indians. Three wheelers are not only used for carrying passengers but are also used as luggage carriers. In India the three wheelers usually run on diesel and petrol but of late in some of the cities CNG run three wheelers have also come up in large numbers. The three wheelers used for carrying passengers in India are usually referred as Auto-rickshaws. Most of the state governments in the country are supporting the operation of CNG run Auto-rickshaws and also three wheelers with four stroke engines as they produce lesser harmful emissions. It has been found that most of the three wheelers running on the roads of the country come with mileage of about 34-36 km per liter of petrol.

The three wheelers have successfully helped to overcome the dearth of jobs in the country. Numerous people could be seen driving auto-rickshaws on the roads of cities like Delhi, Mumbai, Kolkata, Hyderabad, Bangalore and many more. Due to their simple construction and limited amount of investment the three wheelers as a mode of conveyance and commercial mechanism has gained popularity. What's more, their maintenance is also quite simple. 

Majors concerns for the 3 wheeler industry:

Passenger Industry:

 4 W Impact-Bigger Aspirational Value Products (4W) have started impacting industry, Safety Norms- Can be exploited by 4 W Entrants and influence permission for 3 wheelers plying, New Permits-In Cities, almost closed. Permit Resale Cost is very high and thus is acquisition cost, No Organised Financers in Passenger Segment and Private Financers charging as much as 40% interest Rate, Rising Interest Rates and Ban on diesel as a fuel (In metro cities): Shifting Sales towards CNG and LPG.

Carriage/Cargo industry:

De-growing Industry- Industry de-grown by 40% YOY, 4 W Impact-Bigger Aspirational Value Products (4W) have started impacting industry(42% degrowth for 0.75 T), Safety Norms- Can be exploited by 4 W Entrants and influence permission for 3 wheelers plying, Interest Rates has almost doubled in last one year and Ban on diesel as a fuel: Shifting Sales towards CNG and LPG in 0.5 T Category.

All said and done, 3 wheeler still constitutes a considerable number and has its manufacturers glued to the business. Although petrol/CNG/LPG forms a major percentage share in cities, diesel 3 wheelers are rampant in remaining portions of the country.

Indian “DIESEL” 3 wheeler Sales figures for FY 2010-2011:

FY 2010-2011 performance of Diesel 3-wheeler Carriage/Load Segment

FY 2010-2011 performance of Diesel 3-wheeler Passenger Segment 

The overall Industry figure for Carriage+Passenger Diesel 3 wheeler sums up to 274233 units. Piaggio has emerged as an undoubted leader in this category.