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<b>India 2007:</b> LEVs to Grow to 70,000 Units

Sales & Trends

NEW DEHLI, India – In 2007 the Indian bicycle industry was facing big challenges due to the continuous drop in the appreciation of the US Dollar against the Indian Rupee. The greenback used to exchange for about INR 44 but came down to INR 39 what is now causing major concern for the Indian export. […]

<b>India 2007:</b> LEVs to Grow to 70,000 Units

NEW DEHLI, India – In 2007 the Indian bicycle industry was facing big challenges due to the continuous drop in the appreciation of the US Dollar against the Indian Rupee. The greenback used to exchange for about INR 44 but came down to INR 39 what is now causing major concern for the Indian export.

Adding to the problems of the Indian bike makers which are also focused on the world’s export markets, including Europe, are the increased costs for raw materials like steel and rubber. Despite the clamour of the Indian manufacturers no concrete steps have been taken to improve the export scenario.

Hero Cycles manufactured 4.75 million units in Jan – Dec 2007. The Indian bicycle major exported 435,000 units in the 12 month period. The export in value terms stood at about US$ 21 million. Hero’s main export markets are in Africa, Middle East and Europe.

Avon Cycles manufactured 1,660,000 bicycles last year. The company exported 355,000 units in the same period for a total export turnover that stood at US$ 16.1 million.

Production at Sahibabad based Atlas Cycles (Haryana) Ltd. ended at 1,050,000 bikes for the whole of 2007. The company exported 60,000 bikes. Its turnover reached US$ 45 million, while export in value terms reached US$ 2.85 million. For 2008 the company has set its export goals on entering the European markets and South East Asia. Atlas is also planning to enter into the e-Bike segment in a major way by launching models for kids and women.

Hamilton Cycles based in Ambernath, is planning to strengthen its base in Europe and to enter the US and Canadian markets in 2008. The company will also launch e-bikes this year and is to open exclusive outlets in India. Hamilton manufactured 143,052 units in 2007 of which 80,387 units were exported in the 12 month period. Hamilton’s turnover stood at US$ 7.77 million and the company exported for a total value of US$ 3,580,026.

Light Electric Vehicles (LEVs)

Light Electric Vehicles (LEVs) are steadily gaining ground in the Indian mobility market. Apart from the Hero Group venture – Hero Ultra Motors & Gujrat based Electrotherm, more than 45 players have entered the market in the space of a year.

At present only Electrotherm (India) Ltd and Hero Ultra stand out as successful e-Scooter & e-Bike ventures, rather then the smaller regional players. Major industry players feel that it is too early to comment on the fortunes of the new segment.

“The e-Bike category is too young – although it is growing steadily it will take some more time to mature,” feels Naveen Munjal, Deputy Chief Executive of the Hero Group. Hero Ultra plans to capture a sizeable share of the e-Scooter & e-Bike market by the end of 2008. The company expects to sell 120,000 units in 2008. The venture sold about 15,000 units from the time it entered the market up to the beginning of February. Hero Ultra has the widest product range, with nine models.

Electrotherm believes that the customer is looking at the performance and durability of vehicles. “The customer is looking for vehicles with staying power and it will take another 2-3 years to before the e-Bike market picks up steam in the Indian market,” thinks Mr Prashant, Deputy GM of Electrotherm. The company controls the lions’ share of the Indian e-Bike market: it has sold about 50,000 units since it entered the market about a year ago. Electrotherm plans to end its fiscal year in March 2008 with about 60,000 units sold. It has unveiled a new 250-watt model, which is capable of 45kmh and requires licensing and registration.

Interestingly, major Powered Two-Wheeler makers are also eying the e-Bike segment with companies like TVS Motors showcasing e-vehicle concepts during the just concluded Auto Expo. Kinetic has also announced plans to enter the market in the next four months. “That would really change the perception towards the product as established PTWs makers will bring more innovation and interest to the product,” said Naveen Munjal.

TVS has already launched its Teenz electric scooter, targeting women who travel 15-20 km daily. It runs for 50 km in one charge. Another significant development is the negative growth registered by the motorcycle segment in the last couple of years, and positive though marginal growth in the scooter segment. The industry sees this as an important development in favour of electric powered two-wheelers.

Price also seems to be a major constraint in the initial growth of the segment, forcing consumers to think twice about buying an electric vehicle. “Half of the cost of an electric vehicle is the battery. Unless volume comes into the segment, no domestic player would invest in making e-Bike batteries locally,” said a concerned Prashant. Currently, most of the players are importing batteries either from China or Taiwan. “The price of the vehicle can not be reduced without higher volume,” said Naveen.

Over the past year about 70,000 units found their way into the Indian market: though the share of the unorganized smaller players is insignificant, they are responsible for spoiling the market. These smaller players import their vehicles from China taking advantage of loopholes in import regulations, spoiling the initial growth of the segment. Only Hero Ultra and Electrotherm vehicles are approved by ARAI, the official body that tests vehicle and gives the necessary approval for production.

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