3 Wheeler Marketing - Project Report
By Rattan Singh | In MARKETING
Published on 7 July, 2016
#AutoRickshaw #Automotive #Markeing
Background to 3 Wheeler Auto Industry
India continues to witness growing domestic 3 wheeler demand coupled with increasing manufacturing as well as exports. India’s 3 wheeler market is categorized into passenger carrier and load carrier. Passenger carrier 3 wheelers are used for public conveyance, while load carrier 3 wheelers are used for carrying goods and materials over short and medium distances.
Rising demand for cheap and convenient public conveyance in rural and semi urban areas and increasing number of permits being issued by state governments across the country are also playing a major role in driving the India 3 wheeler market over the forecast period. The demand for passenger carrier 3 wheelers exceeds that of load carrier. India's 3 wheeler industry has been exhibiting consistent growth in both domestic sales as well as export markets. Sri Lanka, Bangladesh, Nigeria, Tanzania, Kenya, Ghana, Sudan, Botswana and Nepal are the key export destinations for the country's 3 wheeler industry.
Growing Domestic Demand Coupled With Increasing 3 Wheeler Exports to Boost Three Wheeler Market in India During Next Five Years.
The rising population and increasing need for affordable and convenient transportation is fuelling the market for passenger three wheelers. The market for commercial vehicles is expected to grow significantly over the next five years and its share in the overall three wheeler market is also expected to increase in the near future. The major players in Indian three wheeler market includes Bajaj Auto, Piaggio, Mahindra and Mahindra, TVS motors, Scooter India and Atul auto with Bajaj Auto accounting for the highest share in the market.
3 Wheeler Marketing
3W Industry Segmentation:
3 wheelers remained to be an affordable means of short-to-medium public transportation and last mile connectivity for goods transportation. The significance was well identified by Taxi Aggregators (Ola, etc) and have added autos as well under their offering.
Passenger Segment: Bajaj Auto has clearly been the winner in load category. The dominance is even higher in tier-1 cities where only the Petrol & CNG offering is being sold. While Piaggio dominates the upcountry market (Tier 2 & 3 cities), as diesel engines are predominant in these regions. However, to see the way these 3-wheeled passenger offerings contribute to these OEM's, a historical trend would be apt:
While Bajaj Auto & Piaggio are clearly the segment leaders; the race to the third position has become quite interesting - M&M and Atul Auto are giving a tough competition to each other. While Mahindra has lost some ground, Atul's growth over the past 5 years has more than doubled and has meanwhile able to overtake even TVS in the race! The Gujarat based 3-wheeler OEM has made considerable inroads in the passenger segment - Atul is surely the manufacturer to look out for.
Load Segment: Piaggio leads in the segment by a huge margin. However, it has lost over 10% Market share in previous 5 FY's! The gains has been made primarily by Mahindra & Atul Auto. Do note that the entire segment (load category) depends on diesel offerings and hence the drastic difference in sales from its passenger siblings.
The segment has seen an upward movement in the past 3 FY's and we see the numbers stabilizing ~1 Lakh units/annum as the competition from the 4-wheeler load options remains significant. Also the possibilities for the OEM's to innovate in the segment seems limited.
Trend of 3W Industry:
With annual sales volumes of 432,000 units in FY 2015, the passenger carrier segment accounts for almost 80% of domestic 3W industry sales. India has emerged as the largest three wheeler industry with large domestic market and export base with industry volumes of 9,40,000 units in FY 2015.
Over the past decade (FY 2006-15), the Indian 3W industry has witnessed a CAGR of 8.9% in unit sales driven by steadily rising exports as well as domestic demand. India’s three wheeler exports have grown at a CAGR of 20% over the past decade. Icra said the domestic market growth was driven by increasing demand for last-mile connectivity in metros & major cities, improving penetration in tier III/IV towns and rural areas and gradually increasing availability of funding through organized channel.
The cargo variants face tough competition from small CVs. There is a declining trend in demand for 3W goods carriers in the domestic market due to competition from Small Commercial Vehicles (SCVs). With annual sales volumes of around 1,00,000 units in FY 2015, the goods carrier segment accounts for almost one-fifth of domestic 3W industry sales. Unlike the passenger segment, which has grown steadily over the past decade, the demand for goods carriers has actually declined by 4.2% over the same period, says the Icra report.
Present Scenario of 3W Market:
At a time when the domestic commercial vehicle industry has started to recover from the prolonged slump that lasted over two years, the three-wheeler industry is struggling to maintain growth. In 2014-15, it had notched double-digit growth but it seeing tough times in 2015-16.
Of the OEMs, Bajaj Auto, the world’s leading three-wheeler maker, continues to dominate the domestic market with a 46.7% share. Interestingly, the company exports almost an equal number of three-wheelers what it sells in India.
Between April 2015-February 2016, Bajaj Auto sold 227,502 units in the domestic market, helping itself to a market share of 46.7% and growing marginally by 4.79% over the same period the previous year. It also shipped 266,072 units overseas to log in a market share of 69.9% in total exports. The company’ exports to nearly 36 countries globally. It has an extensive portfolio of three-wheelers which are compatible with all fuels including petrol, LPG, CNG and diesel and for all categories – small, medium and big.
During April 2015-February 2016, other manufacturers like Piaggio Vehicles sold 147,304 units (market share: 30%), followed by Mahindra & Mahindra which sold 50,331 units (market share: 10%). Rajkot-based Atul Auto sold 39,201 units (market share: 8%). While TVS Motors, which sold 14,330 units, is down 13.11% YoY (market share: 2.9%) its exports of 90,617 units give it a 12.44% growth.
Tough times in India
During April 2015-February 2016, the overall three-wheeler segment has seen a decline of less than half a percent with total sales of 486,950 units. The passenger carrier segment, which is largest category in the segment, sold 399,803 units, registering flat growth. During the same period, the goods carrier segment fell 3.74%. Exports grew by 3 % with a total 382, 832 units shipped. In FY2015, the three-wheeler segment grew by 10.79% with sales of 531,927 units against 480,085 units in the previous fiscal. Overall exports grew significantly by 15.44% with total shipments of 407,957 units.
In FY2015, the three-wheeler segment grew by 10.79% with sales of 531,927 units against 480,085 units in the previous fiscal. Overall exports grew significantly by 15.44% with total shipments of 407,957 units.
Road Map for 3 Wheeler Marketing
- Increase Sales Revenue & Profits with Load Carrier and Passenger Carrier
- Build a strong organisation of repute for long term growth in Rural market
- Build a strong customer base and channel network in rural market
- Liaison with Government agencies for Sales of 3 Wheelers as Waste Carriers
- Big players including small 4 Wheelers in that category a threat
- Matching Pollution norms with Government requirement
- New brand introduction and acceptability
- Deliver Quality and competitive Cost Product
- Tie ups with FI’s for easy purchase by customers
- Technical knowhow and after sales support (service and Spare parts availability)
Achieving high performance through transformation:
- Create and train a strong marketing and customer care (service & parts) team
- Create sales channel (distribution and retail)
- Focus mainly on rural market
- Transformation through segment driven sales and marketing campaign
- Transformation through Sales Processes and System development
- Quality and Timely Product delivery
Support requirement: Marketing manpower (3S Management), Product Catalog, Product for Display, Robust Warranty Policy