Market Share Analysis of Three Wheeler Market in India

After having covered the market share trends in the passenger and commercial vehicles industries in India, I now turn my attention to the three wheeler industry.  The three wheeler industry can be divided in to the passenger and the goods segment. In FY15, the passenger three wheeler market was 80% of the total three wheeler market and the goods market was obviously the remaining 20%. The former had grown by a little over 8% in the previous decade while the latter had declined by a little over 4% during the same period. The growth of the passenger category can be attributed to a multitude of factors including increasing need for last-mile connectivity with the advent of metro rail in various cities, increasing urbanisation and associated mobility needs, entry of app based aggregators in to the market and decreasing price and increasing adoption of CNG as a fuel. The following graphical elements sum up the market share trends in the April to February time periods of FY15 and FY16. Data taken from an article available online.

As can be seen clearly from the pie chart, the top three players dominate the industry with a whopping 87% market shared between them. Bajaj Auto is the clear leader with a dominating 47% market share with it. Piaggio provides decent competition with a 30% market share and M&M has a lot of ground to cover if it wants to provide serious competition to the two ahead of it. Now I seek to understand the OEM-wise reasons for the market share patterns.

Bajaj Auto Market Share Trends

The graphic below shows the change in the market share of Bajaj Auto in the domestic three wheeler market in the past three financial years. The numbers have been taken from Bajaj Auto's FY16 annual report.

It can be seen that the industry has been growing and that Bajaj Auto has increased its market share in it. In FY16, release of three-wheeler permits in several states helped grow the company's sales. The company had a market share of 90% in the petrol and alternate fuel driven three wheelers. In the small diesel market too it dominated with a 65% market share. In the large diesel category, however, it was a laggard with only 20% market share. After entering the cargo segment in FY 2016, Bajaj has clocked double digit market share in that segment, further growing its presence in the three wheeler segment.     

Piaggio Market Share Trends

Towards the end of FY14, Piaggio Vehicles Private Limited (PVPL) wanted to achieve a market share of 40% in another three years, which then was a t 31%. As of FY16, it had not grown its market share by much at all, staying close to 30%. At one point, Piaggio had snatched the leadership position from Bajaj in the three wheeler segment by making strong gains in the cargo segment, but Bajaj has reclaimed its leadership position through competing offerings. However, in the goods sub-segment of three wheelers, Piaggio sold more than all others combined, even as late as Q1 2015. In the passenger segment, they had launched a new product the Ape Xtra Dlx which had some new features to make it look stylish and modern. However, year on year market share changes show a decline despite these efforts. 

Other Players Market Share Trends

Between Bajaj and Piaggio, we have covered three-fourth of the industry. The rest can be discussed together. M&M has a market share of 10% in the segment, marginally lower than the share the year before. It has historically tried innovative things like making an electric three wheeler in 2002 and a hydrogen powered three wheeler in 2012. As of now, however, competency in diesel, petrol and CNG rules the roost, if market share trends are to be explained. 

Atul Auto has been growing its market faster than all the others, if you adjust for the fact that it has the smallest market share of all the players with a greater than 5% share. In 2014, it was using its debt free balance sheet to drive expansion of production and aiming to achieve a steady 20% increase in sales year on year. It has been opined that competitive pricing is the key to Atul Auto's expansion when compared to the other players.

TVS entered the three wheeler segment around a decade back. Its weak competitive positioning is reflected in the fact that while sales in December fell by 8.5% year on year, for the company overall, three wheeler sales fell 32.8%. In the graphics in this post, it can also be seen losing market share in the the previous years. The management has brushed aside this under-performance saying that it is not a core business for the company

Scooters India manufactures exclusively three-wheelers. It can be seen to be the biggest loser of market share when the small base or denominator effect is adjusted for. It is a Government enterprise and due to the poor performance, its sale is being considered.

Summary

To sum up,

1. Bajaj Auto has the market leadership position and is one of only two players increasing their market share. Its only weakness is the large diesel segment, where it is looking to expand.
2. Piaggio has had fluctuating fortunes and has failed to live up to its expectations, but does well in the cargo diesel segment.
3. Atul Auto is expanding aggressively and can be called the dark horse in the race. It is the other player apart from Bajaj Auto which has increased its market share in the period under consideration.
4. M&M is also a large player and has been holding on to its market share. However, its novel alternate fuel products have not found much traction in the market.
5. TVS' three wheeler division and Scooters India are in trouble and what happens to them remains to be seen.